Grim Outlook for North Sea Offshore Industry
The outlook for North Sea oil and gas operators looks grim, according to a UK industry report published today.
Two-thirds of companies operating in the North Sea have been forced to cancel projects because of the recent fall in crude oil prices and operators reported slashing staff training by half. One of the strongest contributors for the depressed market is the drop in crude oil prices, which saw oil trading below $50 per barrel in 2015.
The findings are compiled in the 22 Oil and Gas Survey Aberdeen & Grampian Chamber of Commerce and law firm Bond Dickinson, which put together data from 133 North Sea operators.
Confidence in the UK Continental Shelf (UKCS) has reached its lowest level since the survey began in 2004. An overwhelming majority of contractors reported a drop in confidence in UKCS activities over last year’s level.
The report also found that exploration has been one of the biggest casualties in the North Sea decline. Around 70 percent of all firms involved in exploration saw their value drop over the past 12 months.
Decommissioning alone is the one area that is reporting positive trends.
“Decommissioning is the bittersweet positive in the survey. Academics have been predicting an imminent spike in decommissioning for years but that spike is now well and truly upon us. Decommissioning is not driven by oil price or demand and could be very important in maintaining the value of activity in the North Sea – but the inevitable downside is that it hastens the decline of offshore exploration and production,” said Uisdean Vass oil and gas partner at Bond Dickenson.
The survey administrators did maintain a degree of optimism, claiming that new opportunities may exist in the market, despite the grim appearance of the data.
James Bream, research and policy director at Aberdeen & Grampian Chamber of Commerce, said “This is a mid-life crisis in the UKCS but as some people say life begins at 50.”
An infographic for the data can be found here.
The complete report can be accessed here.