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The changing landscape of Oil and Gas

Posted by: Alex Edwards 30 Sep 14  | Process Controls & Automation

There are few industries that influence the world quite as regularly and significantly as that of oil and gas.

These materials are used for all kinds of purposes, and the reliance we've built on them over the past century has provided the sector and its companies with plenty of opportunities for growth, as well as hurdles to overcome. 
 

Change is a normal part of any industry, but businesses with direct interests in oil and gas have been forced - more than most - to adapt over the past decade. 

Activity both inside and outside of this unpredictable world have left companies with little option but to reassess the way they operate.
 
What's new

These seismic shifts have been evident in regional markets across the world, and the UK is certainly no exception. The UK is still the European Union's (EU's) biggest producer of oil and gas, but it's certainly not the exporter it was at the beginning o f the 21st Century. Showing just how quickly things can change, the country has become a more prominent importer in little over a decade. That's not to say its industry isn't thriving, though - nearly 50 million cubic metres of petroleum were produce d by the UK's offshore facilities in 2012, providing employment for more than 30,000 people. It's certainly a good time to be involved.

A new purpose

With the total number of motor vehicles on the planet's roads supposedly passing the one-billion mark in 2011, it's not difficult to get a clear idea of how important the automotive and transport industries have been - and in many ways still are - to the oil and gas sector. Now, however, competition from other industries is increasing and this part of the market is showing signs of an imminent decline. 

Due to changing attitudes and the subsequent pressure coming from governments, regulators and various other powers, vehicle manufacturers are beginning use alternative fuel sources instead of relying on oil. It's completely understandable too; efficiency and sustainability are now priorities for consumers, so they must also be top of the list for profit-hungry businesses. 

The reduction of carbon emissions is a hot topic already in the UK, but with the measures currently in place unlikely to help the government reach its targets, most firms are preparing for the introduction of even stricter regulations, as well as the fallout that's likely to come with it. 

A new onus

Not all of the alternatives to oil and gas are working against the industry, however. When the Tohoku earthquake occurred just 40 miles from the Pacific coast of Japan in March 2011, the resulting tsunami caused havoc on land. The resultant death toll was close to 16,000 and more than 1.1 million buildings were either destroyed or suffered severe structural damage. The impact was devastating. 

Among the buildings was the Fukushima Nuclear Power Plant, where three of six reactors suffered meltdowns, causing the second biggest nuclear disaster in world history. Just like the largest (Ukraine's Chernobyl in 1986), it caused the world and many of its powers to take a much closer look at the age-old nuclear debate.   

By November 2011, a further 42 of Japan's 54 nuclear plants had closed, with plans to cease operations in the remaining facilities the following summer. This wasn't supposed to be a permanent thing, but as of July 2014, only one plant (Sendai) had been given preliminary approval to restart its reactors. 

Despite previously supporting the building of more reactors, Japan's prime minister at the time Naoto Kan said after the disaster: "Japan should reduce and eventually eliminate its dependence on nuclear energy." These thoughts were quickly echoed by leaders around the world, with the importance of oil and gas increasing once again as a result.

The industry is having a shale of time

The industry's feelings of optimism, confidence and positivity have also been boosted significantly by the increasing prominence of shale gas, and major advancements in the way it is mined - a process known as 'fracking'.   

Shale is the natural gas trapped between rock formations deep underground. In the past, it was deemed impractical to mine for shale gas, but over the last ten years, experts have developed new ways of using old approaches and technologies - namely hydraulic fracturing and horizontal drilling - to efficiently access large volumes of it. This progression alone has had an immeasurable impact on the industry in certain parts of the world. 

In the space of just two years (2006-2008), shale discoveries boosted the United States' natural gas reserves by approximately 35 per cent. By 2012, the proportion of North America's natural gas production that was accounted for by shale gas had re ached 39 per cent. This success was difficult to ignore for many countries and it wasn't long before the techniques were being applied in nearby Canada, in Australia and also parts of Asia. 

The UK has also taken note, with Prime Minister David Cameron claiming in 2013 that "fracking has real potential to drive energy bills down". As of 2014, there have still been no instances of commercial shale gas production in the UK but, with the afore mentioned comments in mind, it seems inevitable that it will eventually happen - and when it does, the impact on the industry is likely to be huge.

A great place to be

A great sense of positivity has emerged in the oil and gas industry over the last ten years, and all of the signs suggest that the confidence will continue long into the future. Not only are the decline of nuclear power and the rise of shale gas both picking up pace, the role of technology in the sector is also increasing in importance. All of these elements are working together to make the oil and gas industry an extremely exciting - and secure - place to be.
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