Before pandemic restrictions caused the price of oil to crash, which has resulted in expenditure on operations in the North Sea grinding to a virtual halt, the port had been set for a very good year assisting both oil and gas operators and the renewable energy industry.
Instead, as Joanne Allday, strategic business development manager at the port explains, the Cromarty Firth witnessed the arrival of a succession of deep-sea rigs coming into its sheltered deep waters to safely anchor until demand and offshore operations increased.
“Drilling activities in the North Sea dropped to record lows once the world started locking down due tothe pandemic. At one point we had some 17 rigs laying up and sheltering in the Firth, making use of the deep water,” Allday says.
Under normal conditions, a number of rigs would come into the port through the course of a year to undergo inspection, repair and maintenance, all of which would create work for the local oil and gas supply chain. Allday points out that rigs will also come into the port to lay up between offshore contracts. The sheer number choosing to lay up through March and April shows just how much North Sea activity was impacted by the pandemic.
The anchored rigs generate fees for the port but as Allday notes, port officials would much rather have a working industry, with rigs only coming into the port because they need inspections, repairs and/or maintenance, as this would benefit the local supply chain and safeguard local employment.
On the plus side, she says, five rigs recently left the port, having won contracts to continue oil and gas operations. “As travel restrictions have begun easing around the world, we have seen a modest pick-up in oil and gas activity and that is what everyone in the sector wants to see.
“We still have 14 rigs in the Firth at this moment in time, and how soon most of them will be returned to work depends absolutely on the fluctuations in the price of oil,” she comments.
One of the peculiarities of the impact of the pandemic was that as demand for oil dropped, more and more of what was still being produced had to go to storage, to the point where the oil companies were running out of storage capacity. This led to prices in the USA dipping into negative territory for the first time. That situation is now gradually unwinding, which is why North Sea exploration activities are gradually restarting.
Allday points out that parts of the supply chain have benefited from the fact that renewables work has continued. “A number of the oil and gas supply chain companies that we deal with have been using their expertise to support renewables,” she says.
Work on the Moray East offshore wind project has created some work for the local supply chain through the period, which has been extremely welcome. “We had expected that the Moray East project would be additional, on top of the normal activities associated with oil and gas exploration and production. Instead, it has been a replacement for some of this work. However, hopefully, over the course of the coming months, we will see both sectors, oil and gas and renewables, operating and creating opportunities,” she says.
The medium-term future looks extremely bright, with Crown Estate Scotland opening up the next seabed leasing round for offshore wind (ScotWind). The majority of sites for lease are in close proximity to the Cromarty Firth and could create a 50-year pipeline of work for local people and businesses.
For more information please visit www.pocf.co.uk
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