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£10.6m for oil & gas innovation
New centre of excellence in Aberdeen to transform industry and academic collaboration.
First Minister Alex Salmond today (Monday February 24, 2014) announced £10.6 million for a new Oil and Gas Innovation Centre (OGIC) which will create and fast track pioneering solutions.
The new Aberdeen-based centre, funded by Scottish Funding Council and supported by Scottish Enterprise and Highlands & Islands Enterprise, will bring together more than 2,300 oil and gas operators and service companies with 12 Scottish universities with more than 450 academic staff and researchers working primarily on oil and gas specific technologies.
The OGIC priorities are:
• Enhanced Oil Recovery
• Subsea – including Subsea Tie Backs, Separation, Injection and Metering
• Seismic and Reservoir Characterization – including subsurface imaging
• Shale gas exploitation
• Asset integrity and life extension
• Production Optimisation
• Well Construction, Drilling and Completions including High Pressure High Temperature (HPHT)
• Health, Safety, Environment and Project Management
OGIC will support industry aims to increase production and reduce costs in the UK Continental Shelf by enabling the delivery of ground-breaking technical solutions, using the skills and expertise of Scottish universities, innovators and industry.
Today’s announcement will leverage over £26 million of investments from various sources, including industry contributions and through other external funding agencies within its first five years.
The First Minister said Scotland’s oil and gas reserves are a huge bonus for Scotland which strengthens further the country’s diverse economy, he continued:
“Recent estimates suggest that activity in the North Sea fields will last for decades with 24 billion barrels of oil equivalent, valued at £1.5 trillion.
“Almost all oil production and more than half of total gas production over the next three decades will take place in Scottish waters. And, of course, only through independence would Scotland receive the tax revenues from this production.
“As an international oil and gas exporter, Scotland is undeniably a main player and that is why it is so important we harness the expertise of our universities and bring them together with industry. Increasingly, our companies are embracing the major opportunities in the oil and gas supply chain, winning lucrative contracts to export products and services from Scotland.
“Scotland has many creative, innovative companies and academic institutions capable of identifying growth opportunities and delivering industry solutions. Today’s announcement demonstrates the confidence in our oil and gas sector and its ability to be pioneers of groundbreaking industry advances.”
Laurence Howells, Interim Chief Executive of the Scottish Funding Council said:
“I am pleased that we can support this partnership with nearly £11 million. Drawing on the rich knowledge, expertise, and innovative technology of our universities, the Oil and Gas Innovation Centre will help the industry to be more efficient, reduce its impact on the environment, and increase jobs and growth in Scotland.”
Maggie McGinlay, director of energy at Scottish Enterprise said:
“Scotland’s oil & gas industry is made up of global operators and suppliers – along with an experienced supply chain of small to medium sized companies which we know have the foresight and capabilities to develop significant innovations in the sector. By bringing this together with the expertise of our world-class higher education system, OGIC presents a real opportunity to help maximise the recovery of oil & gas reserves.”
Charlotte Wright, Director of Business & Sector Development at Highlands and Islands Enterprise, said:
"The future of Scotland's oil and gas industry relies on the introduction of new deployment and recovery techniques, of new materials and the fresh design and construction of innovative subsea equipment. Businesses across the Highlands and Islands have a long and successful track record in the oil and gas sector and the establishment of the OGIC will help ensure that our region will continue to play a full part in addressing these challenges."
Notes to editors
The centre has been awarded £10.6 million from the Scottish Funding Council and is supported by Scottish Enterprise.
Academic partners include Heriot-Watt University, Universities of Aberdeen, University of Strathclyde, University of Abertay, University of Dundee, University of Edinburgh, University of Glasgow, University of the Highlands and Islands, Robert Gordon University, University of St Andrews, Glasgow Caledonian University and University of the West of Scotland.
‘Maximising the return from Oil & Gas in an independent Scotland’, is a Scottish Government paper published last July. It was developed alongside extensive discussion with industry experts and outlines the sector’s contribution to the economy and the substantial gains it offers to an independent Scotland. It sets out the Scottish Government’s commitment to provide long-term stability for the country’s world-leading offshore industry, including guaranteeing formal consultation on future changes and greater clarity on decommissioning tax relief.
Elsewhere the paper highlights that:
- There are around 24 billion barrels of recoverable oil & gas remaining in the North Sea with a potential wholesale value of up to £1.5 trillion. This means that more than half the value of North Sea oil is still to be extracted.
- Research by Professor Alex Kemp suggests that almost all oil production (98.8 per cent) and around 60 per cent of total gas production over the next three decades is expected to take place in Scottish waters.
- An independent Scotland could produce six times its domestic oil demand and three times the country's domestic gas demand based on current production.
- Gross-domestic product (GDP) per person in Scotland increases from broadly the same level as the rest of the UK even without offshore oil activity to 118 per cent of the UK average when a geographic share of North Sea output is included. And while onshore tax receipts per person in Scotland are broadly in line with the rest of the UK, the inclusion of offshore revenues lifts Scottish tax receipts to £1,700 per person higher than across the UK.
- Tax receipts account for a smaller proportion of revenue than in a number of other major oil-producing nations, for example it accounts for 15 per cent of public sector receipts over the last decade in Scotland, compared to around 30 per cent in Norway.
- Around 200,000 people are employed directly or indirectly in the sector across Scotland, with record levels of field investment underway, significant growth expected in the next couple of years and total future investment in companies’ plans worth around £100 billion