Mike Vickers' Blog

May 17, 2013

What if Scotland becomes Independent – Energy

Filed under: DHI SPIF, economics, Politics, Scotland, Scottish Independence — derryvickers @ 4:12 pm

In my last blog I referred to the series of ‘conversations’ on various aspects that would have a major impact on Scotland if its people decide to vote Yes in the referendum next year.  Here are my notes on the third conversion on Energy.  The participants are listed at the end of my note

  1. Investment in the Oil & Gas industry will remain competitive.  Other terrains are high risk / high gain – global capital even in oil & gas is limited
  2. North Sea a mature hydrocarbon province – risks not negligible and the gains are not great
  3. Steep downward curve of production – returns and attractiveness very susceptible to tax take
  4. Continued volatility it price per barrel 70$ to 270$
  5. Almost ½ million employed in Oil & Gas in Scotland
  6. We have very strong expertise in oil & gas in Aberdeen in particular – don’t  rock the boat with renewables.  May be one expertise to cross fertilise the other
  7. Dividing the responsibility of who pays if Independence happens – don’t expect any favours from rUK in the negotiations – who is legally responsible for removing the obsolete subsea infrastructure – £30b – already past its sell-by date
  8. Of course decommissioning nuclear is bigger still
  9. Only players in energy game  in Scotland are hydrocarbons and renewables
  10. Production and Supply should be better tied together as the two end of the supply chain
  11. This would allow costs to be spread more fairly
  12. At present the fuel poor suffer a double whammy – they can’t take out long term contracts and have to pay more for what they have (prepay meters) and they have less money to pay with anyway

A couple of personal comments

  1. How much does Scotland’s future depend on cheap energy or are we post manufacturing and its only our brain power that counts  – these of course are an asset which could quickly swamped by China and to some extent India
  2. Very little on the sources of energy production itself – oil & gas taken as read – renewables do exist but nothing on what they are? wind, ?wave, ?tidal.  We are still heavily dependent on coal and also cross border base supply.  And is nuclear quite dead?  (may be not a DHI consideration but one for the RSE).
  3. Could have been more on social aspects of energy pricing – good that Trisha McAuley had been invited

 

 

”The Scottish Energy Sector:

in the Context of Possible Constitutional Change in Scotland”

Main Speaker: Dr Andy Kerr, The University of Edinburgh

Chair: Jeremy Peat, Director David Hume institute

Authors of paper and contributors to Discussion; Professor Mark Schaffer and colleagues (Heriot Watt University); Professor John Paterson and Professor Greg Gordon (Aberdeen University); Professor Kim Swales and colleagues (Strathclyde University); Ms Trisha McAuley (Consumer Focus Scotland)

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