David Young
London Editor
OGJ Online
The oil industry has had a truly global impact, but it has also had a profound effect on many nations and their economies. Its arrival changes expectations and places demands on society.
Scotland is a case in point. By the start of the last century it was already a major center for heavy engineering. In the 1950s investments by US companies led to the development of an electronic industry.
Scott Urban, BP PLC group vice-president, elaborated recently on how the oil industry is both imposing demands on Scotland and adding to its success.
He said, "This 'Scottish' part of the business alone accounts for nearly a quarter of BP's global oil and gas production, so you can be sure that Aberdeen and Scotland are never far from my mind.
"I also understand clearly what it means for Scotland to have a successful and active oil and gas industry. Earlier this year, we published the latest independent assessment of BP's economic impact in Scotland. The report estimated that BP supports 50,000 jobs directly and indirectly in Scotland and that our upstream and downstream activities generate £1.4 billion in income for Scottish households every year."
But success brings problems, he admitted. "One is the industry's future skills needs. Some are forecasting a skills crisis. Many doubt the industry's ability to attract the next generation we need both at technician and professional level. It's a very serious issue for the industry. Fifty-eight percent of BP's offshore staff [working] on the UK continental shelf is aged over 40, with 18% over 50, and the onshore staff profile is very similar.
"So we know that attracting more young people is vital. The difficult part is how to do that. We want and need the best but do they need us? How do we compete with the apparent excitement offered by other high-tech industries?
"We have to listen to what people say about our industry: particularly the people who do still want to come and work for us and those already working for us. They want to know whether they will be allowed to influence the values and future direction of the industry -- where we stand on issues such as sustainable development, on renewable energy and social investment, on diversity and equal opportunities. And they need to know that they will be given the space and support to be creative and innovative and that our industry is open to new ideas.
"I believe our industry does offer all of these opportunities, but that we are failing to get that message across as powerfully and widely as we need to. There are three key areas where we have to do more.
"First, the industry leadership here in the North Sea needs to put even more effort into telling the 'North Sea Future' story with more positive and upbeat language -- glass half full rather than glass half empty, high tech rather than dull tech.
"Second, we need to put more effort into engaging with young people, reaching out to the next generation, and explaining what we do and where we are going.
"And finally we need to switch from being defensive about what our industry stands for to telling people what our contribution really is: Providing heat, light, and mobility; leading change; and being a force for progress in everything we do."
He suggested that looking at the strides the industry has made in the UKCS over the last 10 years, it has developed well beyond anything that could have been foreseen.
"There are many reasons for this unprecedented performance, including innovations in the fiscal scene, but key to the success then and now has been the use of technology. Technology and innovation are at the heart of many projects under development or about to be developed. Technology to help us locate, access, and produce more of the oil in mature fields and develop new reserves.
"But projects beyond our traditional areas of expertise are also important. Like our investment in fiber optics linking Scotland with Norway via Forties and some of our other offshore fields in the central North Sea.
"It represents new digital-age technology for our North Sea industry but one which brings offshore communications into the 21st century and in line with the best in other industries. Almost unlimited bandwidth will allow us to apply a range of technologies to enhance production, and improve efficiency and safety. And the new link gives Scotland access to a network connecting through London and Norway to the rest of the world.
"I'm pleased that this new service is about to open for business. Initially, we expect the main customers to be North Sea operators and contractors. By the end of this month (October), Forties field will have completed the transition from satellite communications to fiber optics.
"I'm certain that this investment will also generate more ideas and more business for Scotland beyond the oil industry. Lack of bandwidth availability and high costs have been identified by Scottish Enterprise as real barriers to economic development. This new infrastructure begins to put that right."
There recently has been a debate in Scotland around the access to opportunities for the smaller, independent operators. An impression has been created that the larger operators are only interested in big projects and that they are sitting on a host of small, undeveloped discoveries that should be handed over to the independents who have the will, technology, and creativity to make them happen.
Urban said, "The reality is quite different. Take the untapped potential issue. Of the 85 undeveloped discoveries that BP had on its books post the Atlantic Richfield Corp. acquisition at the beginning of last year, 44 have been exited and sold to a variety of companies, 15 are in action, and 10 have been sanctioned or are nearing sanction. Six are still being considered for our satellite accelerator program and 10 are still under review.
"Of course many of these will be subsea developments tied back to existing infrastructure. But the key point is that two-thirds of the gross reserves in these 85 potential developments are currently being worked on -- some 800 million bbl.
"So BP does have the will, technology, and ability to develop small fields, just as we have a great interest in applying technology to profitably extend the life of mature fields. Some of our independent operators have been tremendously successful in small pool development and mature field operation, and I congratulate them. I hope that they will continue to invest here and that BP can continue to support access to the North Sea for smaller companies, as we have done in the past. So I believe there is room for all in making the North Sea globally competitive.
"But our priority is to sustain a top performing oil and gas business here in Scotland for many more years."
Urban said that lessons learned about people in the Scottish industry can just as easily be applied to people in other oil provinces, just as technical lessons learned are broadcast to a wider audience.
Contact David Young at [email protected]
