Tags: industry insights, blog

UK oil and gas industry experts have suggested that 2014 could be a pivotal year for the sector, following a hit and miss performance in 2013.

Wood Mackenzie - a global leader in intelligence and research for the energy, metals and mining industry - stated that improvements in exploration success and production performance are needed in the next 12 months in order to "ensure the longevity of the sector".

Although there was an increase in capital investment last year, this was offset by delayed projects and underperforming production sites.

What has happened since 2011?

One of the biggest problems facing oil and gas companies is finding new sources that are capable of contributing a significant number of barrels per day.

Of course, this issue is not exclusive to the UK and other renowned oil producers - such as countries in south-east Asia and the Middle East - have had problems maximising the potential of wells to varying extents.

According to Wood Mackenzie, only 79 million barrels of oil equivalent (Mmboe) were discovered in the UK in 2013, which has inevitably raised concerns about the future of the industry.

Lindsay Wexelstein, head of UK upstream research for Wood Mackenzie, explained why this was the case.

"Just 52 exploration and appraisal (E&A) wells were spudded last year," she commented.

"This is largely due to stretched company and service sector resources, as well as difficulties some companies faced in raising finance to fund exploration activity."

On the flip side, the North Sea investment boom that started in 2011 has continued over the past two years and Ms Wexelstein has high hopes for the coming 12 months.

"Last year capital investment reached the highest level in real terms since the mid-1970s," she added.

"We anticipate £21.3 billion will be spent on capital investment across 2013 and 2014."

So, what does all this mean for jobseekers?

As Ms Wexelstein stated, one of the biggest disappointments of 2013 from an oil and gas industry perspective was the large number of exploration projects that were delayed.

Nevertheless, it is clear that businesses are finding new sources and figures have suggested that foreign organisations are still interested in exploring UK-based oil reserves. With investment levels predicted to rise in 2014, it is likely that more job opportunities will open up across the sector.

Skills shortages have proven problematic in recent years, which means candidates who do have valuable experience will be highly sought after.

Ms Wexelstein concluded that the UK's upstream sector should look forward to 2014 with "cautious optimism".

She said changes could be made to the way the industry is regulated, following recommendations made in the Wood Review, and the upcoming referendum on Scottish independence could also have huge implications.

"Although some uncertainty remains over the longevity of the sector, 2014 could prove to be a pivotal year for the UK's North Sea," Ms Wexelstein said.

It will be interesting to see how oil and gas professionals fare in 2014, especially in light of recent economic growth in Europe, which should fuel greater demand for energy.