North Sea

Facing the future head on

Louise Kingham OBE FEI Chief Executive

Louise Kingham OBE
Chief Executive

Gloom and doom casts a shadow across headlines about the oil and gas industry as economic slowdown and the continuing falls in commodity prices wipes millions off the value of stock markets around the globe. These circumstances are forcing companies to reshape their businesses with the inevitable pain of the impact this has on jobs, productivity, progress in the shorter term and the wider social impact which can be much longer lasting.

Industry cycles are expected – as are the’ ups and downs’ we experience when we’re in them. Clearly it’s important to ride the down times as well as you can but, at the same time, good leadership always has an eye on the future. Making time to think and understand how things will be different going forward and what that means for our organisations and so, being able to reposition to embrace change is essential.

At the same time, worldwide pledges have been made to reduce greenhouse gas emissions as part of the COP21 commitment. This takes engagement from the oil and gas sector and so, while managing the downturn, the industry is also examining  the challenges and opportunities these environmental responsibilities present.

With that in mind, listening to the impressive line-up of leaders gearing up to speak at International Petroleum Week in London in less than two weeks’ time to tell us how they are facing the future head on will be time well spent. Bob Dudley FEI from BP, Patrick Pouyanne from Total, Ayman Asfari FREng FEI from Petrofac and Igor Sechin from Rosneft are among the many taking part in presentations and panel debates between 9-11 February. I’d suggest you can’t afford to miss it.

A nice problem to have with awards

Ian Marchant

Ian Marchant FEI, President

I have never been a big fan of awards, probably because I never win any! However, last year I was one of the judges for the Energy Institute’s annual awards and this sort of changed my view. I had two, apparently conflicting, emotions. Firstly, I was really impressed with the calibre of many of the nominees and was struck by the obvious evidence of professionalism and achievement. However, the second emotion was that in a few of the categories I was disappointed with the depth of the field as I know from the various roles I have around the energy industry that there is a lot of really great stuff happening and lots of really talented and committed people.

I would single out two particular awards where I would have liked to see a lot more nominees. Firstly there is what is now called the ‘Energy Champion‘ award which is for an individual who has made a significant contribution to our industry. I suspect that one reason for a small field is that people don’t feel they should nominate themselves. I totally agree with this so why not nominate a colleague or contact who has gone above and beyond the call of duty. They could be your energy hero or they could be a rising star, it doesn’t matter; what matters is the impact they have had.

The second award where I would like to see a deluge of nominees is for safety. This is a topic close to my heart and I know that, for most companies in our sector, it is the number one priority or core value. Lots of good stuff is happening, every day, to improve processes, change behaviour and reduce risks. Let’s celebrate this and use the awards to showcase what can be done to inspire others to raise their game too.

So my plea is that we make the job of this year’s judging panel much more difficult by swamping them with loads of examples of the good things that are happening in our industry. This would be a nice problem to have.

The EI Awards are free to enter and the deadline for submissions is 29 June 2015.
For more information, please visit www.energyinst.org/ei-awards

 

May you live in interesting times

Ian Marchant

Ian Marchant FEI, President

We are now only a few months away from the UK General Election and, at this stage, it seems to be one of the most unpredictable for a long time, if not ever. In fact, one report that I saw analysed 10 different possible outcomes for who would form the next government covering majority or minority governments for both the larger parties and then a whole raft of different coalitions.

The election is being fought on more predictable grounds with things like the economy and the NHS coming to the fore. Every now and then another topic seems to dominate the media coverage and so far energy hasn’t been one of them. I hope that at some stage in the next few weeks it does get an airing as the new Secretary of State for Energy and Climate Change is going to face some interesting issues in his or her in-tray. I think that the following will be near the top:

  1. How is the UK oil and gas industry responding to the low oil price and what can Government do to create a stable and supportive investment climate? This folder will, I imagine, recommend a quick visit to No. 11 Downing Street.
  2. What will be the outcome of the complete investigation of retail energy supply and how should the government of the day react given that, since the investigation was launched, competition has increased and prices have decreased?
  3. What progress is being made on implementing the recommendations of the Wood report to secure the long term stewardship of the North Sea assets to maximise long term recovery?
  4. Is the much vaunted Electricity Market Reform actually going to secure the UK’s security of supply over the next couple of winters, and then put us on the road to decarbonising the electricity sector in the next couple of decades? This brief should recommend a long, hard and rigorous look at the capacity margin in the next two years.

Of course on the climate change side of the department the issues are no less serious as the new government will be taking part in the Conference of the Parties (COP) meeting in Paris later in the year where the subject of an international agreement on emissions reduction is, once again, on the agenda.

Here things seem a bit more positive in that the leaders of the Conservatives, Labour and Liberal Democrats parties have signed a joint pledge. This didn’t get much coverage as it was swamped by a megaphone debate on tax avoidance so I thought I would provide a link to the agreement, see www.green-alliance.org.uk/resources/Leaders_Joint_Climate_Change_Agreement.pdf

When I step back and think about the next few weeks I am reminded of the alleged Chinese proverb “May you live in interesting times”.

On 3 March, the EI will be hosting a pre-election energy question time in London with representatives from the political parties. This debate will provide delegates with the opportunity to engage in the discussion and express your own views on energy policy issues.

 

Energy Barometer – the role you can play

Prof. Jim Skea CBE FEI EI President Elect

Prof. Jim Skea CBE FEI
EI President Elect

This month sees the roll-out of the EI’s new Energy Barometer, which aims to ensure that the voice of the energy professional is heard by policy-makers and in the wider energy debate. The Barometer will be drawn from an annual survey among EI members.

Some of you will have already had an email from EI President, Ian Marchant FEI, inviting you to join the EI College which is at the heart of the Energy Barometer initiative. This means you had the good fortune to be randomly selected from among the professional and pre-professional membership to spearhead the Barometer project. If you have received an invitation, please accept at once. The EI Knowledge Team is waiting for your reply.

The team is currently preparing a questionnaire, which will be circulated to College members in early February. This involves researching questions, consulting industry experts and the EI’s Energy Advisory Panel, and fine-tuning the questions with the help of survey experts based at the University of Cardiff.  College members will be given two weeks to complete the questionnaire online, which should take no more than one hour. In March, the EI Knowledge Team will start to draw up a report developing a clear narrative from the conclusions and identify strong or surprising messages. The report will be reinforced with relevant industry statistics and will cross-reference energy policy proposals featuring in the party manifestos for the 2015 General Election. The report will then be published at a suitable time in the weeks following the election, and its findings will be communicated to EI members, government, and the public.

I can’t over-emphasise the importance of EI members’ participation in bringing credibility and prestige to the Barometer report. We are determined to ensure that the report picks up members’ views, 600 in all, right across the EI. In practice, this means that we’ve refined our random selection in two ways: first by making sure that we meet quotas for Fellow (FEI), Member (MEI) and Graduate (GradEI) members to ensure that the perspectives of both seasoned industry experts and future energy leaders are captured; second by ensuring that we get equal contributions from those who have elected to receive Energy World and those who have elected to receive Petroleum Review magazines.

If you have not received an invitation, you have not lost out. The College will have a two-year rolling membership with half the members replaced annually so that we combine an element of continuity with an opportunity for a wide range of EI members to contribute. This year’s invitations will be for a mixture of one-year and two-year memberships – in 2016 a further set of invitations will go out and you may well be on the list.

People who are not College members can also join activity on social media to discuss potential questions and important topics as well as debate the report findings – join in the conversation now @EnergyInstitute #EnergyBarometer to help form the questionnaire.

This is an exciting initiative in what will be a critical year for energy policy. Please join in and make your voice heard.

A 50-year adventure, but the North Sea exploration journey is far from complete

Louise Kingham OBE FEI EI Chief Executive

Louise Kingham OBE FEI
EI Chief Executive

September 2014 marked the anniversary of the award of Licence P.001 to BP, which saw the birth of the UK Continental Shelf (UKCS) only one year later when the West Sole gas field was discovered.

In 1970 the Forties discovery was made and, after construction of the pipeline by the same name, oil was brought to UK shores in 1975. A new era in UK energy production meant the adventure was just beginning.

On the 50th anniversary of that first discovery, in September 2015, the 8th Petroleum Geology Conference – known to many as the ‘Barbican conference’ – will take place in London at the QEII Conference Centre with a focus on North West Europe.  From the North Sea and surrounding onshore areas, to exploration frontiers in the North Atlantic and the Barents Sea, there is much to share from 50 years of learning.

The call for papers is currently open seeking abstracts and there will be an emphasis on knowledge transfer too because this event is about what the UKCS will mean for future generations.

The oil and gas industry is still the UK’s largest industrial investor with record cap ex of £14.4 billion in 2013. However, as capital and operating cost efficiencies reduce, there is never a better time to innovate – so it’s timely to share experience and learning and pass knowledge on.

Energy and the Scottish referendum – do we know the result yet?

Ian Marchant

Ian Marchant FEI, President

Energy has always played a key role in the Scottish economy. In the 18th and 19th centuries it was coal; in the 1950s and 60s it was hydroelectricity and power from the glens; from the 1970s onwards North Sea oil has loomed large and made Aberdeen one of the world’s premier energy cities. Finally, in this century, Scotland has played a leading role in the low carbon revolution both in renewables and in carbon capture and storage.

With this rich heritage, it is no surprise that energy became one of the key discussion topics leading up to the September referendum. The energy issues raised have, however, not been really settled by the vote and this would have been the case regardless of the outcome.

There are two issues worthy of comment. Firstly, there is the debate over the level of recoverable reserves in the North Sea. I have seen figures ranging from 15bn barrels to 24bn. I suspect that even the bottom end will require really significant investment and technological advances but we have to get the regulatory and fiscal regimes right and stable to even get close to this range. There was momentum behind implementing the recommendations of the Wood Report earlier this year and I hope that momentum is regained now the big constitutional issue is behind us.

Secondly, the low carbon revolution I mentioned earlier is stuttering. There are many causes behind this but political uncertainty is certainly one of the biggest. The referendum created a large shadow over investment and innovation in the renewable industry in Scotland and I sincerely hope that good progress can be made before the UK general election creates its own shadow. We need to see projects, both large and smaller community-owned ones, reach financial close and we need to see the climate of innovation and entrepreneurship return to both the corporate and education sectors.

The Scottish referendum has opened the Pandora’s box that is the UK constitution and, as the debate about things like devo max and home rule continue, I am sure energy issues will emerge that have to be sorted. These need to be addressed quickly, clearly and rationally if we are to avoid further delay and disruption or, to use a good Scottish word, a guddle*, in the two halves of the energy industry that are so important to the Scottish economy.

*guddle [verb. to catch fish by groping with the hands , as under stones or along a riverbank; noun. a muddled affair; mix-up; confusion.]