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View Full Version : Oil : The denial stops now



rob murray
18-Jun-15, 10:29
In yesterdays oil conference in Aberdeen, industry itself has accepted that oil barrel prices will stablise at 60 / 65 dollars and the days of 100 dollars + per barrel are gone, talks are now on how companies can operate / extract hydrocarbaons at this rate and still be profitable, consensus is now focusing ( as it has these past 6 months in the more pro active companies ) on idenitifying and achieveing effeciencies in the processes involved ie minimising non productive time. Sturgeons contribution, apart from digging up past UK government oil tax blunders ( now rectified ) was to "ask" the UK government to provide tax incentives / credits to boost oil and gas exploration. ( indutry has no issues with UK gov over oil ) However this is all well and good,but until the industry can make profits on 60 dollars a barrel ( and that wont happen over night ) it doesnt really matter if incentives for exploration are provided, as long as high extraction costs prevail. Tantamount to throwing good money after bad

Roy Mcgrgegor, Global Energy, was on the radio last night interviewed at the conference, he said that denial has to stop and the reality must be accepted

So if oil is going to continue at 60 / 65 dollars a barrel, as accepted by all serious industry players / advisers / economists etc then does this not blow SNP "financial modelling" out the water ? ( or are we to seriously believe that oil is an added bonus to the economy? ) : also if Scotland was independant what service cuts would be made to provide the exploration tax credits / funding, could we give funding shortfalls, actually fund explorations ?

Anyway sanity is prevailing, the SNP can no longer trot out nonsensical financial proposals based on high oil prices....they maybe adapt at titling at windmills but when the entire industry speaks with one voice, and accept the reality, any political party that challenges this consensus has a deep denial problem.

See http://www.bbc.co.uk/news/uk-scotland-33170553 Can the North Sea oil industry work on $60 a barrel?

Kenn
18-Jun-15, 12:44
Good reasoning, backed up with facts.
My daughter is living and working in an oil rich state but they are having to look at ways of balancing the books having accepted that the price of oil may never recover to the silly heights of the last few years,
I read today that wind farm subsidies may now be withdrawn by 2016 so looks like another sacred cow is about to bite the dust.

rob murray
18-Jun-15, 13:08
Thanks Liz....yes since the downturn many companies in Aberdeen slashed "shore based jobs" office based jobs which at over 100 dollars a barrel, had spiralled so this was the first port of call, more informed companies though, early doors ( Jan / Feb 2015 ) were having what the industry called "hackathons" ie setting targets of cost reductions and looking at waste and ineffeciencies within off shore structures, this has led to "day rate " consultancy rates being lowered as well as more effecient project management, basically 100 dollars plus masked an underlying problem of over manning and ineffeciency, which come the new reality...had to be addressed...no avoidnace or denial ....you cannot argue aginst the iron laws of economics : wind farm subsidies..see this link http://www.telegraph.co.uk/news/earth/energy/windpower/10122850/True-cost-of-Britains-wind-farm-industry-revealed.html : seems that they are not labour intensive ( ie not big employers ) and are very over subsidised, however wave / tidal if handled correctly could genuinely be big employers,

BetterTogether
18-Jun-15, 13:40
You may find this article an interesting read.

http://www.thinkscotland.org/thinkpolitics/articles.html?read_full=11588&article=www.thinkscotland.org


I start to see that you are a big fan of the potential for wave /tidal power Rob my primary concern is would go down the same route as Wind power with huge subsidies thrown at it but little really returned. It wasn't until I read the article with link provided that I'd heard of Blue Carbon, I should imagine some of the same issues would apply to building of wave /tidal units. I recall reading somewhere quite some time ago that the building of hydro electri plants and the huge dams and reservoirs have altered the earths spin somehow due to the amount of water stored, but that's off the top my head I can't provide empirical proof no doubt a search would provide it.

rob murray
18-Jun-15, 13:42
Wind fram subsidies : Energy and ClimateChange Secretary Amber Rudd: "We are driving forward our commitment to endnew onshore wind subsidies and give local communities the final say over anynew wind farms." The Scottish Conservative energy spokesman said the movewas about the "Conservativegovernment standing up for communities that the central belt SNP couldn't careless about."
He added: "Thelatest figures show that with all the wind projects already constructed, thoseunder construction or given consent we have already met the SNPs 100% targetfor renewable electricity. "What Scotland now urgently needs is a balanced energy policy with wind as partof the mix, but only one component rather than being the primary focus."
The move was part of a manifestocommitment by the Conservative Party ahead of the general election in May socannot be called unexpected. Its great to see the UK government realising that weneed a balanced energy policy and be prepared to drop the reliance on highly subsidised, lowjob creating, wind farms

rob murray
18-Jun-15, 13:45
You may find this article an interesting read.http://www.thinkscotland.org/thinkpolitics/articles.html?read_full=11588&article=www.thinkscotland.org

A good read.....I liked...."Even in the unlikely event that climate change targets are achieved with wind power, it will be a Pyrrhic victory. The Government gambled with onshore wind energy and we lost. They should not attempt to pick winners. We must find what is right for Scotland and until then, a greener future must be built on the strong foundations of energy conservation and energy efficiency.
Oscar Wilde famously said that 'experience is one thing you can't get for nothing'. Scotland has experienced the unrelenting imposition of wind power and it most certainly did not come for nothing. But renewable energy companies are the only ones who learnt from the onshore wind experiment. They learnt that vast sums of money can be acquired if the lucrative subsidy regimes are harvested before the anti-wind intelligencia is mobilised. They also recognised that the sound carries twice as far when someone else blows your horn and they are happy to sit by whilst misguided environmentalists fight their corner.
Green groupthink must never conquer common-sense. Where is the value in destroying some of our most important and fragile ecosystems in order to build wind turbines that will struggle to last 20 years? The lesson for everyone is that the green lobby does not have the monopoly on environmental protection. You do not need a Greenpeace membership card to care for the environment. No single person owns the environment. Each and every one of us has a duty to protect it because we do not inherit the land, or seas, from our ancestors; we merely borrow them from our children.

BetterTogether
18-Jun-15, 13:48
I was watching Parliament today on TV today was good to see the Conservatives making an issue of how onshore wind farms are ruining the beauty of this country, this has to also be something taken into account. They may well suit the political purposes of the SNP when blowing their own trumpet but how many people in Caithness have directly benefitted from jobs created by Wind Farms compared to how we are all blighted by seeing them scattered all over the countryside.

rob murray
18-Jun-15, 14:01
I was watching Parliament today on TV today was good to see the Conservatives making an issue of how onshore wind farms are ruining the beauty of this country, this has to also be something taken into account. They may well suit the political purposes of the SNP when blowing their own trumpet but how many people in Caithness have directly benefitted from jobs created by Wind Farms compared to how we are all blighted by seeing them scattered all over the countryside.

A closer look at wind turbines will illustrate that they are mostly assembled from parts imported from other countires, assembled and sold on, so not a lot of direct manufacturing jobs involved, and yes, across Scotland not a hell of a lot of direct jobs have been created : have a look at this

http://www.windustry.org/resources/what-types-jobs-exist-wind-energy-today

Manufacturing Sector

Turbine Production ( assembled from imported parts )
Tower Production as above
Gearbox and Component Parts a mjix of imports and UK inputs
Service Sector

Site Prospecting.....professional support service
Wind Farm Development.....professional support service
Consultation....professional support service
Construction (on-site) one off erection projects
Transportation an indirect job retainer
Environmental Impact Assessment.professional support service
Legal Assistance...professional support service
Financing..professional support service
Turbine Technician (Operation and Maintenance)....how many ?
Wind Energy Forecasting and Resource Assessment...professional support service
So not a lot of direct jobs..loads of professional services leaching of the core though !

BetterTogether
18-Jun-15, 14:20
It's funny but not when you consider the fine engineering capibility Scotland has and the amount of unemployment that we are unable to manufacture the wind turbines themselves instead of importing them.

The same can go for ferries and ships we now have to purchase elsewhere due to EU competition laws instead of manufacturing and servicing them ourselves.

Yes might cost a bit more to manufacture and set up in the first place but the job creation, wealth creation and ongoing servicing may well offset those costs and long term be cheaper to do in our own country.

rob murray
18-Jun-15, 14:30
It's funny but not when you consider the fine engineering capibility Scotland has and the amount of unemployment that we are unable to manufacture the wind turbines themselves instead of importing them. The same can go for ferries and ships we now have to purchase elsewhere due to EU competition laws instead of manufacturing and servicing them ourselves. Yes might cost a bit more to manufacture and set up in the first place but the job creation, wealth creation and ongoing servicing may well offset those costs and long term be cheaper to do in our own country.

Ive been at a major suppliers base in Glasgow, where basically components are sourced world wide, stored and assembled on demand, in a format that leads to quick on site installs, theres no engineering skills really, more low level "performing manufacturing operations" assembely type work. As a friend of yours once put it " you cant buck the market".......if Scottish firms could manufacture tower components economically then Im sure they would, but you cannot compete against the likes of China. EU ...competition policy.....thats the way it goes.....Im a euro sceptic whose preference is to be in the EU than out of it, so hopefully we may see some watering down of competition laws...but I doubt it. We are straying off topic now...ie from Oil....there can be no more denying / FFA / indepence impact into EU...suggest you open a EU thread ie better in or out ?

BetterTogether
18-Jun-15, 14:36
Fair point and duly noted

BetterTogether
18-Jun-15, 15:54
I did read a piece on Wingsoverscotland about the decommissioning of oil rigs could be a booming business for Scotland.

That if Scotland hadn't been betrayed and the rig in question sent down to Hartlepool instead.

http://wingsoverscotland.com/oil-wells-that-end-well/

On one hand we have the SNP saying Oil is a bonus for Scotland, on the other hand we have their followers saying decommissioning the oil field is a bonus for Scotland that's been denied them.

The mildly rabid comments section is good fun to read there are almost as many conspiracy theorists following the site, as the history channel has blaming everything on aliens.

davth
18-Jun-15, 16:11
I did read a piece on Wingsoverscotland about the decommissioning of oil rigs could be a booming business for Scotland.

That if Scotland hadn't been betrayed and the rig in question sent down to Hartlepool instead.

http://wingsoverscotland.com/oil-wells-that-end-well/

On one hand we have the SNP saying Oil is a bonus for Scotland, on the other hand we have their followers saying decommissioning the oil field is a bonus for Scotland that's been denied them.

The mildly rabid comments section is good fun to read there are almost as many conspiracy theorists following the site, as the history channel has blaming everything on aliens.

The Pioneering Spirit makes light work of removing a jacket and topside from the ocean.
Where it can be picked apart at any scrapyard in the world.

rob murray
18-Jun-15, 16:28
The Pioneering Spirit makes light work of removing a jacket and topside from the ocean.
Where it can be picked apart at any scrapyard in the world.

True, but see http://www.veolia.com/en/veolia-group/media/press-releases/veolia-wins-norwegian-oil-platform-decommissioning-project a UK subsidiary company of Veolia, picking up decommissioning work, but in Norwegain sector of north sea

BetterTogether
18-Jun-15, 17:03
Now would there be any reason we have no deep sea quay in Scotland capable of decommissioning the rigs or are they all held over for cruise liners etc. I'd of thought that would be an ideal business to be developed for Scottish industry.

davth
18-Jun-15, 17:07
Veolia are really a French outfit however with the actual dismantling being carried out in Norway.
Not much meat on the bone for the UK there.

BetterTogether
18-Jun-15, 17:13
Veolia are really a French outfit however with the actual dismantling being carried out in Norway.Not much meat on the bone for the UK there.That's the problem with big companies it's not where they operate from but where they are actually based and that can vary dependant on how suitable taxation systems are. But that is another topic all together.

Seems the Scottish oil Industry is almost entirely reserved to pumping it out of the ground by multinational companies and paying tax to the relevant government. Employing staff to man the rigs and some offices onshore.

davth
18-Jun-15, 17:30
That's the problem with big companies it's not where they operate from but where they are actually based and that can vary dependant on how suitable taxation systems are. But that is another topic all together.

Seems the Scottish oil Industry is almost entirely reserved to pumping it out of the ground by multinational companies and paying tax to the relevant government. Employing staff to man the rigs and some offices onshore.

As with most other countries

BetterTogether
18-Jun-15, 20:05
Well this is what happens if you base your economy on oil.

We were told during the referendum debate that Norway was the model to follow. Well this is what happens when it goes wrong.


https://www.energyvoice.com/oilandgas/80362/norway-cuts-rate-to-record-low-as-oil-slump-rears-recession-risk/

Another near miss avoided!

rob murray
19-Jun-15, 09:11
Well this is what happens if you base your economy on oil.

We were told during the referendum debate that Norway was the model to follow. Well this is what happens when it goes wrong.


https://www.energyvoice.com/oilandgas/80362/norway-cuts-rate-to-record-low-as-oil-slump-rears-recession-risk/

Another near miss avoided!

The SNP keep trumpeting on about Norway....and their oil fund....but thats all hindsight.....they, Norwegians implemented their Oil policies years ago we cannot deal in hindisght ie what we could have done..we dont have a tardis and cannnot go back in time...we are where we are at 60 / 65 dollars a barrel so the idea of " SCotlands Oil / having an oil fund" is not on it........ cannot be given oil prices....and Norway....costs of living are enormous

rob murray
19-Jun-15, 11:31
Veolia are really a French outfit however with the actual dismantling being carried out in Norway.
Not much meat on the bone for the UK there.

Thanks I didnt know who Veolia were

davth
19-Jun-15, 11:56
Thanks I didnt know who Veolia were

No problem, always happy to help

rob murray
19-Jun-15, 14:01
No problem, always happy to help

Good to get "adult" help on here.....I take it youve an interest in oil, whats your take on Oil price impact ?

davth
19-Jun-15, 15:19
Good to get "adult" help on here.....I take it youve an interest in oil, whats your take on Oil price impact ?

On a personal level, concerned.
Aberdeen is in a bad way at the minute.
A trigger point for me is if we start to see oil companies decommissioning ahead of plan.
But there is a lot of mature assets out there which are "near end of life" and would be decommissioned regardless.
If they start knocking off assets that have a decent production rate then we are on to plums.

rob murray
19-Jun-15, 15:47
On a personal level, concerned.
Aberdeen is in a bad way at the minute.
A trigger point for me is if we start to see oil companies decommissioning ahead of plan.
But there is a lot of mature assets out there which are "near end of life" and would be decommissioned regardless.
If they start knocking off assets that have a decent production rate then we are on to plums.

Good point made in killing off productive assets being the big barometer...yep Aberdeen and the travel to work area ( Fraserburgh - Montrose / Forfar ) is battered, to these folk oil was not a bonus as some put it, it was there lives, many well paid shore jobs are gone now and gone for good with the knock on effect hitting businesses, heard the term "hackathon" ?? ....management speak for cost reductions, one leading player ( cant name names ) had a hackathon to hack a million quid of costs out of their processes for 100 days.......I kid you not !.

davth
19-Jun-15, 16:08
Good point made in killing off productive assets being the big barometer...yep Aberdeen and the travel to work area ( Fraserburgh - Montrose / Forfar ) is battered, to these folk oil was not a bonus as some put it, it was there lives, many well paid shore jobs are gone now and gone for good with the knock on effect hitting businesses, heard the term "hackathon" ?? ....management speak for cost reductions, one leading player ( cant name names ) had a hackathon to hack a million quid of costs out of their processes for 100 days.......I kid you not !.

Many folk have little sympathy for the laid off workforce.
"they have had it good", "have been overpaid for too long"
But consider this, many folk (not I) have relocated to Aberdeen to work there.
Your average 3 bed semi costs 3 times the price of one in Caithness, many of these folks are now in jeopardy financially because of this.
Big players in the city are playing dirty tricks i.e. moving jobs to the other end of the country, and telling workers take it or leave!
Offering staff alternate jobs but insisting on them resigning first so as to "reset" the years of service clock.
Changing working rotas from 2 on 3 off to 3 on 3 off with no recompense.

But on the other hand, if they really are making losses then things need to change to preserve the future of the industry.

rob murray
19-Jun-15, 16:28
Many folk have little sympathy for the laid off workforce.
"they have had it good", "have been overpaid for too long"
But consider this, many folk (not I) have relocated to Aberdeen to work there.
Your average 3 bed semi costs 3 times the price of one in Caithness, many of these folks are now in jeopardy financially because of this.
Big players in the city are playing dirty tricks i.e. moving jobs to the other end of the country, and telling workers take it or leave!
Offering staff alternate jobs but insisting on them resigning first so as to "reset" the years of service clock.
Changing working rotas from 2 on 3 off to 3 on 3 off with no recompense.

But on the other hand, if they really are making losses then things need to change to preserve the future of the industry.

Well put....youd have to be one sad individual to go down the "theyve had it too good for too long road eh ? In one company that I am involved with fathers / wifes / children all work there ie on shore suport jobs...so when the red letter day came the efect was as you'd expect massive. Big wages were paid out in the good days of high dollar barrel prices, companies basically "out bidding" each other and ratchiting wages up, now as you say all the dirty tricks are being pulled. The oil companies themselves operated ineffeciently and got fat and complacent so now in the new reality ie a celing of 60 / 65 dollars, they have to get the costs down to make profits.