Oil & Gas UK: Well Services Sector Booming

Oil & Gas UK’s survey of the well services sector published yesterday (23 May) reveals that companies delivering drilling, completion, testing and maintenance for oil and gas wells generated gross revenue of £1.9 billion ($3.05 billion) in 2012, the highest since records began in 1996.

In line with increasing oil and gas activity on the UK Continental Shelf (UKCS), the total number of technicians and graduate engineers employed by well services contractors rose to 2,200 and 1,700, respectively, with new recruits into both groups also increasing.

The sector continued to invest in future capacity with spending on equipment and technology rising by around five per cent from $178 million to $186 million. Technological innovation remained a priority for well services contractors, some of whom spent up to 90 per cent of their annual capital investment on developing new technologies.

The Rt Hon Dr Vince Cable, Secretary of State for Business, Innovation and Skills, welcomed the report saying: “These figures show just how valued the UK’s expertise in the oil and gas sector is across the world. They also emphasise the value and potential growth of the industry to make a stronger UK economy. We want to continue to attract investment into the supply chain so that we can compete internationally.

“That is why we chose to develop an industrial strategy for the oil and gas sector. Launched in March, it’s about working with industry to focus on skills, technology, exports and access to finance.”

Oil & Gas UK’s operations director, Oonagh Werngren, said: “Once again, well services contractors have achieved robust growth, contributing significantly to the economy and innovation while creating new jobs for highly skilled people. The higher than expected rise in gross revenue could be attributed to a number of factors ranging from increased exploration and production activities since 2011 to the growing number of technically complex wells that require the specialist knowledge of well services contractors.

“The sector is, however, competing with other booming oil and gas provinces around the world with respondents reporting a 19 per cent rise in the number of UK employees working overseas to deliver well services outside the UK. Attracting, retaining and engaging skilled personnel here in the UK represents a challenge to the industry, one which is being addressed, together with Government, to ensure that this sector, alongside others, can continue to flourish.”

Respondents to the survey cited Step Change in Safety and Oil & Gas UK as the initiatives which are most effective in encouraging safety and efficient business within the industry.

Looking forward, well services providers forecast that gross revenue will rise by around 5 per cent in 2013 but business growth may be hindered by continuing concerns regarding the limited supply of skilled personnel and the availability of equipment.