North Sea Oil and Gas Sector

By Sean Buchan, Vice President Europe, Middle East and Africa, Maxwell Drummond

It is more than forty years since oil and gas was first discovered in the North Sea and the region is now recognised as one of the world’s most successful exploration and production reserves. The North Sea’s oil and gas sector, which has played a major role the UK economy since the early 1970s, has effectively doubled its life span, compared to original estimates. Potentially there are still tapped oil supplies equivalent to the 32 billion barrels already extracted.

Today the industry is characterised by a few big firms like Shell and BP and a host of small independent oil companies and employs over 100,000 people in oil and gas related jobs, the majority in the North East of Scotland.

Despite the projections, the North Sea is still an increasingly mature basin. What next? Decommissioning North Sea oil and gas facilities is projected to cost between $48 – 54 billion between 2010 and 2040. Decommissioning is a relatively new business in the North Sea but the expansion of local rig decommissioning brings job opportunities and the potential to develop new technology.

The UK’s March 2012 budget included proposals to create a contractual approach to decommissioning tax relief. The announcement provided a set level of relief for operators which will assist the whole industry – and particularly the smaller breed of operators working in the North Sea – and will encourage more asset sales with prospective buyers now being assured of Government support when the assets reach the decommissioning phase.

The UK sector is at an early stage of its development, with only a small percentage of the North Sea rig structure having been decommissioned to date. In the future, opportunities will exist in Norwegian, Danish and Dutch oil and gas facilities. There will be huge demand for contractors, consultants, service specialists, equipment providers, technology developers and professional service companies from around the North Sea. Increased tax stability will help to reassure the hundreds of supply chain companies and encourage them to consider investment in attracting new staff.

The challenge to overcome is timescales. Constant changes to the predicted timings of decommissioning projects creates difficulties in planning, meaning that no company can rely on just decommissioning work to survive. Ever-changing plans can create problems for contractors unable to make necessary arrangements or plan for a strong workforce and technical support, which can delay the development and implementation of new technology.

As the years go on, with continued fiscal stability and government support, the decommissioning sector will be a large employer in the North Sea and beyond.

About the author
Sean Buchan joined Maxwell Drummond as a Research Consultant in 2006 and was quickly promoted to Consultant where he worked on a range of senior projects across the Oil and Gas value chain for positions in Europe, the Middle East, West Africa, Southeast Asia and the Americas. In January 2009 Sean was promoted to General Manager for the UK and in 2011 became Vice President Europe, Middle East and Africa. He is now responsible for leading these regional teams and driving the consistent delivery of the firm's executive search projects.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.