North Sea oil industry 'close to collapse'

North Sea oil industry 'close to collapse'

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Discussion

RichTT

3,047 posts

170 months

Friday 19th December 2014
quotequote all
Gandahar said:
Are you saying that the oil companies are not giving good offshore working habitats? Take it up with them.

As mentioned most offshore workers work in an environment far better for most hours of the day compared to some other sectors working in the UK. At more than twice the pay.

Summary, there is always someone worse off than you and people like to complain, even when they are relatively well off.
A good working environment? The environs of the North Sea are generally not conducive to a good working environment at the best of times. Regardless of the rig you might be on. Seeing as almost all of the crew will be out and about on a regular basis throughout the day, whatever the weather, I'm not sure where you are getting this picture of a cushty life style?

And considering that the 'working environment' is generally very large bits of moving steel, process plant, explosive and flammable materials and live wells it's hard to change the basic risks of the work.

That aside, most of the rigs in the North Sea sector are old, both in regards to the accommodation and the plant outside. Tell me, how many other sectors in the UK put up with:

- Working away from home for 2-4 weeks at a time
- 12+ hours shifts without a day off for that time
- Unable to use phones/internet apart from short periods after your 12 hour work shift to keep in touch with family
- Severe weather conditions on a regular basis
- Travel to work by helicopter
- Working on top of either live production wells or drilling exploration (both of which just a tad dangerous)
- Staying in cramped cabins, sharing with one or more people, sometimes on the same shift

Is it our choice? Yes of course it is. And some rigs are much better/worse than others. But I'm not entirely sure where you get off saying that the wages are not warranted given the risks involved. It's danger money pure and simple.

hairyben

8,516 posts

182 months

Friday 19th December 2014
quotequote all
MissChief said:
of course now the banks have seen themselves as 'too big to go bust' and have been propped up by governments before, what's to stop the 'we can do as we please' attitude, in the belief that if it happens again the Governments will step in again?
Hasn't a lot of the noise been about separating investment banking from high street banking, so that investment arms can fail with limited knock on?

DonkeyApple

54,921 posts

168 months

Friday 19th December 2014
quotequote all
Devil2575 said:
DonkeyApple said:
Indeed. It's a wonderful political tool. Just look at how Brown managed to shift the blame of his deregulation of retail debt to increase spending beyond means onto the Jews (or rather the bankers).

Political blaming the money lenders for their overborrowing is as old as the hills.

The difference is that this time around the base level of education in the UK is so low that few people are aware of their puppetry.
I rather think you're over simplifying things yourself here, just the other way round.

The Politicians lost sight of what the banks were doing as did a lot of the bankers I suspect. The banks left themselves vulnerable and when it went tits up the whole house of cards fell down.

To suggest that the economic meltdown was all the fault of governments and not the fault of the finacial instituations that got themselves into the st in the first place is simply wrong.

Oh and the comment about the base level of education being low is more rubbish too.

Compared to when exactly?

Final point, someone change the fking thread title as I get an error message everytime I post and have to go back into the forum again!!

Edited by Devil2575 on Friday 19th December 17:00
It can be made very simple. Govts put in place regulation that prevented banks from being a systemic risk to an economy. We learnt out lesson after the South Sea Bubble.

All govt's, banks and economists know that if you allow unfettered debt then the retail market doesn't self regulate, it over extends and goes pop. But it also knows that for a short while this massive spending of tomorrow's money today boosts tax receipts and creates an artificial boom.

And so began the Greenspan/Clinton euro of deliberate removal of the lending safety nets. The UK copied and in fact went a little further, hence US lenders taking over Canary Wharf to utilise our more lax regulation.

It is that simple. The world knows exactly how lending works which is why we regulate it.

DuckDuck

459 posts

147 months

Friday 19th December 2014
quotequote all
North Sea oil isn't just about offshore, It supports thousands of manufacturing and other related industries. I work for a big player in Aberdeen in subsea technology and my work concerns projects across the world and I work with people across the world. Sure oil price will have an effect but it's cyclical; prices won't be low for that long.

As someone has already said the readjustment was overdue.

DonkeyApple

54,921 posts

168 months

Friday 19th December 2014
quotequote all
Devil2575 said:
DonkeyApple said:
Saudi oil is amongst the cheapest to extract with things like shake oil amongst the most expensive. In the middle you have deep sea then shallow sea like North Sea basin.

Then there are different types of oil, Saudi oil is quite heavy so contains less of the higher another fractions, such as hexane that make up petrol but is great for burning in our power stations of for other core industrial purposes, North Sea oil is light and very rich in hexanes and the other octane fractions that make up our fuel needs.

The cost of US oil is much higher than Moddle East so OPEC can drive the US really hard if it wants to.

Aberdeen will contract as projects get shelved but it is a central hub for much of the globe''s production so there will still be plenty or work and revenue just leaner and just as has happened before.

What is interesting is that off the exchanges oil is trading well under $50 and this suggests there is more to go on the fall of the exchange prices. Our 'house' view is that the fall has gone too far for a quick recovery. That there is no extra storage capacity so propping up the price via central buying isn't an option so high end producers are going to have to fail and st down to remove supply from the system.

So in short, prices could go much lower potentially.

In addition, Russia is totally fked. Wheat is up 30% from lows as Russia will not be exporting if the ruble stays so low. And industry is screwed as they cannot buy in resources due to the cost of USD to them and the massive fall in oil dollar revenue isn't going to improve soon.

In short, Russia is on the edge of repeating 1998/9 and it will take banks like Barclays with it as well as Deutsche and others.

Frankly, Aberdeen contracting off oil boom highs is a total irrelevance compared to what the whole of the UK might face again.

One could almost believe that the West may be incentivised to knock out some overseas production?
That's an interesting post but I've heard a different take on it.

While oil prices falling is bad in some respects it actually has a net benefit on world economic growth, not for countries who are net producers, but for those that aren't. I'd be supprised if our banks are seriously exposed to failing if Russia dies on it's arse. I suspect that this situation may force Putin's hand into backing down over Ukraine so that sanctions are lifted.
That's the longer term macro advantage. We as a net importer become more competitive and manufacturing and transport costs fall.

What we are looking at presently Imre the short term ramifications of sovereign default

The recent UK bank stress tests didn't factor in the default of a major economy and several UK banks are hugely leveraged to Russia, notably Barclays and I think HSBC or Standard chartered.

And we only have to look at the fact that most oil producing nations are not exactly politically or religiously stable to see that a massive fall in USD income is going to trigger civil unrest.

YankeePorker

4,763 posts

240 months

Friday 19th December 2014
quotequote all
RichTT said:
A good working environment? ......... how many other sectors in the UK put up with:

- Working away from home for 2-4 weeks at a time
- 12+ hours shifts without a day off for that time
- Unable to use phones/internet apart from short periods after your 12 hour work shift to keep in touch with family
- Severe weather conditions on a regular basis
- Travel to work by helicopter
- Working on top of either live production wells or drilling exploration (both of which just a tad dangerous)
- Staying in cramped cabins, sharing with one or more people, sometimes on the same shift
You forgot no beer after work.........eek

YankeePorker

4,763 posts

240 months

Friday 19th December 2014
quotequote all
Devil2575 said:
I have a lot more sympathy for the permanent staff than I do the contractors.
Why? The contractors allow the companies to be reactive and downsize rapidly, as they're doing now, so they are an essential part of the business model. They might get paid more, but that is also because their employment is precarious, they don't get sick pay, holiday pay, employer funded pensions, company share schemes, etc. Often, while junior staffers go business class, the more experienced contractor is stuck in economy class at the back of the plane.

It's a choice, the permies always have the option of going contract if they're good enough at their job to swing it......

hidetheelephants

23,749 posts

192 months

Friday 19th December 2014
quotequote all
DonkeyApple said:
One could almost believe that the West may be incentivised to knock out some overseas production?
[Tinfoil hat]
Time for that invasion of Iran Bush wanted? A nice proxy war in the middle east ought to rally the oil price.
[/Tinfoil hat]

hehe

98elise

26,372 posts

160 months

Friday 19th December 2014
quotequote all
RichTT said:
Gandahar said:
Are you saying that the oil companies are not giving good offshore working habitats? Take it up with them.

As mentioned most offshore workers work in an environment far better for most hours of the day compared to some other sectors working in the UK. At more than twice the pay.

Summary, there is always someone worse off than you and people like to complain, even when they are relatively well off.
A good working environment? The environs of the North Sea are generally not conducive to a good working environment at the best of times. Regardless of the rig you might be on. Seeing as almost all of the crew will be out and about on a regular basis throughout the day, whatever the weather, I'm not sure where you are getting this picture of a cushty life style?

And considering that the 'working environment' is generally very large bits of moving steel, process plant, explosive and flammable materials and live wells it's hard to change the basic risks of the work.

That aside, most of the rigs in the North Sea sector are old, both in regards to the accommodation and the plant outside. Tell me, how many other sectors in the UK put up with:

- Working away from home for 2-4 weeks at a time
- 12+ hours shifts without a day off for that time
- Unable to use phones/internet apart from short periods after your 12 hour work shift to keep in touch with family
- Severe weather conditions on a regular basis
- Travel to work by helicopter
- Working on top of either live production wells or drilling exploration (both of which just a tad dangerous)
- Staying in cramped cabins, sharing with one or more people, sometimes on the same shift

Is it our choice? Yes of course it is. And some rigs are much better/worse than others. But I'm not entirely sure where you get off saying that the wages are not warranted given the risks involved. It's danger money pure and simple.
Sounds like being in the Navy (as I was) except we were away for months, and shared cabins with 20-30 people, and instead of oil we have magazines full of live weapons.

We didn't get any danger money frown

DonkeyApple

54,921 posts

168 months

Friday 19th December 2014
quotequote all
hidetheelephants said:
DonkeyApple said:
One could almost believe that the West may be incentivised to knock out some overseas production?
[Tinfoil hat]
Time for that invasion of Iran Bush wanted? A nice proxy war in the middle east ought to rally the oil price.
[/Tinfoil hat]

hehe
That's the sort of thing. Or let Isis overrun Iraq oil facilities or let some Ebola carriers in to Nigeria/Gabon etc. wink

Although, at these levels an awful lot of new US production is under water.

And then there is Gazprom. Someone big will fold if oil spends longer below these levels and supply will fall naturally and bring price stability.

Devil2575

13,400 posts

187 months

Friday 19th December 2014
quotequote all
DonkeyApple said:
It can be made very simple. Govts put in place regulation that prevented banks from being a systemic risk to an economy. We learnt out lesson after the South Sea Bubble.

All govt's, banks and economists know that if you allow unfettered debt then the retail market doesn't self regulate, it over extends and goes pop. But it also knows that for a short while this massive spending of tomorrow's money today boosts tax receipts and creates an artificial boom.

And so began the Greenspan/Clinton euro of deliberate removal of the lending safety nets. The UK copied and in fact went a little further, hence US lenders taking over Canary Wharf to utilise our more lax regulation.

It is that simple. The world knows exactly how lending works which is why we regulate it.
That's over simplistic.

You say all but how come no one was shouting for further regulation when governments were deregulating? The opposition parties certainly weren't, in fact they supported it. I'd go as far as saying that if Brown and Clinton had suggested more regulation there would have been widespread opposition from both the republicans/conservatives and the banks. Hindsight is a wonderful thing but the fact is very few people saw the economic collapse coming even those who should have seen it. It wasn't just an issue of over extending either. The issue was that the banks lost sight of how much risk they were exposed too, they didn't simply lend too much to people who couldn't afford to pay, at least not in the UK. The problem was clever people decided that packaging up debts and selling them on as a new financial product was a great way to make money. The result was that UK banks had no idea how much they were exposed to the US sub prime market. Politicians also clearly had no idea how exposed national financial institutions were the events on distant shores.

So yes, financial institutions need proper regulation to stop them screwing the economy, however I've not heard anyone of any substance claiming that this is purely the fault of politicians. Pretty much the only place I have read it is in a right wing blog from the US, which is a little ironic. What it is saying is that the economic downturn was caused because the Clinton Administration did what any good capitalist would do and deregulate. What he should have done is behave like a good socialist and regulated further. This is a strange stance for a right wing blog, given how much they hate anything with even the slightest whiff of socialism. Maybe they figure that it is better to try and blame the Democrats and hope that voters don't realise the implications of what they're saying for unfettered capitalism.

The final point is that it's a strange argument to make that politicians are to blame for the actions of independent financial institutions. While pretty much everyone would agree that with hindsight deregulation was a mistake, to then say that the institutions bear no responsibility is odd. Is it the fault of the government that people are fat because they haven't heavily taxed certain foods?



Devil2575

13,400 posts

187 months

Friday 19th December 2014
quotequote all
YankeePorker said:
Devil2575 said:
I have a lot more sympathy for the permanent staff than I do the contractors.
Why? The contractors allow the companies to be reactive and downsize rapidly, as they're doing now, so they are an essential part of the business model. They might get paid more, but that is also because their employment is precarious, they don't get sick pay, holiday pay, employer funded pensions, company share schemes, etc. Often, while junior staffers go business class, the more experienced contractor is stuck in economy class at the back of the plane.

It's a choice, the permies always have the option of going contract if they're good enough at their job to swing it......
I'm not saying that I have a problem with contractors but it's what you sign up for. No one goes into contracting with the expectation that the good times will last very long. Contracting is a lifestyle choice, you earn big when the going is good and when it isn't you are prepared to move around. I've got mates that do it and none of them expect sympathy when things take a turn for the worse. Contracting is like an all day drinking session. The day and night are great and everyone has a blast but when you sober up it hurts like fk. But who cares because the hangover never last that long as the next drinking session isn't that far away. It's not for me though.


Tomo1971

1,127 posts

156 months

Friday 19th December 2014
quotequote all
So hold on here....

Price of crude is going down, price of fuel at the pumps is going down helping the 'little people' who may now get an extra £10 to £20 a week in their pocket.

So to help the oil companies in their 'hour of need' we should pay more for fuel so that they can earn more. Erm No, FRO. Where were they when the litre was £1.40 +? Were they dropping their cut to help US? No.

Get Tae Fu&k.

Private companies been far too greedy and bowing to shareholders to deliver dividends and not thinking of the future and keeping some profits aside in their time of need.

Not my problem pal.

whoami

13,151 posts

239 months

Friday 19th December 2014
quotequote all
Devil2575 said:
No one goes into contracting with the expectation that the good times will last very long.
Unfortunately, loads of folk go into contracting thinking just that.

DonkeyApple

54,921 posts

168 months

Friday 19th December 2014
quotequote all
Devil2575 said:
DonkeyApple said:
It can be made very simple. Govts put in place regulation that prevented banks from being a systemic risk to an economy. We learnt out lesson after the South Sea Bubble.

All govt's, banks and economists know that if you allow unfettered debt then the retail market doesn't self regulate, it over extends and goes pop. But it also knows that for a short while this massive spending of tomorrow's money today boosts tax receipts and creates an artificial boom.

And so began the Greenspan/Clinton euro of deliberate removal of the lending safety nets. The UK copied and in fact went a little further, hence US lenders taking over Canary Wharf to utilise our more lax regulation.

It is that simple. The world knows exactly how lending works which is why we regulate it.
That's over simplistic.

You say all but how come no one was shouting for further regulation when governments were deregulating? The opposition parties certainly weren't, in fact they supported it. I'd go as far as saying that if Brown and Clinton had suggested more regulation there would have been widespread opposition from both the republicans/conservatives and the banks. Hindsight is a wonderful thing but the fact is very few people saw the economic collapse coming even those who should have seen it. It wasn't just an issue of over extending either. The issue was that the banks lost sight of how much risk they were exposed too, they didn't simply lend too much to people who couldn't afford to pay, at least not in the UK. The problem was clever people decided that packaging up debts and selling them on as a new financial product was a great way to make money. The result was that UK banks had no idea how much they were exposed to the US sub prime market. Politicians also clearly had no idea how exposed national financial institutions were the events on distant shores.

So yes, financial institutions need proper regulation to stop them screwing the economy, however I've not heard anyone of any substance claiming that this is purely the fault of politicians. Pretty much the only place I have read it is in a right wing blog from the US, which is a little ironic. What it is saying is that the economic downturn was caused because the Clinton Administration did what any good capitalist would do and deregulate. What he should have done is behave like a good socialist and regulated further. This is a strange stance for a right wing blog, given how much they hate anything with even the slightest whiff of socialism. Maybe they figure that it is better to try and blame the Democrats and hope that voters don't realise the implications of what they're saying for unfettered capitalism.

The final point is that it's a strange argument to make that politicians are to blame for the actions of independent financial institutions. While pretty much everyone would agree that with hindsight deregulation was a mistake, to then say that the institutions bear no responsibility is odd. Is it the fault of the government that people are fat because they haven't heavily taxed certain foods?

Er, it is very widely accepted that it was the Clinton administration that deregulated lending by allowing debt to be sold off balance sheet so that unlendable people ended up being able to get loans.

It could only have been done by govt removal of regulation.

In the UK, Thatcher started but the big retail changes came in the late 90s.

Everyone remembers the mantra 'light touch regulation'.

It really is that simple. Debt is toxic. It is like many things a poison in too high a dosage. Regulation existed to prevent the exact problem we have just had. That is why it was put there.

If it hadn't had been removed we would not have had the credit cars boom, the car financing boom, the housing boom. Non of it. It has all come about since the mid, late 90s precisely because the regulation that stopped it was lifted and what remained was ignored. And everyone all got very rich.


Edited by DonkeyApple on Friday 19th December 23:14

Devil2575

13,400 posts

187 months

Saturday 20th December 2014
quotequote all
DonkeyApple said:
Er, it is very widely accepted that it was the Clinton administration that deregulated lending by allowing debt to be sold off balance sheet so that unlendable people ended up being able to get loans.

It could only have been done by govt removal of regulation.

In the UK, Thatcher started but the big retail changes came in the late 90s. You

Everyone remembers the mantra 'light touch regulation'.

It really is that simple. Debt is toxic. It is like many things a poison in too high a dosage. Regulation existed to prevent the exact problem we have just had. That is why it was put there.

If it hadn't had been removed we would not have had the credit cars boom, the car financing boom, the housing boom. Non of it. It has all come about since the mid, late 90s precisely because the regulation that stopped it was lifted and what remained was ignored. And everyone all got very rich.


Edited by DonkeyApple on Friday 19th December 23:14
Is it widely accepted? I've not heard any reputable economist saying the blame all lies at the door of the Clinton administration. Yes if regulation hadn't been removed then the problem wouldn't have occurred but to say the lack of regulation was to blame is an odd response. It's a bit like saying that the
Jailor is to blame for the crimes of people he has not locked up.

The financial crisis was caused by financial institutions simply because in the absence of regulation they cannot be trusted to behave responsibly. It also wasn't just about the level of debt either for reasons that I've already explained.

The credit card boom is neither here nor there is it? Certainly in the UK the financial crisis was not connected to personal debt.

I think you're twisting the facts to fit your own world view.


DuckDuck

459 posts

147 months

Saturday 20th December 2014
quotequote all
Tomo1971 said:
So hold on here....

Price of crude is going down, price of fuel at the pumps is going down helping the 'little people' who may now get an extra £10 to £20 a week in their pocket.

So to help the oil companies in their 'hour of need' we should pay more for fuel so that they can earn more. Erm No, FRO. Where were they when the litre was £1.40 +? Were they dropping their cut to help US? No.

Get Tae Fu&k.

Private companies been far too greedy and bowing to shareholders to deliver dividends and not thinking of the future and keeping some profits aside in their time of need.

Not my problem pal.
Oil companies don't set the oil price

Devil2575

13,400 posts

187 months

Saturday 20th December 2014
quotequote all
whoami said:
Devil2575 said:
No one goes into contracting with the expectation that the good times will last very long.
Unfortunately, loads of folk go into contracting thinking just that.
You shouldn't be going contracting if you don't understand the nature of the industry you're working in.

DonkeyApple

54,921 posts

168 months

Saturday 20th December 2014
quotequote all
Devil2575 said:
DonkeyApple said:
Er, it is very widely accepted that it was the Clinton administration that deregulated lending by allowing debt to be sold off balance sheet so that unlendable people ended up being able to get loans.

It could only have been done by govt removal of regulation.

In the UK, Thatcher started but the big retail changes came in the late 90s. You

Everyone remembers the mantra 'light touch regulation'.

It really is that simple. Debt is toxic. It is like many things a poison in too high a dosage. Regulation existed to prevent the exact problem we have just had. That is why it was put there.

If it hadn't had been removed we would not have had the credit cars boom, the car financing boom, the housing boom. Non of it. It has all come about since the mid, late 90s precisely because the regulation that stopped it was lifted and what remained was ignored. And everyone all got very rich.


Edited by DonkeyApple on Friday 19th December 23:14
Is it widely accepted? I've not heard any reputable economist saying the blame all lies at the door of the Clinton administration. Yes if regulation hadn't been removed then the problem wouldn't have occurred but to say the lack of regulation was to blame is an odd response. It's a bit like saying that the
Jailor is to blame for the crimes of people he has not locked up.

The financial crisis was caused by financial institutions simply because in the absence of regulation they cannot be trusted to behave responsibly. It also wasn't just about the level of debt either for reasons that I've already explained.

The credit card boom is neither here nor there is it? Certainly in the UK the financial crisis was not connected to personal debt.

I think you're twisting the facts to fit your own world view.
Then, if you'll excuse me, you have not been following the situation.

Banks could never lend off balance sheet. To increase lending the regulation was removed that prevented banks from packaging and selling on debt. Do CDOs ring a bell?

At the same time, banks then needed more buyers for this debt so the investment industry was further deregulated to allow entities such as pension funds to buy higher risk debt assets.

This all began under the Clinton administration as a tool to allow poorer people to buy their own homes. There is even an argument that they took this from Thatchers policy of right to buy as a vote securer.

Our Govt duplicated this. One so that the City could remain competitive, grow and finance all the govt debt spending but also it creates a retail spending boom that makes everyone feel rich, pushes up asset values so you can borrow even more and increases tax take to finance the increased debt.

I don't know how old you are but if you are 40+ then you will very clearly remember the world before credit cards and the world after. So, seeing as credit cards had been around for decades why did so few people have them and why all of a sudden in the mid late 90s was suddenly everyone using credit cards? Same for store cards. Why in the mid late 90s did store cards suddenly become available to the common man? And why at the same time could people suddenly get 100% mortgages or not have to show income to get a mortgage? And at the same time, why did all the building societies demutualise and then why did so many merge under brands such as RBS or HBoS?

Why did all these things happen at the same time? The banks could have done all of these things whenever they wanted surely?

Well no. Regulation prevented banks from offloading client risk. Regulation prevent banks from giving credit to people who couldn't prove they could pay it. Regulation kept bank licenses in line with mutual licenses for fair competition.

And then the regulation was removed. And everyone actually knows when this happened it's when we all started recieving offers from MBNA credit cards, when our banks started offering 100% mortgages, when normal people could get store cards.

None of the consumer debt bubble would exist if the original regulation had remained in place. House prices couldn't have boomed, personal debt couldn't have boomed, all the old building societies which had become carrousel debt vendors wouldn't have needed bailing out.

So please forgive me that having lived through the very heart of this and for these regulatory changes to have defined my entire working life, I do know this subject particularly well.

So may I ask you to invest just ten seconds in putting these words into Google: clinton home loan bill
If this subject genuinely interests you then also Google 'thatcher right to buy' and 'Greenspan economic miracle'

None of the credit crunch could ever have happened without successive Govts through the West deliberately removing the regulation that previous Govts had specifically put in place to protect the people from this very event.

And if you want to learn about the birth place of this regulation then it all began in England and in the aftermath of the South Sea Bubble which was the first fully documented and defining credit crunch of the modern world and where regulation was technically born.

Anyway, back to oil: Find a Western 20th/21st century global recession that hasn't been preceded by a medium term spike in oil prices. wink

Horse Pop

685 posts

143 months

Saturday 20th December 2014
quotequote all
World's smallest violin etc.