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Oil & Gas

Scottish city prepares for life beyond oil

October 21, 2009
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Offshore supply vessels resembling large, floating trucks fill Victoria Dock, unable to find charters, in a sign of the downturn in the British oil industry, according to Reuters. With British North Sea production of oil and natural gas 44 percent below its peak, Aberdeen, the self-styled oil capital of Europe, fears the slowdown is not simply cyclical. An oil industry that at one stage inspired talk of Scotland as “the Kuwait of the West” has already outlived most predictions, having enjoyed a hydrocarbon heyday of almost five decades. As it prepares for the end of oil, Aberdeen is remaking itself, putting its hopes in renewable energy and tourism. The oil industry has been good to Aberdeen, which has about 200,000 inhabitants. The North Sea industry, with current output of 2.5 million barrels of oil equivalent per day, pays more to the British government’s coffers than any other industry, is one of the highest spenders on goods and services and is an important employer. About 40 percent of the Aberdeen area’s economy relies on the oil industry, according to the Aberdeen and Grampian Chamber of Commerce. As big oil companies like BP and Royal Dutch Shell have cut spending, Aberdeen has seen hundreds of layoffs, and for the first time in years, engineering graduates from local universities have struggled to find jobs. Tourism, life sciences and the export of oil services around the world are among Aberdeen’s preferred substitutes for North Sea oil and natural gas. But for many, the biggest prize would be to use its offshore oil expertise to build a renewable energy industry as big as oil. The city wants to use its experience to become a leader in offshore wind, tidal power and carbon dioxide capture and storage. It hopes those industries will receive a lift from global climate change talks in Copenhagen in December. Tidal power remains at the testing stage. A carbon capture and storage industry could also be developed, filling depleted North Sea oil fields with carbon dioxide. People in the oil industry doubt that any Copenhagen treaty would provide sufficient incentives to make this activity profitable. The city also wants to reorient its vibrant oil services industry toward emerging offshore oil centers like Brazil. Local companies plying their wares to international buyers at the Offshore Europe exhibition and conference last month said the shift in emphasis was under way. When the oil finally does run out, the decommissioning of hundreds of offshore platforms and thousands of pipelines will be an opportunity in itself. The infrastructure will need to be disassembled and returned to shore for disposal, creating a market worth at least £23 billion, estimates Oil and Gas UK, an industry-lobbying group.
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