Oil and gas sector can't afford to wait for the sun to rise

I AM writing this as I travel to Edinburgh to give evidence to Holyrood’s Economy, Energy and Tourism Committee on the future of the oil and gas industry.

To get to our capital city from my home in Mintlaw for 10.30am, I need to get up at 5am (yes, I know you could nearly get to Boston from Glasgow in that time – first and last complaint).

However, on the way I did benefit from a cracking sunrise.

It got me thinking that the session I was about to attend was probably going to be focused on the “nichts fair drawin’ in on the eil & gas sicter”.

However, that 8am sunrise refocused my mind on the bigger prize, even though things feel pretty dark right now.

So the facts from our latest oil & gas survey, which were revealed last month, are:

  • Confidence and activity levels in the UK Continental Shelf are at record lows.
  • Four in five of the contractors we surveyed say that they are less confident in their prospects than they were a year ago.
  • Companies are working below capacity and confidence in international markets is weak, providing no safe haven for the industry
  • Parochially, we are certainly seeing a “softening” in the regional economy

None of this is a surprise and unlike some short-term down-cycles we have seen in the recent past, it looks like this could be a longer winter night for the sector.

For individuals, this is serious.

We estimate that there has been a 6% reduction in the UK workforce of firms in the sector over the last 12 months alone, following on from previous redundancies in 2014.

The rounds of job losses are not going to end in 2016, either.

But back to the sun.

If the wider industry continues to operate as it has done in the past, it is a near certainty we will not maximise the potential of the North Sea – sunset is more likely than sunrise.

However, if we are not complacent a long-term future still exists for the sector, and players such as the Oil & Gas Authority will have a major role alongside the industry itself.

Governments need to protect the cluster which has contributed so much to the UK.

As a frontier basin we face challenges earlier than others.

This also means we are oddly incentivised to use technology and innovate earlier than others in areas such as decommissioning and the diversification of our supply chain.

There is an inner strength in the industry which means that it is well capable of waking up and facing another day.

However, we all need to be change agents and not just accept the situation as something we cannot affect.

Individually we can’t impact on the oil price or when the sun rises but we can influence a whole range of other things which are vital to our future.