The recent heated debate in Scotland about exactly how much oil and gas might be left in the UK sector of the North Sea prompted me to reflect on my visit to the 2014 ONS exhibition in Stavanger, Norway last month.
While I was in Stavanger it was apparent that, although the Norwegian oil and gas industry often complains about government taxation holding back investment, there is plenty of evidence to support that that country’s oil and gas economy still has quite a few decades of hydrocarbon production to depend upon.
In Scotland, important industry figures like Sir Ian Wood – author of this February’s Wood Review that set out a new strategy for maximizing the recovery of oil and gas from the UK Continental Shelf – have strongly criticized forecasts from the Scottish independence campaign that give a rose-tinted view of future North Sea revenues, while suggesting it could be as little as 15 years before declining reserves begin to hit the Scottish economy. He believes that the Scottish government’s estimate that a further 24 billion barrels of oil remain in the UK North Sea is up to 65-percent too high.
Meanwhile, Norway – which has a similarly-sized population to Scotland – has some 10 billion barrels of already-discovered, but undeveloped, resources sitting on its continental shelf, according to a report issued during ONS week by energy research firm Wood Mackenzie. And, unlike Scotland, Norway will never have to share these resources with any other country.
Of course, Norway doesn’t just have the North Sea on its continental shelf but also the Norwegian Sea and the Barents Sea – an Arctic region that oil and gas explorers have become very excited about. So, Norway is also in the fortunate position of having the capability in its oil and gas sector that years of operating in the maturing North Sea has given it coupled with the promise offered by a frontier region that forms part of its own territory.
When I was in Stavanger, Norway’s confidence about its oil and gas wealth was evident to me in lots of ways – from the large number of oil and gas operators, equipment suppliers, service companies and other exhibitors that filled the many halls of the ONS show to the huge party held (featuring Norwegian pop sensation Ylvis) at the ONS Festival on the night before the exhibition closed.
But a far more important measure of confidence is the employment created by oil and gas resources. And a brief chat with Stein Racin Grødem, managing director of the Forus Business Park, provided evidence that Stavanger is in rude health when it comes to jobs that depend on the oil and gas industry. A major business park in the city, Forus – home to oil and gas engineering firms such as Subsea 7 – has seen its workforce increase from 34,000 to 45,000 people in three years, Grødem told me. In another five years, he expects to see more than 50,000 people working in the business park, and there is even a housing development of thousands of apartments being built on the edge of the park to accommodate the workforce.
Now into my 40s, I expect that I’ll be writing about the energy sector until the end of my career. But the current row over Scottish reserves has made me wonder how long I’ll be visiting Aberdeen for my job. On the other hand, I reckon I’ll be traveling to Stavanger until I collect my pension.