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Sir Ian Wood’s words should not be lost amid the politics

Sir Ian Wood’s words should not be lost amid the politics

Scotland’s independence referendum continued to dominate the headlines this week as it will for many months yet.

But the debate came to the north east, with Aberdeen’s tale of two cabinet meetings and a string of announcements and counter-announcements on energy all competing for top billing.

The clamour and the politics might just have drowned out the most important voice, though.

To many in Scotland’s highly lucrative oil and gas industry, the only character that mattered this week was Sir Ian Wood.

The sector veteran had been asked by the UK Government to produce a state of the industry review, guiding future policy for a crucial segment of the economy.

Massively wealthy and hugely respected after forging what has become a worldwide energy services firm with revenues running to billions of dollars and a global workforce of almost 50,000 people, Sir Ian’s words rightly hold huge weight.

He called for exploration efforts to be stepped up to ensure full exploitation of recoverable reserves in UK waters and for best use of modern technology to maximise the take from tough-to-reach areas.

But he also spoke of more collaboration: between government and the industry; and between operators, to help develop resources on a cost-reducing regional basis rather than in isolation.

He wants a new regulator to oversee the sector, too.

A “watershed opportunity”, Sir Ian called it, with a confident prediction that the changes he proposed could add at least £200 billion to the economy over the next two decades.

What he did not say though he must have been asked over and over again was what independence would do for the sector. Better or worse?

I heard him on the radio. Quietly, respectfully, the question was batted away.

A strong oil sector would be better whatever the outcome of the independence referendum, he said.

Perhaps he feared all hell might break loose if he got into the debate on the wireless at breakfast time.

Or perhaps, and more likely, he’d rather talk about the business than the politics.

Because the business appears to be in a tricky spot.

Trade body Oil & Gas UK backed Sir Ian up when it released its annual activity survey.

Fewer and fewer exploration wells were drilled last year, it reported, but capital expenditure continues to climb.

Operating costs are at all-time high.

And last week, Scottish Gas owner Centrica said it was more likely to invest in gas production in the USA than in the North Sea because of rising costs.

Put simply, the easiest and cheapest oil has already been tapped.

We’ve now got to find ways to get to the hard to reach stuff and that’s what Sir Ian’s suggestions are all about.

It’s too easy to think of oil as something that happens up there in Aberdeen.

In reality, its tax revenues fund public services across the country, thousands of workers get their pay packets and spending power from it, and supply chain companies from all over the UK rely on business from the sector.