Aberdeen, Scotland – It’s easy to see how important oil is to this venerable port city on the northeastern coast of Scotland. Exit the door of the small international airport and you are thrashed across the street by the roar of helicopters ferrying crews back and forth to oil platforms scattered in the North Sea.
Drive into town and you’ll pass through huge office parks with oil company logos, home to some 71,000 engineers, geologists, drillers and others in Scotland who work in the oil and gas industry. Overall, industry accounts for an estimated 7 percent of Scotland’s economic output.
Yet Scotland’s oil and gas industry is in jeopardy.
Oil production from the British North Sea has been on a long, steady decline for two decades, and production last year was about one-third of its peak in 1999. Natural gas production in the region has also been falling – a problem in recent weeks. Gas prices are skyrocketing, causing a jump in utility bills. According to Oil & Gas UK, a trade group, jobs associated with the offshore oil industry have declined by about 40 percent over the past five years.
Once a mainstay of the Scottish economy and an important source of government funding, the oil and gas industry “is not a revenue generator once it is”, said Malcolm Forbes-Cable, vice president of energy consultant Wood Mackenzie.
In fact, the rising costs of shutting down and destroying thousands of wells and hundreds of platforms, recently an estimated 46 billion pounds ($68 billion) have begun to exceed their earning potential.
Then last month, under pressure from environmentalists, Scotland’s first minister – its top elected official – urged the UK government to reconsider licenses already granted for offshore oil fields still in the planning stages. The official, Nicola Sturgeon, asked British Prime Minister Boris Johnson Re-evaluation of projects “in the light” We are now facing the gravity of the climate emergency.”
The move sent shock waves to the industry as the approval of such licenses is usually a foregone conclusion. Mr Johnson has the final call, but oil officials say the blocking of new oil fields, effectively halting 18 developments and over £21 billion in planned investments over the next five years, is a death knell for the industry. Might be possible.
Ms Sturgeon’s main target is an oil field, known as Cambo, west of the Shetland Islands, considered the most promising resource in British waters. The majority owner, Sikar Point Energy, a private firm whose backers include asset management giant Blackstone, says it has already spent $190 million in the area and that it Will create 1,000 direct jobs. Climate protesters, arguing that urgent action is needed to address the warming climate, have made halting the Cambo project a rallying cry. (Mr Johnson previously said the government “cannot break contracts.”)
Mr Forbes-Cable said there was “a link going on” between Ms Sturgeon jobs and the investment that Cambo would produce and pacify the Scottish Green Party, which opposes oil drilling in the North Sea and which she supports as others. In his campaign for a referendum for Scottish independence.
The current reduction in natural gas prices in the UK and globally could strengthen the industry’s argument for continued growth. Despite declining North Sea production, Britain is still the second largest petroleum producer in Europe after Norway, a feature that may now seem more valuable than it was just a few months ago.
Ms Sturgeon and Mr Johnson also want to be seen as tackling climate change as Britain prepares to host COP26, a major UN climate conference, in Glasgow in November.
Questions about the future of the oil and gas industry in Scotland underscore trends that have been visible over the years. Last year, investment in British exploration and drilling fell to just £3.7 billion, the lowest in real terms since the early days of oil production in 1973, according to the industry group.
Finding new sources of well-paying new jobs will be difficult to find but vital to Scotland’s economic and social health, said Mary Spowage, director of the Fraser Allender Institute at the University of Strathclyde.
“We don’t want to repeat the mistakes of the 1980s,” he said, when the loss of heavy industry such as coal and steel in Britain led to increased homelessness and unemployment.
For many, the growth of renewable energy in Scotland, particularly its fleet of wind turbines along its coastline, may provide a way for the gradual replacement of oil and gas. Globally, ocean turbines still account for less than 1 percent of electricity generation, according to Hemi Bahar, an analyst at the International Energy Agency, but in 2020 the business attracted $29 billion in investments, which would go towards renewable energy. 8 percent of the global total.
and a pilot wind farm across from the fishing port of Peterhead, north of Aberdeen, represents a new frontier for the region.
Instead of sitting on the ocean floor, these turbines float, anchored by cables on top of tall vertical structures called spars. Because they float, they can be placed far out in the ocean, beyond a depth of about 200 feet which is considered a practical limit for most turbines.
Not only does this open up a wider expanse of ocean where machines can be placed, but it also allows them to take advantage of the strong and steady winds usually found far from land.
The $230 million wind farm off Peterhead, floating in some 300-foot-deep water, tops all British offshore wind farms in proportion to the energy it pumps to its theoretical capacity – about 54 percent. The reason for this is strong and steady wind.
“We can go deeper water, higher wind speeds,” said Ben Lawson, operations and maintenance manager of the wind farm, which is majority owned and operated by the Norwegian company Equinor. “How important the success of this project is, it should not be underestimated,” he said.
In fact, it opens the way for massive multi-billion dollar offshore wind farms off the coasts of places like California, Japan and France, where there are major markets for electricity but the waters are too deep for traditional offshore machines.
“These are all areas we are working on,” said Sonja Chirico Indrebo, vice president of floating wind at Equinor.
Aberdeen sees an opportunity. It is building a new £350 million port with special docksides designed to bear the heavy loads of turbine components as well as oil platforms brought in for decommissioning.
“Once in a lifetime, you get the opportunity to work at a new port,” said tasks manager Dave Meekham, surveying the 35-foot-high breakwater.
The thinking is that designing, building and operating floating structures will require skills similar to those required to build and manage offshore rigs and drilling platforms.
Jim McDonald, Principal and Vice Chancellor of the University of Strathclyde and Advisor to the Scottish Government, said: “If done properly and in collaboration between industry and government, this is going to create the next big industry for Scotland in the next 50 years. ” energy.
The Scottish government is also in the midst of selecting companies for new offshore wind leases that could lead to an estimated £30bn in investment.
All the major European oil giants are participating, including BP, Total, Equinor and Royal Dutch Shell. And some don’t shy away from telegraphing that a win for them will help them maintain payrolls in their Aberdeen offices that are otherwise under threat from the oil and gas decline. BP has said that if it finds the acreage of its choice, the company will position Aberdeen as the center of its growing offshore wind business, creating 120 jobs.
The dream is not only to build wind farms off the UK, but to develop the expertise to supply the world with wind equipment, as the Aberdeen field has done in the oil industry, where it is a world leader in underwater technology. Is.
Old Hands, however, warn that while oil and gas skills in floating wind turbines can be useful, businesses are also different.
Offshore work forces for turbines are too small, for example, because new technology means “everything is being automated,” said Alan McAskill, a former BP executive who recently completed a floating wind farm off Aberdeen. has done.
Paul de Leeuw, director of the Energy Transition Institute at Robert Gordon University in Aberdeen, said the energy industry could end up with more jobs at the end of the decade. But Scotland and Britain as a whole must prioritize the use of locally manufactured equipment (many components for the turbines lining Britain’s shores were built elsewhere) and ensure that the decline of oil and gas is so slow That companies will continue to invest enough to retain jobs.
“If you don’t do these things,” he said, “we could end up with fewer jobs than we do now.”