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Six major challenges facing the UK oil and gas sector


There are many challenges facing the UK oil and gas sector which will determine success in the long term. While many of these issues can be tackled by the industry itself, some of the challenges are external and present a potential uncertain future.

Resistance to shale gas

Shale gas could be the answer to a lot of prayers, but in order to find this gas, which is deep below ground, hydraulic fracturing seems to offer a solution. This is not an easy sell, as Cuadrilla recently found throughout their time at Balcombe. Some are already planning their first 'fracking' venture into the Irish Sea with permission granted from the Department of Energy and Climate Change but protests abound about the process. However, if the shale gas revolution does take a hold in the UK, the potential benefits are huge with some estimates saying there is £70bn worth of shale gas in South Wales alone.

Expertise and skills

Those that decide to take on the job of hydraulic fracturing in UK seas will need the resources, qualifications and experience to carry out this type of job. In fact, the industry as a whole needs to ensure that it can fill the specialist roles across the entire industry. The costs of decommissioning are expected to reach £30bn and will be a long term project. As such, skills and expertise need to be developed. The Oil and Gas Academy launched in 2007 was a good start but further investment in skills and training is required.

Environmental concerns

Environmentalists are not best pleased however; as they believe water supplies could be severely compromised. However, hydraulic fracturing out at sea has advantages, not least of which is that it avoids the ongoing battles with local communities and local government.

Declining Production

The UK oil industry took a bit of a knock last year as it saw production decline at record rates and this has been an ongoing trend. The UK's tax revenues from oil and gas in 2012-13 were £4.7bn lower than the year before, amounting to a 40% fall.

Investment and resource

Investment into the North Sea energy industry during 2013 reached the highest levels since the 1970s. Interest in the area is high with Energy consultancy Wood Mackenzie forecasting that 14 new fields with the capacity to produce 438m barrels of oil equivalent will be brought on stream by the industry in 2014. However, the nest 12 months in critical because of one large factor...

Scottish Independence

One of the biggest uncertainties that t he UK oil and gas industries faces right now is one that is ultimately out of the industry's control. On Thursday 18th September 2014 the Scottish public will get to vote on whether Scotland becomes an independent state. 

The challenges posed require experts in the field who can bring the talent and skills to the table before reassurances can be given. The future of oil and gas will be both a challenging and exciting journey.

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