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T H E M A G A Z I N E F O R T H E U K O F F S H O R E O I L A N D G A S I N D U S T R Y
attract investment in the future and the
industry’s $15/boe target certainly takes
us in the right direction.
Q: Does this mean more bad news
on the jobs front?
A:
Over the course of 2015, industry efforts
saw total expenditure fall by almost
£5 billion. This restructuring has been
painful for many, especially those tens
of thousands who are estimated to have
lost their jobs. The immediate desire for
cash flow and ongoing transformational
change mean that more efficiency gains
and expenditure reductions are inevitable
during the course of 2016, making further
contraction in employment likely. We’re
looking to provide an update this summer
on the number of jobs supported by
the industry.
Q: What will happen to production
if little new investment is approved?
A:
We know that strong and sustained
investment does translate into higher
production. The
Activity Survey
identified
– and the Oil and Gas Authority has since
confirmed – a ten per cent increase in
production last year, which is a direct
result of significant annual capital
expenditure in the five years to 2014.
Unfortunately, the converse is also true.
There is a real risk that fields due to cease
production in the next five years will
simply not be replaced by new projects,
and, as a result, domestic oil and gas
production is forecast to decline sharply
beyond the end of this decade, though the
Chancellor’s announcements on 16 March
should help pave the way to address this.
Q: Is the low oil price speeding up
decommissioning?
A:
Industry is determined to avoid
premature decommissioning and to retain
the infrastructure required to maximise
economic recovery. However, the
Activity
Survey
does show that the number of fields
expected to stop producing between 2015
and 2020 has risen by one fifth over the
past year to just over 100.
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