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Oil & gas sector schotland

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  • 1. Oil & Gas Sector in Scotland David Rennie Oil & Gas, Thermal Generation & CCS Director 25 September 2012
  • 2. Scottish Enterprise• Scotland‟s main economic development agency• Work with Scotland‟s key industries• Work in partnership with industry, further education, local authorities and public sector bodies• Investing around £300 million in economic development
  • 3. UKCS History• Gas production started SNS in late 1960s – 50 metres• Oil production started NNS in mid-1970s – 200 metres• West of Shetland started late 1990s – approx 500 metres• Atlantic margin – between1500 – 5000 metres
  • 4. Economic Contribution Supports up to 440,000 Oil and Gas provides 75% of UK jobs – (c. 45% in the UK’s primary energy Scotland) The largest single industry ~ £ 6 billion UK balance of “value adding” trade contribution in 2011 contributor to the UK economy Currently providing 68% ~ £ 11.2 billion in direct of the UK’s oil and taxation 58% of its gas needs
  • 5. UKCS Production UKCS Oil & Gas Production • UK is 19th largest oil and gas producer • Produced 1.8 million boe per day in 2011 • Decline in production offset by growth in oil price Source: DECC
  • 6. UKCS Reserves UKCS Reserves and Resources • Up to 24 billion boe still to be recovered • Technology and investment key to unlocking potential
  • 7. UKCS ExpenditureUKCS Overall Expenditure (2012-16) • Total UKCS expenditure increased from £12.4 billion in 2007 to £17 billion in 2011 • £90.5 billion total forecast expenditure over five years 2012-16 • Annual average expenditure £18 billion
  • 8. Current challengesSome challenges of a mature UK oil and gas industry • Control CAPEX and OPEX - massive increase in costs • Ageing assets - maintain integrity of infrastructure - high cost of Operation and Maintenance • Sustain production levels – technology • Create indigenous decommissioning supply chain capability – uncertainty of timing
  • 9. Strategy Themes • Focus on maximising recovery through: – Strengthening our supply chain expertise; – Applying Innovation; – Utilising our skills; – And increasing internationalisation. • Industry led – through Industry Leadership Group
  • 10. Opportunity driven • Around £90bn of investment in the North Sea in the next 5 years • About 40% resources by volume still to extract – more in value terms (up to £1.5 trillion) • Current recovery levels average 40% - for each percentage point rise in recovery: £89bn in economic value £22bn in taxation • Oil and Gas will still meet 70% of UK primary energy needs by 2020 – even if renewable targets are met • Industry supports about 200,000 jobs in Scotland – but needs 10,000 new people over the next 5 years
  • 11. Supply Chain - Domestic What is planned? • Additional account management resource - primarily in Aberdeen • Engage with additional 100 companies over next 3 years – SE currently work with around 175 O&G companies in Aberdeen (230 in Scotland) • Working with trade associations on how to make that happen – identify the best companies • Increase levels of „prospecting‟ within SE • More market research – spends and trends – opportunities in shale gas • Increase engagement with larger companies
  • 12. Supply Chain - International What is planned? • Focus on priority markets (two thirds of current sales) • Increased SDI resource – increase international activity and exports • Plans for Brazil, Norway and West Africa • Building on Calgary and Middle East • All these will have oil and gas focus • Increased SDI resource based in Scotland • Market Intelligence e.g. a guide on “How to do Business in Brazil” • Market research into Middle East Gas opportunities for Scottish firms • Building on existing SDI activity – learning missions and exhibitions • Work with larger companies re inward investment opportunities
  • 13. International Activity
  • 14. InnovationWhat is planned? • Focus on technologies to enhance recovery • £10m over 3 years - series of innovation calls around – Enhanced Oil Recovery (EOR) – Subsea – Asset integrity • Working with the Industry Technology Facilitator (ITF) to deliver • Significant interest from Industry in this proposal - we can leverage more including field trials and technical support
  • 15. Scotland a major region forcentres of excellence • Shell E&P – Centre of Upstream Technology Excellence & Diving Excellence • Total E&P – Centre of Excellence in Geoscience • Expro – Centre of Excellence in Design Engineering • ChevTex – Subsea Engineering R&D function • FMC Technologies – Technology Development Centre • Aker Solutions – manufacturing facility for intelligent control systems and valves • AMEC Energy Service – drive their global energy activities from Aberdeen • Technip – drive European and N African subsea engineering business • Health & Safety training - worldwide reputation, North Sea is international benchmark • First class hyperbaric centre
  • 16. New OpportunitiesWhat is planned? • Increase supply chain knowledge of new opportunities e.g. • Oil & Gas Decommissioning • Carbon Capture & Storage • Nuclear Decommissioning & New Build outwith Scotland • Offshore Renewables • Workshops and events working with trade bodies • Promote oil and gas capability to these new sectors • Encourage cross learning – e.g. “A Guide to Offshore Wind and Oil & Gas Capability
  • 17. Decommissioning Forecast Decommissioning • Total £3.7 billion forecast Expenditure expenditure to 2016 • Rising from £490 million in 2012 to £1,050 million in 2016 • Brent field (Shell) will account for majority of UKCS expenditure over next few years
  • 18. SkillsWhat is planned? • Skills issues responsibility driven by others – SDS, OPITO and Trade Bodies • But ILG has a role to play – Facilitating discussions – Sharing data and evidence – Using account management system to feed back issues and shortages • Probably the number one issue right now • Long-term need to increase the size of the talent pool • Messaging to schools and universities about the long-term nature of the industry
  • 19. Promotion and PlaceWhat is planned?• Work with others who have the main responsibilities here • ASCEF • Local Authorities • Scottish Govt• Ensure that views regarding local infrastructure are fed via the ILG into the above bodies• Ensure that local and national policy makers are aware of the issues which impact upon the sector• Consider possible sources of investment for infrastructure with a focus on business space and transport
  • 20. Supply Chain: Industry Bodies
  • 21. Next steps • Action Plans and sub-groups • Some already underway – skills and internationalisation • Innovation call starting soon • Marketing campaign • Industry & Parliamentary events
  • 22. THANK YOU
  • 23. Existing enabling technologies Major technology contributors to sustaining exploration & production in the UKCS • Improved seismic imaging (3D and 4D) • Under-balance drilling • Hydraulic fracture stimulation • Horizontal wells
  • 24. Existing enabling technologies (2)
  • 25. Examples of future technologyrequirements Exploration & production tools of the future: • Improved reservoir imaging – always! • Cost-effective drilling • e-field real-time operations management • Tail-end production and field rejuvenation • Handling problematic reservoir fluids/heavy oil • Subsea processing and transport