I will lay my cards on the table as I have always done. I have never had any time for Oil & Gas UK nor now for its successor Offshore Energies UK. It is just a mouthpiece for the oil companies with hardly ever any suggestion of how the industry impacts the rest of society. So for it now to be moaning about the prospect of a one-off windfall tax, expected to be used to offset the alarming rise in energy costs here, is simply disingenuous. Much of the extra money that has flowed in has had nothing to do with any new venture nor any risk. It is simply the result of the global impact on the energy markets of the criminal assault on the Ukraine by the megalomaniac posing as Russian president.
There seems to be some notion that the oil and gas industry should be allowed to make as much money as it can and that any limits are bad for the general economy. Let’s be frank – oil and gas exploration and production, and in particular the offshore side, is a high risk, high reward venture. Most probably will have forgotten – or never knew about – BP’s infamous $1bn ‘water’ well in Alaska. Or how close the North Sea came to never having had a real offshore industry if Phillips had given up on the Ekofisk area before finally striking oil. And yet these companies and many others carried on investing and looking for hydrocarbons because the potential reward was so great.
I will mention in passing the tale of one small Scottish independent, comprised solely of money-men, who managed to secure a 5% stake in a UK offshore licence. This turned into one of the biggest oil developments of the 1990’s. The operator bought this stake to expand its investment and the moneymen, who only funded exploration and never ponyed up for the actual development costs, all headed off to various golf courses, most never to have to work again.
The general public in Norway, the UK and the USA, on the other hand, will not have forgotten the Alexander Kielland and Piper Alpha offshore disasters with the concomitant loss of hundreds of lives or the Exxon Valdez misadventure which polluted the Alaskan coastline for decades or the Deepwater Horizon tragedy. All of these events were preventable – no act of God or nature were the causes of these events. Human error and corporate failings were behind them all. So the industry, despite creating hundreds of thousands of jobs and paying tax into national coffers, is never going to garner much sympathy. And we haven’t even mentioned the exorbitant rewards given to top executives.
I have to admit that I have had my run-ins with BP over the years when I was editor of Subsea Engineering News, so I am no fan. One has to at least admire, though, the honesty of Bernard Looney who when asked if a windfall tax would restrict the £18bn in investments it had proposed to keep the oil and gas flowing for several more decades said not at all. This is the same company which had to find $40bn or so to fund the Gulf of Mexico cleanup, pay fines and compensation after the Deepwater Horizon accident and is still in business paying billions in dividends to its shareholders. So it is time for the oil and gas industry to simply shut up, pull out its wallet and say we will help in this time of economic hardship. It is the least it can do.