Aberdeen - Oil Industry (North Sea) slow down?

[Guffy]

I work for an Oil Compnay that has suspended all North Sea drilling activity this year, Talisman are doing the same. Just interested in people's opinion on where they think the North Sea industry is heading over the next couple of years?

[Gareth135R]

Xmas lunch cancelled at my work.
Plus a new staff freeze.

[asbo]

South by the looks of things!

There is however an indication that the oil price will start to rise again in the near future.

Nevertheless, these are troublesome times and many (inc. myself) may loose our jobs.

Exploration (in the North Sea especially) will be hit hardest as it offers the least cost effective return for larger organisations, however production ops should remain on a fairly even keel.

I'm in gas at the moment, but my contract expires in October, so who knows what will happen after that.

[asbo]

Gareth135R said:

Xmas lunch cancelled at my work.
Plus a new staff freeze.

Hi gareth. How are you getting along with the 'ricer?

[x200sxy]

Oil price cannot stay low for long with all that is happening politically worldwide.

Not enough people to do all the work. Generally ageing workforce.

Plenty of work in Far East and Africa.

[FezzaDezza]

A good indicator in the north sea is the rig market which is starting to slow up and semi rates are starting to drop off from $400,000 per day to $300,000 and probably likely to fall further. Lots of operators cancelling or postponing rig requirements from 2009 onwards and a couple have walked away from letters of intent. Also lots of sublet slots coming free so its clear demand is falling off.

Oil price may put in a low of circa $25 as demand is falling off a cliff. US demand down dramatically, India and China the same as the economies slow and factories close, people drive less and fewer good need to be shipped. (Just look at shipping rates on the baltic exchange, down 90%!) Opec has cut production a couple of times to prop the price up but they cant do anything about the demand side.

I'm personally more worried about the value of the £ in the future and the rapid fall off in GDP, (especially exports) considering the hammering the pound has taken already. Further reductions in base rate followed by quantitive easing will only see the pound fall further and no doubt lead to rapidly rising inflation.

Not good when the majority of the goods we buy are imported.

[AliV6]

it has a detrimental effect on everyone. Oilexco also went into Admin. Hercules are warm stacking 60% of their rigs in GOM...

As a service company we're suffering due to the shelved projects and reduction in POB's...

That said - it will come bak up!

[onlynik]

Working for an IT service company, projects are being put on hold, and one customer is cutting costs, I'm only contracted until the end of March. Dark times ahead.

[onlynik]

FezzaDezza said:

I'm personally more worried about the value of the £ in the future and the rapid fall off in GDP, (especially exports) considering the hammering the pound has taken already. Further reductions in base rate followed by quantitive easing will only see the pound fall further and no doubt lead to rapidly rising inflation.

Not good when the majority of the goods we buy are imported.

I keep harping on that the banks need to raise intrest rate, to build some confidence in the pound. Plus give something back to the savers. At the mo folk aren't spending as they are scared and all this rate cutting isn't really helping them, as the cash they are saving on their mortgages isn't being spent.

[jerwatt]

As a geology student about to enter work this year not good to hear at all, especially after last year when the oil prices were so high resulting in lots of graduate employment.

[asbo]

jerwatt said:

As a geology student about to enter work this year not good to hear at all, especially after last year when the oil prices were so high resulting in lots of graduate employment.

Your trade in in short supply though. I think you will fair better than most.

[jerwatt]

Yeah, been looking into it and about 50% of geologists will reach retirement age in the next 10 years and stuff like that. Doesn't look like the best of years to be graduating although as you said will fair better than most.

Hope everyone on here doesn't have too many problems with this downturn.

Edited by jerwatt on Thursday 15th January 14:23

[jshell]

Heard from Holland that Shell are cutting back exploration massively and that Subsea 7 are cutting a few hundred jobs this year. Dark times ahead indeed methinks.

[daz05]

On the flip side this is the most cost effective time to actually develop fields/assets, lead times are shorter, materials cheaper and rental rates etc are also lower. Problem is Oil companies don't think like that.

A different attitude is required and thats what CRINE was suppost to promote after oil went below $10 a barrel in the 90s!!

Actually doing my masters on this at the moment!!

Edit - hope everyone makes it through ok!!

Edited by daz05 on Thursday 15th January 14:59

[amaftau]

wish the bloody prices weren't the same as london for everything too.

[thinfourth2]

Ah yes the oil industry

Monday Oh my god there is such a huge shortage of skilled people and we can't retain them

tuesday Where can we find expired staff

Wednesday Oil price crashes

Wednesday afternoon You are all fired

Short sighted doesn't even start to cover it.

[Kiltie]

daz05 said:

... materials cheaper and rental rates etc are also lower.

I don't believe they are yet - they're sure to settle soon though.

That's the point for me. I think it's a common misconception that the E&P companies reluctance to explore / develop just now is purely related to the barrel price. Many development projects which have been postponed in the last few months are still very much economic in the current climate.

The market believes that bargains are just around the corner though and so they don't want to commit at current rates.

I'm not saying that the barrel price or related uncertainty isn't a factor but I don't believe it's the primary one across the board.

You'd think that, given what's happened in the past, the operators, contractors and suppliers would be able to get smart and smooth out the peaks and troughs.

Cheers,

Eric

[H2DCA]

Kiltie said:

daz05 said:

... materials cheaper and rental rates etc are also lower.

I don't believe they are yet - they're sure to settle soon though.

That's the point for me. I think it's a common misconception that the E&P companies reluctance to explore / develop just now is purely related to the barrel price. Many development projects which have been postponed in the last few months are still very much economic in the current climate.

The market believes that bargains are just around the corner though and so they don't want to commit at current rates.

I'm not saying that the barrel price or related uncertainty isn't a factor but I don't believe it's the primary one across the board.

You'd think that, given what's happened in the past, the operators, contractors and suppliers would be able to get smart and smooth out the peaks and troughs.

Cheers,

Eric

Absolutely, rig rates are high in UKCS sector but this is because of the dominace of one rig operator, many operators are putting projects on hold until rates soften, steel is falling rapidly, Corus is keeping people at home and unfortunately we are seeing some major service companies laying people off. As noted you would think the industry would learn its lesson but no lets lay off then when the market picks up pay above the odds to secure people that in turn creates an expensive place to live and an unsustainable sector. The oil price has been very volitle this last week, global events creating uncertainty and this will continue as I saw that conflict is about to escalate in the Nigeria Delta. I believe the markets are getting talked down, demand is still apparent but with the talk of down turn the commodity markets have the jitters, short term I suggest we will see a continual fall in oil price with mid $30 becoming the norm, remember the days we wished for a $20 to $25 bbl !!! The ratio between supply and demand remains, harsh winter in Nth America, global events etc will possibly change this near term but in the autuum once things settle we may see a stablisation in the price and confidence will return to the sector albeit very slowly (As usual)

[craig-A]

thinfourth2 said:

Ah yes the oil industry

Monday Oh my god there is such a huge shortage of skilled people and we can't retain them

tuesday Where can we find expired staff

Wednesday Oil price crashes

Wednesday afternoon You are all fired

Short sighted doesn't even start to cover it.

the attitude and short sighted-ness of the oil companys really boils my piss. were these companys not making enough money when oil was $140 per barrel, we're already talking about cut backs despite posting record profits last year.! no doubt these same companies will be crying about a lack of skilled staff in 12 months time!

[daz05]

Its worse than that.... some of these companies are still selling oil at $100+ a barrel. Those are the smart ones that entered into fixed price agreements.