The FT Noted An Increase In The Number Of Idle Drilling Rigs In The North Sea
An increase in the number of idle drilling rigs in the North sea with falling oil prices indicates the approach of a crisis in the oil and gas industry in the UK, writes the Financial Times.
The number of rigs in the Scottish port of Cromarty Firth, where there are unused oil platforms, has grown to 16, compared to an average of 12 in 2016, when the previous crisis peaked. Crew members remain on nine platforms, ready to resume operations if necessary. However, the remaining seven rigs are unlikely to leave the port in the near future.
As the FT notes, the Cromarty Firth became a barometer of the state of the UK oil industry during the fall in oil prices in 2014, when the port turned into a"cemetery of drilling rigs".
The number of unused platforms is also increasing at other ports in Scotland, including Dundee.
Oil prices continue to decline, despite a new OPEC+ agreement to cut production by a record 9.7 million BPD, which creates problems for fields at a later stage of development, such as those in the North Sea.
"After the end of the health crisis, we will face a major crisis in the industry," said Jake Molloy, a representative of the RMT Union in Aberdeen, in Scotland.
He estimates that approximately 1,500 oil industry workers in the North sea are involved in negotiations to downsize companies.
In 2014, 41,300 people were involved in oil and gas production on the British shelf. In 2016, there were 35,600, and by 2018, 36,800. Unions fear that the current crisis could lead to massive cuts.
According to the forecast of the UK Oil And Gas Industry Trade Association OGUK, field operators will reduce capital expenditures this year by 30% - to 4-4. 5 billion pounds. In addition, representatives of the industry may receive negative cash flows-only for the third time in the past 30 years.
OGUK expects drilling to decline by more than a third to a record low. Investors were expected to make a final decision on 12 new projects in 2020, the FT notes. Siccar Point and Royal Dutch Shell have delayed approval for the development of the Cambo field, located 125 kilometers northwest of the Shetland Islands.
Independent oil producer EnQuest in March decided not to resume production at two fields that had been suspended due to maintenance work.
Many industry veterans believe that due to the current crisis, part of the oil and gas resources of the North sea will remain in the subsurface. Even before the coronavirus outbreak, there were questions about the compatibility of North sea oil and gas production and the UK's goal of reducing net greenhouse gas emissions to zero by 2050.
The British oil and Gas regulator Oil and Gas Authority in 2018 considered it economically profitable to produce 10-20 billion barrels of oil equivalent in the North sea. However, the University of Aberdeen Professor Alex Kemp warned that the level of activity in the region is "very sensitive to changes in oil prices." Last year, he said that for $50 per barrel, it was economically profitable to produce only 8.7 billion barrels until 2050.