Life after oil: can Aberdeen rise again ?

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Mark
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Life after oil: can Aberdeen rise again ?

Post by Mark »

http://www.bbc.co.uk/news/business-35631775

Off the coast of Aberdeen, a dozen oil supply ships sit idly, their crews waiting for word of work. From their decks, the commodities that once made this Scottish city a centre of commerce are still visible - the grand granite buildings of Union Street, and the few remaining fisheries in a harbour dominated by fuel storage cylinders. One of those is co-run by James Robertson. Founded in 1892 by James's ancestor, Joseph, the firm has been in family hands for four generations. In the 1970s and 1980s, when the North Sea energy boom began to drive up costs for local businesses, and the Cod Wars led to restrictions on fishing quotas, Joseph Robertson Ltd had to adapt to survive. "We used to fillet fish," Mr Robertson says, but limited expansion meant that soon became unprofitable. "Now we process fish cakes and frozen breaded fish for some of the UK's largest supermarkets". But it's the North Sea oil industry, which fuelled Aberdeen's economy for more than four decades, that is now facing a similar challenge - adapt or die.

And, unlike granite and fishing, which faded slowly over a couple of decades, the pace of the fall in the oil price - from $120 a barrel to around a quarter of that in less than two years - has taken almost everyone in the city by surprise. Just a couple of years ago, house prices in "the energy capital of Europe" were rising faster than in London. And the energy sector was so strong, that the impact of the global recession of 2008 was hardly felt. Prior to the collapse in the oil price, it was said that if you wanted a job in Aberdeen, you got one. Now, it has one of the fastest-rising rates of unemployment in the UK. An estimated 65,000 oil and gas jobs have been lost since the downturn began in 2014, and the number rises on a weekly basis.

Oil rebound
The redundancies are made all the worse by the fact that the cost of living in Aberdeen is still high, powered by the six figure salaries that were commonplace in the oil sector just a couple of years ago. "Many people are living above their means," says Dave Simmers, who runs a food bank as part of Community Food Initiatives North East, which has handed out staples such as cereals, rice and frozen fish to some former oil high-fliers in the last few months. "They are two or three wage slips away from a brick wall." Nonetheless, almost everyone you meet in Aberdeen is convinced that oil will rebound, if not to the heady heights of $120 a barrel, then at least to a level where the North Sea operations can be profitable again (somewhere between $60 and $80 a barrel, depending on whom you ask).

Continues....
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RenewableCandy
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Post by RenewableCandy »

Was just about to post the blurb for AllEnergy (Conference and Exhibition of Renewables held in Aberdeen each May) but noticed it's been moved to the SECC in Glasgow!

Oh dear...perhaps Granite City really is on the skids... :(
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Post by kenneal - lagger »

They could always build and service wind turbines. Provided, of course, that the government lets anyone build any more.
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RenewableCandy
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Post by RenewableCandy »

Offshore wind's still very much a goer.
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Post by BritDownUnder »

Two people I worked with last year in Bangladesh of all places were former North Sea oil rig workers operating power plants. They got laid off when the shift structure changed. Now they are doing it in Bangladesh instead of the North Sea. Six weeks on and then fly home for six weeks off.

I have never been to that part of Scotland but I should imagine it would be a better place to live than London in this changing world we are all living in. I note that Tarrell seems to have stopped posting now. i seem to think he would know that region rather better than me.
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Post by Tarrel »

Hi Folks,

Still here. Got disillusioned with the forum after seeing the way the whole migration debate went, but been checking in from time to time.

The oil price drop has hit the North East and Easter Ross quite hard. My wife runs ante-natal classes in Aberdeen one weekend a month. Hotel room rates and occupancy levels are down. Redundancies are up. General air of gloom. I heard that $60 a barrel is needed for the North Sea to remain viable in the short term.

There are a lot of rigs in the Cromarty Firth, and have been since around this time last year. I heard they're basically sitting there waiting for the scrap metal price to go up before being de-commissioned. My neighbour runs a company providing a pool of labour to the yards at Invergordon, covering everything from catering services to maintenance. He is struggling at the moment.

On a better note, Nigg fabrication yard seems to have steady work coming in at the moment, and I understand it will be the site for production of some of the Meygen wave generators. Also, Invergordon is expecting a record number of cruise visitors this year!

Aberdeen is a bit of a disaster area to be honest. Over the decades it has "developed" in all the wrong ways. It's all fast cars, high property prices, rising inequality and crappy public transport. There has been a complete failure to invest in decent civic infrastructure to allow the city to grow and thrive on the back of the oil boom. It seems that oil was seen as the end in itself, rather than a one-time opportunity to build a glittering city that works.

So, not everything in the garden is rosy. Having said that, we just got back from a weekend in London visiting our son and, yes BritDownUnder, I'll take the Highlands any time!
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Post by kenneal - lagger »

Welcome back to our select group of contributors, Tarrel. You can always block threads which you don't with to contribute to.

You would think that Aberdeen would be at the forefront of the wind and wave revolution in the North Sea in trying to get off the dying tiger of North Sea Oil. I suppose that the facilities are owned by oil companies and they have no interest in anything other than oil. Once the oil is gone so are they leaving their devastation behind them. Hopefully, renewable energy will be a bit more responsible.
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Tarrel
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Post by Tarrel »

Thanks Ken. I think you've hit the nail on the head with respect to Aberdeen.

Having been up here four years now, I'm starting to see the weaknesses in the way the Government runs things. Don't get me wrong; they do a lot right. However, when it comes to energy policy, they seem to be too ready to take a laissez-faire approach.

IMO, the worse thing is an increasing reliance on off-shore manufacturing in, e.g., China and Malaysia, for the oil hardware, leading to a gradual dilution of the associated core design and manufacturing skills here. Those skills are a resource that could be re-purposed into the Renewables industry, or exported to areas of the world where oil extraction and/or offshore renewables are under development.

The overly-centralised local authorities seem impotent when it comes to revitalising areas that are suffering from the decline in oil production. Highlands and Islands Enterprise, for example, is a shadow of its former self. Difficult to know how much of this is due to misguided policy and how much is a result of Westminster-driven cuts.

Having said all that, there is a strong community spirit up here, and plenty of small, local initiatives that compensate for the absence of more top-down driven ones.
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Post by kenneal - lagger »

Tarrel wrote:...
Having said all that, there is a strong community spirit up here, and plenty of small, local initiatives that compensate for the absence of more top-down driven ones.
And government is handing us over increasingly to the clutches of big business and making things more and more difficult for small businesses to compete. If we get TTIP it will be the death of many a small business as multinationals resort to making a living from "not being able to trade" and claiming compensation paid for by increasing taxes on us and small business.
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RenewableCandy
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Post by RenewableCandy »

Apparently the French government have thrown a spanner in the TTIP works.
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Little John
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Post by Little John »

Hollande is in big trouble with his electorate for a variety of reasons. An electorate who are also against TTIP in growing numbers. He is being politically expedient, in other words. I don't believe he would have turned against TTIP if his political numbers were not already precarious.

Then again, I'll take whatever grubby reason he has for opposing it. Straws and camel's backs and all that.
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Post by AutomaticEarth »

http://www.telegraph.co.uk/business/201 ... in-crisis/
Oil workers on lucrative contracts continued to live like pre-recession City Boys for years after the financial meltdown
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