• 2 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 3 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 3 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 3 days Schlumberger Warns Of Moderating Investment In North America
  • 3 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 3 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 3 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 3 days New Video Game Targets Oil Infrastructure
  • 3 days Shell Restarts Bonny Light Exports
  • 3 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 3 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 3 days British Utility Companies Brace For Major Reforms
  • 4 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 4 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 4 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 4 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 4 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 4 days Rosneft Signs $400M Deal With Kurdistan
  • 4 days Kinder Morgan Warns About Trans Mountain Delays
  • 4 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 4 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 5 days Russia, Saudis Team Up To Boost Fracking Tech
  • 5 days Conflicting News Spurs Doubt On Aramco IPO
  • 5 days Exxon Starts Production At New Refinery In Texas
  • 5 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 6 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 6 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 6 days China To Take 5% Of Rosneft’s Output In New Deal
  • 6 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 6 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 6 days VW Fails To Secure Critical Commodity For EVs
  • 6 days Enbridge Pipeline Expansion Finally Approved
  • 6 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 6 days OPEC Oil Deal Compliance Falls To 86%
  • 7 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 7 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 7 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 7 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 7 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 7 days Aramco Says No Plans To Shelve IPO
Alt Text

With A World Awash In Oil, Kazakhstan Faces Fuel Crisis

Kazakhstan is struggling with a…

Alt Text

Russia And China Continue To Boost Oil Ties

The Russia-China alliance is strengthening…

Alt Text

Why Petrol Powered Cars Aren’t Going Anywhere

Internal combustion engines are still…

Chris Smith

Chris Smith

Chris Smith is a Glasgow based writer and blogger. He writes extensively about finance on his website, Spend It Like Beckham. His articles about modern…

More Info

Can Scotland Save Its Oil Industry?

Can Scotland Save Its Oil Industry?

The Scottish city of Aberdeen is built upon the successes of the oil and gas industry. A walk round the city centre reveals the level of investment, with every street festooned with luxury hotels, classy restaurants, and even a golf course, courtesy of Donald Trump.

Recently, however, there has been an increasing sense of uncertainty in ‘the granite city’. At the start of the year, it was reported that the price of crude had slumped to a twelve-year low with the likes of Shell warning of a 50 percent cut in profits. Across the city, oil workers have been facing redundancy from a variety of companies including Petrofac, Gulfmark, ConocoPhillips and Sparrows.

There are a number of widely reported factors that have contributed to the global drop in the price of crude oil including China’s continued struggle with its economy, continued unrest within the oil producing Middle East, U.S. oil producers adopting fracking techniques in an effort to gain a degree of self-sufficiency, as well as Saudi Arabia’s reluctance to reduce its levels of oil production. This last factor may be resolved, however ahead of April’s meeting of oil producers in Doha. Either way, the Aberdeen economy has faced the consequences, with reports of the amount of people claiming out-of-work benefits rising by as much as 72 percent. Related: Oil Prices Struggle To Move Beyond $40

With Aberdeen beginning to look like a less tenable location for oil and gas production, many industry leaders are starting exploring other markets, such as North Africa. James Crawford, MD of Wood Group PSN has specifically called out Mozambique, Kenya, and Tanzania as ‘fantastic opportunities’ over the Scottish Northeast for oil production.

Naturally, the Scottish Government is scrambling to do what it can to quell the diversion of investment into Aberdeen. During the 2014 campaign for independence, North Sea oil and gas was identified by the Scottish National Party as a potential cornerstone in the economy of an independent Scotland. Now that the SNP hold a controlling majority within the Scottish parliament, the politicians are keen to salvage Aberdeen’s oil and gas, especially as the party is drawing up plans to hold a second referendum on independence in the near future. The future of Scotland’s oil industry will, once again, be a key factor in this debate.

The road ahead for Aberdeen perhaps isn’t quite as bleak as is suggested in the media, however. Scottish Banks are still keen to offer investment to small businesses within the offshore sector. Other companies have sought to take advantage of the unrest in the Northeast, with the likes of Cluff Natural Resources looking to buy stakes in three North Sea licenses for the paltry sum of £3. Despite the turmoil experienced by the big names like Shell, it’s clear that there is a right-place-at-the-right-time attitude in the Northeast. Related: Russia Under Threat From U.S. Natural Gas

Although the physical extraction of oil and gas from the North Sea oil fields is at risk, there is still talent and expertise in Scotland that has the potential to grow. Take Rubberatkins, for example. This Aberdeen-based company is an industry leader through its innovative use of rubber sealing solutions. Whether their sealant products are being used a few miles away from their head office in the North Sea, or the deserts of Saudi Arabia, there is still plenty of opportunity for this small business to grow. All they have to do is respond to where the market is most geographically viable.

Having innovative companies within the industry is one thing, but if Scotland and the UK are wanting to remain a significant force in terms of global oil and gas production, perhaps a view that is blinkered towards the North Sea isn’t the most effective one. Shale gas explorers such as Cuadrilla, Coastal Oil and Gas, and IGas have been looking to follow the U.S. model and use fracking techniques within the UK. There has been some loud opposition from environmental groups towards this, but a number of viable sites have been identified across the UK. Related: The Current Oil Price Rally Is Reaching Its Limits

Another approach has been geared towards onshore drilling. In June 2015, UK Oil and Gas estimated that there were 271 million barrels of oil per square mile under The Weald, an area close to Gatwick, South of London. As recently as Monday, it was reported that a vertical well nick-named the Gatwick Gusher was achieving North Sea levels of oil flow, which appears to be promising when it comes to sustaining oil production in the UK.

So what can we take away from these changes that are developing within the UK oil and gas industry? First, investment is leaving Aberdeen and the Northeast of Scotland. Many of the multinational drilling companies that work out of Aberdeen are seeking to relocate in markets that offer more opportunity.

Second, the smaller, supportive businesses still have a market to work with, in terms of seeking business from a greater diversity of sources. And finally, if the UK as a whole wants to retain its place at the top table of oil producing nations, it has to look beyond the North Sea for its gas and oil supplies.

By Chris Smith for Oilprice.com

More Top Reads From Oilprice.com:

Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News