Scots survey shows offshore squeeze

A Scottish survey has revealed that specialist equipment and infrastructure, such as drilling rigs and survey ships, are at a premium and in short supply and that planned activity by contractors is stronger in international markets than on the UK continental shelf.

Aberdeen & Grampian Chamber of Commerce chief executive Geoff Runcie said at the opening day of the Offshore Technology Conference in Houston: “The potential equipment flight that may result due to capital expenditure necessary to increase UK continental shelf capacity must be seriously considered.

“Oil producers and contractors, employing more than 200,000 people in the UK and international oil sector, expressed unease about resourcing their businesses with the right equipment, infrastructure and people,” he said.

Runcie said this disquiet is compounded by the fiscal instability created by the UK government’s decision to increase supplementary North Sea oil taxation from 10% to 20%.

“Concerns about the additional tax burden are much more evident in this survey,” he added.

The survey, which was carried out by the Fraser Allander Institute, also shows that business confidence is still increasing, but at a slower pace than in previous surveys.

The majority of producers reported increased UK continental shelf-based exploration, development and appraisal activity through the period and these rising trends are set to continue over the next 12 months.

Rising trends in employment were reported, with 43% of producers expecting to add to their workforce.

All respondents have increased contract staff in the period. The use of temporary as well as contract staff has increased particularly among the contractors.

Producers and contractors also reported rising trends in overseas-based work and this is expected to strengthen further over the next year.

Graeme Sheils, oil and gas partner at Deloitte, said: “A critical industry concern highlighted in the report is the skills shortage to meet the demand of almost half the survey base expecting to increase employment.

“However, of particular note is the trend to recruit contracted staff and we question whether this is the new norm.

"As the time this survey was being conducted, many large oil and gas companies and industry bodies were launching initiatives to attract fresh talent into the sector,” he said.

Sheils said the average age of the sector’s workforce continues to rise and the industry must appeal to the next generation of employees. The expansion of non-permanent posts may not be sending out the right signals.

The percentage of contractors working at or above optimum levels eased slightly from more than 90% to just under 70% with regards to overseas activity and from more than 80% to 70% in relation to UK continental shelf activity.