Find out how to Make The Final Oil Pay
The widespread notion is that the North Sea is completed. However while some forty
billion barrels of oil and fuel have been produced from the North Sea to date,
there is another estimated 25 billion still to come.
That’s the good news, each for the UK’s increasingly unsure power security
and for the financial system. The unhealthy news is that North Sea oil is by far probably the most
extremely taxed a part of the financial system with its personal particular rate of 50 per cent,
rising to 75 per cent on manufacturing from older fields. The regime was
created when the North Sea was still gushing with oil, and is in danger of
choking the technically tough and dearer exploration and
drilling required to take advantage of of what is left.
Industry representatives hope to meet Lord Davies, a minister within the
Division for Enterprise, in the coming weeks to debate their issues. But
given the response from Lord Hunt, a minister on the Department of Power,
in recent talks, confidence is just not high.
“The North Sea is the UK’s unsung industrial hero,” says John
Gallagher, vice president of Shell’s European upstream enterprise. “This
is about each maximising the UK continental shelf (UKCS) and protecting the
world-leading business even after that’s over. The federal government has not fully
grasped the significance of what we’ve got in the mean time, and what probably
is perhaps lost.”
There are major economic implications. Of the 25 billion barrels that are
left, 10 billion are accounted for in commercial edible oil refinery plant design 03 production plans. However the
rest aren’t. If the last, onerous-to-attain assets are too expensive to
pursue, the distinction to the UK financial system at an oil value of $70 can be
greater than £1 trillion.
The woeful state of the general public finances will little question make it harder for the
Authorities to rein back on a regime that produces an annual £20bn in taxes. “They
would possibly just want to squeeze tougher however that could be to the detriment of the
longer time period advantage of the asset,” Mr Gallagher warns. “The
Authorities must be careful how they nurture a nationwide asset into middle
It is not just a question of the valuable reservoirs of oil and gas. It’s
also in regards to the industry itself. Trickle-down spending quantities to £12bn per
12 months and there are 450,000 people who work within the sector. And as world
hydrocarbon reserves run down, and firms take on larger technical
challenges, UK experience is turning into a priceless export commodity. Export
levels are rising at a rate of 10 per cent a year, hitting £5bn in 2008.
The UKCS pioneered a variety of offshore applied sciences when the business began in
the 1970s, and continues to lead the world in a variety of areas. One UK
strong suit is sub-sea drilling, for instance. The expertise involved in
offshore oil and gas manufacturing is awesome on the best Bina of occasions. Sub-sea
drilling is mindblowing. Rigs could stand in tons of of metres of harsh sea
conditions, before drilling tons of of metres extra into the rock under,
coping with the temperatures and pressures throughout the earth, as nicely as the
immense complication of the sea.
Sub-sea is identical drilling process, however from a boat, ending with solely a pipe
main back to a nearby oil rig as a hub. The distinction in price of a
so-called “sub-sea tie-back” and a whole new rig is phenomenal. In
a world where oil sources are depleting and demand is pushing corporations to
exploit bigger numbers of smaller reservoirs, sub-sea tie-backs are a great
place to be. And Aberdeen leads the world.
However the North Sea oil and gas sector is already showing indicators of pressure.
Capital expenditure is falling from £5.6bn in 2006, to £4.8bn in 2008, and
trade group Oil & Fuel UK estimates it might fall as low as £4bn this
12 months. Drilling operations have declined by more than half within the final year,
with only 15 exploration wells drilled in the three months to June, in contrast
with a 50 per cent enhance just over the border into the less closely-taxed
Norwegian North Sea.
“In this nation, once we get an industry, we aren’t superb at
holding on to it,” Mr Gallagher complains. “The main spending
business within the UK is being forgotten about.”
The federal government has not been fully deaf. April’s Finances included barely
extra favourable therapy of new subject developments.
But the industry says the amounts usually are not enough to make a distinction. And
although Lord Mandelson, the Business Secretary, told the Labour Social gathering
convention that the longer term is “less monetary engineering and loads
extra actual engineering”, there isn’t any mention of the North Sea.
Malcolm Webb, chief govt of commerce group OGUK, says: “Lord Mandelson
says the UK needs to construct on its industrial power, and the North Sea is
an enormous one.
“We should be clearly open for enterprise in oil and gas within the UK and we
want assist from the government in that message.”
All at sea: Life on the rig
*It is difficult edible oil refinery plant design 03 to imagine the scale of an offshore rig. Some 100km out into the
North Sea off Aberdeen, Shearwater’s 9 decks tower 20 metres above the
150 metre-deep, dark turquoise water. It’s residence to 92 people, who work a
12-hour shift pattern, with two weeks on the rig, then two weeks off,
another two weeks on, then a month off.
“You should be a special kind of person to work on a platform,”
says Dave Blackburn, Shell’s operations manager for 3 North Sea rigs. “But
there’s the most unimaginable environment and teamwork.” The tradition has
modified out of all proportion in recent times. Since the Piper Alpha
disaster that claimed 167 lives in 1988, the macho ethos has been replaced
by an overwhelmingly security-aware strategy.
The advent of recent know-how within the form of commodity Tv units and the internet
has additionally changed life on the rig. Stuart Sibbald, the medic on Shearwater,
says: “Twenty years ago when there were no TVs or computers, there was
a movie every night and more communication between people. New know-how
means higher communication with the remainder of the world, but the people here
talk much less.”
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