On September 18th, 2014 the citizens of Scotland voted on an independence referendum, determining whether Scotland should stay in the United Kingdom or become its own country. Although it was close, the ‘No’ side won with 55.3% of the votes. One commercial enterprise that was keeping a close eye on the results was the oil and gas industry.
Approximately 90% of the United Kingdom’s North Sea oil fields are located in Scottish waters. Scientists and industry experts believe there could be as much as 24 billion barrels of oil equivalent (boe) still untapped and yet to be extracted. Sir Ian Wood, founder of the Wood Group and one of Scotland’s biggest oil tycoons, says there are extensive oil reserves west of the Western Isles and Shetland that are just waiting to be extracted.
Now that the British government has promised to let Scottish parliament be more involved in their own major decisions, a ‘No’ vote was music to the ears of the oil and gas companies. Currently, the oil industry in Scotland is struggling with little exploration money and the possibility of having to sell off many offshore assets. Sir Ian Wood believes the vote has now changed all that. He says the referendum showed the importance of Scotland’s offshore oil rigs to their economy.
With British help and more power given to Scotland, Wood believes the untapped reserves will be developed within the next ten years. Advancements in drilling technology, surveying, oil rig designs, oilfield thread protectors, and oil country tubular goods will maximize the economic extraction of those billions of barrels yet untouched. The vote allowed two key changes to take place. The first change was the Fiscal Review. It showed how badly the economic need really was for new rigs to be built and the oil to be tapped. The second change was the formation of the Offshore Gas Authority (OGA). Now an industry that was struggling to survive will have new life breathed into it. The economy, in turn, will be bolstered when the oil finally starts to flow.
The ‘No’ vote also helped the giant oil companies by lowering taxes and freeing up money needed to go after the oil, which is in extremely harsh and forbidding territory. It will take a lot of dollars to research, build, and perform the explorations necessary. The oil and gas industry is the U.K.’s top corporate taxpayer, and its biggest industrial investor. The industry also is crucial in the field of employment. It employs thousands of well paid, highly skilled and highly trained people, making it one of the largest corporate employers. If the oil and gas industry goes down, so will the United Kingdom’s economy.
To safeguard the industry, Wood believes they must get at those oil reserves, and get at them fast. The longer they wait, the harder it will be and the more money it will cost. The ‘No’ vote played a pivotal role in all this. Without it, Wood believes the industry would have eventually died, along with the economy of the United Kingdom.
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