Aberdeen needs to move into Low Carbon Energy

On 18th January, Scottish Enterprise launched the results of their study into Oil and Gas Diversification The material supports oil and gas supply chain companies to develop opportunities in other business sectors and is based on a study we conducted last year. (More info here)

Aberdeen risks being left stranded

As North Sea oil and gas production continues to decline and at the same time low carbon energy starts to replace fossil fuels, Aberdeen risks being left stranded.

Whilst oil and gas will continue to be important for Aberdeen for many years to come, diversification now into other sectors will be important for long term prosperity. Despite maximising economic recover (MER) and other initiatives, the inexorable decline in N. Sea production means that oil and gas activity in Aberdeen will never return to levels of recent years.

Lower and more volatile oil prices are a result of US shale oil and an excess of supply vs demand. Long term demand will also be affected by the low carbon transition and the use of electric vehicles.

Aberdeen has benefitted over the last 40 years from a singular focus on oil and gas, at the expense of other industries. Now the North Sea is in decline and oil prices are low this is a major challenge.

However, potential exists to redeploy the Aberdeen oil and gas supply chain and its technology into new low carbon sectors. Aberdeen could be a world leader in low carbon energy services, just as It is in oil and gas.

To ensure Aberdeen’s long term prosperity requires urgent diversification. Major investment and effort is required now to get past this myopic insularity. Oil and gas technology, know-how and innovation could be leveraged into high growth low carbon sectors of wind, wave, tidal, hydrogen, heat and water.

Beware: Aberdeen’s institutions and many major businesses are focussed on oil and gas, so don’t expect them to provide leadership in diversification. Forward thinking business leaders, the media and local/national authorities need to take action.

With the vision to be so, Aberdeen could be a world leader in low carbon energy services. But only if it acts now.

Oil and Gas Diversification is key to Scotland’s Low Carbon Future

In a study on Oil and Gas Diversification for Scottish Enterprise, Pale Blue Dot Energy highlighted the opportunity for Scotland to deploy surplus oil and gas capability on emerging future energy sectors including Wave and Tidal, CCS, Hydrogen and Heat. There is too little focus on Diversification, particularly in the North East. Oil and gas businesses should develop Diversification strategies in order to manage the long-term decline in oil and gas driven by price uncertainty and the Low Carbon transition.

Adapting to a Low-Carbon Future: A Blueprint for the Oil and Gas Industry

1. Introduction

The oil and gas industry is currently in crisis — supply exceeds demand and has resulted in oil prices falling to less than half their value of 12 months ago. According to the Financial Times in June 2015, this has led to postponement or cancellation of ca. $200 billion worth of projects worldwide (Adams, 2015). The industry is restructuring and many staff are being laid off; figures quoted in June 2015 indicate 150,000 worldwide (Eaton, 2015).