The oil and gas industry has faced many challenges this year as a result of oil prices fluctuating from $30 to $50 a barrel, half that of prices per barrel in 2014. But the challenge of making the industry profitable in this new age of pricing has largely revolutionized the sector for the better. Production costs are down considerably, exploration for new oil sources is higher than ever, and the industry’s interactions with technology used in other business practices is providing results previously thought impossible. Among those results is growth in Scottish North Sea oil and gas production by nearly 3% from 2016-2017.
The 75 millions tons of oil produced by the Scottish efforts represent 82% of total UK production. This figure is also at the highest it has been since the 2011-2012 season, providing proof that long term $50 per barrel oil prices are incapable of inhibiting the industry’s growth. Statisticians tracking the source of this humongous success point to increased levels of production in tandem with oil prices finally stabilizing from lows of $30 a barrel at the end of 2016. However, as mentioned above, operating costs reduced by the industry’s involvement with the internet of things and the benefits it has to offer are also playing a part. Despite an increase in production for the North Sea assets, operating expenditure remained at the same price this year without including decommissioning costs. Notably, smarter and more cost effective decommissioning operations are another target on the list of things to do as technological improvements strike the sector.
The growth caused Scottish energy minister Paul Wheelhouse to comment publicly on the industry’s success. He said “Scotland’s oil and gas industry has a bright future, and it is encouraging to see this continued increase in production which has risen by a total of 25% over the last two years. These figures show that confidence is continuing to return to the sector after a number of challenging years.” But confident words are not the only bolster the minister had to provide to the industry. The Oil and Gas Industry Leadership Group, co-chaired by Wheelhouse, was also created to ensure that companies receive proper assistance in the wake of the industry’s change.
While the oil and gas industry has faced new challenges many times over the past couple years, Scottish North Sea operations are just one example of how the sector has gone above and beyond stepping up to the plate.
Written by: Chris Stomberg