New oil field found off Shetland

[ocelot41]

Does anyone here know about oil? How significant is this?

www.bbc.co.uk/news/uk-scotland-north-east-orkney-shetland-39406131

www.bbc.co.uk/news/uk-scotland-north-east-orkney-shetland-39406131

Argh am an idiot! How do I get the link to work?

The link works

Something more than fairly significant but not enough to be the equivalent of a Lotto win for an independent Scotland!

I worked with this crowd as a supplier on this project. Great development seriously, but not the saviour of us all.

It might drive Shetlands independence

Thanks drquin and congratulations if you were involved in this find! Is it financially viable to extract or is that not clear yet? I am sure it would lead to some arguments CD but my understanding is that if the Shetlands wanted to become independent, they would only be entitled to about 12 miles radius of sea....

Shetland or the Shetland Islands - never Shetlands. End of lecture 🙂

This will not fund an independent Scotland. It won't even cover the decommissioning of the existing facilities in the Scottish North Sea. Scottish independence is more unaffordable the ever for Scotland. Potential to end in absolute ruin.

The cost of decommissioning is huge, and no one is factoring it into their equations.

Forgive me, MrsAmaretto, I am but a Lowlander

That's interesting Strix, do you work in the sector? What is involved in decommissioning?

Strix "independence is more unaffordable than ever for Scotland. Potential to end in absolute ruin"

Oh waily waily! Massive new oil field in Scottish waters, what a disaster. How unlucky we are. Imagine oil was a commodity. What are we going to do?

Good job we have the broad shoulders of the UK to take all the worry off us.

Interesting that the Scottish Green Party seem to be the only one in the world who are okay with an oil supported economy.

Currently oil isn't much of an asset it probably costs more to get it than it currently makes.

I don't see why Shetland shouldn't have the same exclusive economic zone as Scotland - 200 miles. There would be questions about who owns Rockall as well.

That's okay Ocelot 😉

An independent Shetland is a terrifying idea. The glorious leaders of our council and charitable trusts are incompetent fools without having any more power 😬

As the Patrick Harvie said, it needs to stay in the ground.

Even if it was taken out it'd be worth fuck all because if the fact that the UK government gives oil companies tax breaks rather than taxing them properly. Plus decommissioning.

OK so (stupid question coming): if oil is worth so little and the costs of getting it and decommissioning rigs are so high, why are companies like Hurricane still looking for it? What's the point?

Also, I would be really interested to hear what folk from Shetland think - are people over the moon? Worried about the environmental effects? What?

ocelot - It's always worth knowing where it is. Someday the stuff might be rare again and worth pulling out of deep water areas, or technology might improve to a point where its cheap to get and doesn't land you with huge decommissioning costs.

To put it in perspective its one billion barrels and Fortes is 5 billion.

This find is positive for the UK/Scotland/Shetland. But it isn't big enough to pay for Scottish independence. It's very expensive to extract oil from the North Sea. So the price per barrel has to be quite high in order for the project to become financially viable. IT's also worth remembering that fields are plugged when the product stops making money, and not when the field is actually empty.

In last Scottish Independence referendum the finances of Scottish independence did not account for the enormous cost of decommissioning the many offshore platforms in Scottish waters. A huge oversight. And then the price of oil dropped, huge swathes of the British workforce have been laid off, and several oil services and construction companies have gone under. Oil will come back, but not for some time. And not until it does, can the operators afford to undertake any but the most essential projects.

So, it's good news that there's a find. But, I think it will be some time before the project gets funding/sanction.

Yes, I have worked in the oil industry. (But, before you start throwing tomoatoes, I'd like to point out that at least I am not a banker :-))

No judgy pants here Strix!

I thought decommissioning costs were the responsibility of the oil company. I attach a Bloomberg article saying that when assets are bought and sold the decommissioning costs are shared by the buyer and the seller, and that the UK government would contribute some through tax relief to companies.

www.bloomberg.com/news/articles/2017-01-31/shell-shows-how-to-remove-obstacles-to-north-sea-oil-deals

I don't understand the judge pants comment.

I think it was in reply to you saying you worked in the oil industry but in your defence, at least you weren't a banker - ocelot is saying they're not judging you

There are a number of problems that make that decision more complicated than it sounds. For example, many of the platforms are being sold off from the majors to smaller companies. What happens when the little guys go bankrupt? What happens when a platform which has extended its design life fails structurally (e.g. Falls over). Who will be to blame? The design contractor? The construction contractor? The oil company who commissioned the platform? Or the little Chinese company who owns it now?

Call me a cynic, but I will believe that agreement for decommissioning responsibility when I see it.

Do you agree though that decommissioning costs would not be solely or even mainly the responsibility of the Scottish government, which is what you appear to be implying in your posts above.

Yes, I suppose I have assumed that ultimate responsibility would belong to the government of the land (or water).

I think if independence is to be considered that the cost of decommissioning has to be worked into any equation of financial feasibility. At today's oil prices I seriously doubt financial viability is achievable.

Best to look at it in another 5 or 10 years, when the oil industry has (hopefully) recovered.

Yes, I suppose I have assumed that ultimate responsibility would belong to the government of the land (or water).

TBH, I think you are right. I'm sure an oil company has many ways of wriggling out of its obligations.

I think a responsible government would need to build the cost of decommissioning into the licensing and taxing of the company, sonthatbif a company wants the oil they effectively have to pay up first.

Of course, the really sensible thing to do would be to have the oil fields operated by state owned companies....