Here to stay
- September 2011
BP investing more than ever before in North Sea
BP’s commitment to the North Sea is unwavering with more money being spent and more developments underway than for a very long time, according to the boss of the company’s operations in the province.
As Regional President of BP North Sea Trevor Garlick is responsible for more than 3000 staff in the UK and Norway and he told Business Bulletin that the facts about Aberdeen’s importance to the oil giant speak for themselves.
“We are doing more than we have ever done, we are hiring more people than we have ever hired and investing more money than we have ever spent – although we are spending it in a more focussed way,” he said.
Mr Garlick, who took over the post as part of a top level shake up of the company in the wake of the Macondo tragedy, highlighted the industry’s skills shortage and the unexpected tax rise in this year’s Budget as two of his current concerns.
“Our over-riding vision for our business here is that we have a material long term presence in the North Sea. We are still one of, if not the biggest producer, and a big investor and a big employer. We see this being a key part of BP’s portfolio for the long term.
“The recent tax announcements have made some of our more marginal future projects less competitive but will not prevent the four new UK field developments we currently have underway.”
He said the company’s longevity in UK waters was assured, for example, by the fact that the $4.8-billion re-development of the Schiehallion and Loyal oil fields west of Shetland would keep them in production until 2035 and the second phase of the Clair project, Clair Ridge, would stretch it even further.
“We are also engaged in extending the life of some of the older projects. Magnus is 28 this year and the work we are doing to improve the platform integrity and fabric and to restart drilling and increase the enhanced oil recovery scheme should see Magnus reach 40 years old.
“In Norway we have just put a new platform in at Valhall and that will take the field, which is 27 this year, out until 2049.”
He said the diversity of the reservoirs in the North Sea meant that the technology being developed to recover the resources could be exported all over the world.
“The technology advances start with reservoir imaging and in the past two years we have tripled the amount of seismic we have been shooting and basically redone the imaging of all of our big reservoirs.
“Then you start to look at drilling technologies to try and access smaller pools, edges of reservoirs, tighter reservoirs and there is a big challenge on the drilling side to achieve that. Increasingly developments have a subsea component or are entirely subsea so that technology is big. Then finally, in the later life fields, what we are looking at is enhanced oil recovery on all of our bigger fields. There is always something to push and that includes how you run the platform.
“In Norway we have just put in a cable from the shore to power the Valhall platform which is the first major field linked to the onshore coastal grid. We have hydro generated energy, which is more environmentally friendly, supplying constant and reliable energy to the offshore platform.
“There are no plans right now to replicate it in the UK but it has only been up and running for a month so it could be something for the future.
“There is still lot of oil to recover from the North Sea and we have a fair chunk of it; the skills base is here; and we have gas, oil, condensate, and every kind of recovery mechanism you can mention. We have floating deep water production systems, shallow jack up systems and everything in between.
“The diversity of these different types of development means the UK industry is building the skills and technologies which can be applied to lots of different types of fields and environments around the world.”
He said that while BP had been successful in its recruitment as a result of an intensive campaign the skills shortage was a significant concern.
“So far this year 185 people have accepted offers to join BP’s North Sea business, including 69 graduates, but we have transferred 66 people to other BP locations and we
expect to transfer out another 50 over the year although we will continue to recruit.
“We don’t have a great problem finding graduates or employees with up to 10 years experience and we attract very high quality. Where it is harder is to get folk in the more experienced range but so far we have done quite well.
“We have rationalised our portfolio but we are investing heavily it in a more focussed way in the Central North Sea, West of Shetland and Norway and will spend something like $1.7 billion on the UKCS this year, which will be a record, and about $800 million in Norway. The answer to people who ask if we are leaving is that the combined total is the most we have ever spent, we are hiring more people than ever before and we have never had four fields being developed simultaneously.”
He said the lifestyle in the North-east appealed to many.
“They say the second hardest thing is to attract people up here and the hardest is to persuade them to leave.
“Many of the people we hire, particularly the graduates, are into outdoor activities. They are sporty and love the space, the clean air, the mountains and the rivers and just want to be outside.”
He said the Budget tax rise had come as a surprise and while all the projects underway remained viable they were not as valuable.
“Where it does affect us is on some of the more marginal developments we may come to and it means there is an even greater need for technologies to overcome some of the new challenges because of the taxes.
“There is a cross industry group, which we are part of, engaging the government on further field allowances for particularly marginal fields and then looking at decommissioning and how decommissioning is treated.
“Both of these issues - marginal field development and decommissioning - are real concerns for everyone in the industry and we are working to address them with the government.”
He said that he personally enjoyed living in the North-east and, should he be able to have a single wish granted it would be less congestion on the roads around the city because of the difficulties in commuting to and from Dyce. However he said the air links were fine.
“The flight connections to Norway are very good which is important for us.
“The thing I most like about living here is the space, the countryside and the clean air and as far as restaurants and concerts are concerned I think there is plenty to keep everyone entertained.”
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