Scottish oil hub plans for fossil fuel-free future
OFFSHORE supply vessels resembling large, floating flatbed trucks fill Victoria Dock in Aberdeen, unable to find charters in a sign of the downturn in Britain’s oil industry.
Aberdeen is the self-styled oil capital of Europe, but with Britain’s North Sea oil and gas production 44 percent below its peak, the Scottish city fears the slowdown is not simply cyclical. To secure its future, Aberdeen is trying to diversify into other areas, including green energy.
Throughout a hydrocarbon heyday that has run to almost five decades, the city has to some extent been preparing for the end.
The oil industry, which at one stage sparked talk of Scotland as “the Kuwait of the West”, has already outlived most predictions. “I’m steering my kids away from anything to do with oil,” said John Irvine, a lorry driver who used to work on the rigs. “It’s not going to last forever.”
New BMW and Mercedes models are plentiful in the traffic jams that clog the roads at rush hour and Jaguar, Aston Martin and Porsche sportscars with personalised licence plates are evident in the city of around 200 000 inhabitants.
The North Sea oil industry, with output of 2.5 million barrels of oil equivalent a day, currently pays more to UK government coffers than any other sectors. It is also one of the biggest spenders on goods and services and an important employer in Scotland.
About 40 percent of the Aberdeen area’s £10.5 billion (R128.74bn) economy is reliant on the industry, according to the Aberdeen and Grampian Chamber of Commerce.
Oil work has pushed unemployment in Aberdeen to less than half the UK average. But with Brent North Sea crude futures at about $80 (R592) a barrel, just over half the price it fetched a year ago, the port authority says the harbour is quieter.
Dock workers say some ship owners are so pessimistic of getting a charter soon, they won’t even pay to dock at the harbour. A dozen vessels are moored a few miles off the sandy coast. Normally you might see one or two, oil men said.
Aberdeen has seen hundreds of layoffs. Engineering graduates from local universities have, for the first time in years, struggled to find jobs as big oil companies such as BP and Royal Dutch Shell cut spending.
The result is vacant shops on Union Street, the city’s main thoroughfare, while bars, restaurants and taxi drivers say business is slacker than a year ago.
Aberdeen is targeting tourism, life sciences, and the export of oil services to around the world to substitute for North Sea oil and 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 aims to use its experience to become a leader in offshore wind power, tidal power and carbon capture and storage (CCS). It hopes these industries will receive a boost from global climate change talks in Copenhagen in December.
“We have to harness that expertise and turn Aberdeen into the energy capital of Europe and not just the oil capital of Europe,” said Mike Rumbles, West Aberdeenshire Member of the Scottish Parliament (MSP).
Alex Salmond, the head of the devolved Scottish government, told a conference in Aberdeen last month the market for wind power could be worth £130bn, while Scotland could be the “Saudi Arabia of tidal power”.
“We’re seeing the emergence of an offshore energy market that is comparable in scale to the market we’ve seen in offshore oil and gas in the last 40 years,” he said.
Tidal power remains at the testing stage, and the economic viability of new offshore wind projects has been questioned even by current investors such as utility E.ON.
CCS technology could also see the development of an industry filling depleted North Sea fields with carbon dioxide, although oil men doubt any Copenhagen treaty would provide sufficient incentives to make this activity profitable.
Another area of Aberdeen’s new focus, tourism, has previously been hindered by the presence of oil.
“The hoteliers got lazy,” said taxi driver Jim Moir. “They were full Monday to Friday with oil workers so they never bothered attracting tourists.”
Eager to put Aberdeen on the international tourist map, local business has strongly backed a plan by US real estate tycoon Donald Trump for a luxury housing and golf project 12km north of the city, even though it means building in a nature reserve.
Trump is currently locked in dispute with land owners who refuse to sell to him and hopes local authorities will, if necessary, invoke compulsory purchase powers to facilitate the development.
The city hopes to reorientate its oil services industry towards emerging offshore oil centres like Brazil.
“Just because production in the North Sea starts to decline doesn’t mean that Aberdeen as a global centre also does,” said Chamber of Commerce chief executive Robert Collier. “That expertise can still stay here and be exported around the world.”
Local companies plying their wares to international buyers at the Offshore Europe exhibition and conference last month said the shift in focus was already under way.
“Ninety percent of our production is exported,” said Equalizer International managing director Ian McCormick, standing beside a yellow mock-up pipeline, to which were attached samples of his company’s stainless steel clamps.
Decommissioning will itself be another opportunity.
When the oil finally does run out, the hundreds of offshore platforms and thousands of pipelines will need to be disassembled and returned to shore for disposal, a market worth at least £23bn, estimates industry lobby Oil and Gas UK.
“It could be the beginning of a whole new industry,” said Lewis MacDonald, the MSP for Aberdeen Central. – Reuters