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Vote No, Amec urges Scots amid worries over North Sea  

Credit:  By Alistair Osborne, and Emily Gosden | The Telegraph | 05 April 2014 | www.telegraph.co.uk ~~

The chief executive of engineering giant, Amec, has become the latest business leader to urge voters to reject Alex Salmond’s dreams of an independent Scotland.

Samir Brikho said a Yes vote in the referendum in September would create uncertainty for business at a time when the North Sea required “billions of pounds” of investment to maximise oil and gas production from its fields and also faced similar costs to dismantle rigs coming to the end of their lives.

Amec, which provides engineering and project management services for the oil and gas, nuclear and mining industries, employs 4,500 workers in the North Sea.

“For me, there is no question. I believe in the UK – that being together is a better outcome for both the Scots and the English,” Mr Brikho told The Telegraph.

Meanwhile, an official report will this week warn Scottish households of soaring energy bills if they vote for independence and the increasing risk of blackouts because of Holyrood’s drive to use intermittent renewable power sources, such as wind farms.

The Scottish population would have to shoulder hundreds of millions of pounds in subsidies for the disproportionately high share of the UK’s wind farms built north of the Border, the report from the Department of Energy and Climate Change will say.

They would also have to foot the bill for multi-billion pound energy network upgrades planned for Scotland – work currently funded through levies on all consumers across the UK as a whole.

The Treasury has disclosed that a sharply decline in oil revenues left the Scottish government with a deficit of £12bn last year, and warned of mounting financial pressures.

Giving his first interview since Amec formally unveiled its £1.9bn takeover of US-listed rival Foster Wheeler in February, Mr Brikho said that, despite the concerns over declining North Sea production, the current rate of around 1.3m barrels of oil or gas equivalent a day could be maintained, but only if people were prepared to invest heavily in new extraction techniques.

“I’m not so sure about declining production. Maybe the production will remain stable,” he said.

“You just have to make more investment in high pressure, high temperature – you need to increase the pressure in the wells to extract more.”

Mr Brikho, who is following his counterparts at BP, Shell and, last week, the engineer Weir in calling for the Scots to turn down independence, also warned of the growing liabilities associated with shutting down old rigs after 40 years of drilling in the North Sea.

“A lot of installations have come to an end-life status. What are we going to do with the platforms out in the North Sea? Leave them there, or take them back home?

“You can’t just cut the top. You have pipes filled with oil. It will never happen unless you say, ‘If you take home two or three, we’ll give you a tax break on your next investment’.” He added that the closure costs would run to “billions and billions. I think there will be business for the next 50 years”.

Mr Brikho, who joined Amec in 2006 and transformed it into a company providing services across the energy markets, said he believed the Scots would ultimately vote against independence.

The report from the Department of Energy and Climate Change will assess the impact on the energy sector as a whole if Scotland votes to go it alone in September.

Government sources say they believe that an independent Scotland could struggle to keep the lights on while also pursuing its target of generating 100 per cent of its energy from renewable sources.

“The UK has a broad mix of energy sources, which means that if there is a shortage of any single energy source, then other energy sources can fill the gap,” the report will say, casting doubt on what would happen in Scotland when the wind doesn’t blow or the sun doesn’t shine.

The Government has already warned that the Scottish government would have to invest the equivalent of £3,800 for every person in Scotland to honour the UK’s tax commitments for decommissioning North Sea oil and gas fields.

This week’s report is expected to build on warnings from Ed Davey, the energy secretary, who told an Edinburgh audience last month: “The size of the United Kingdom protects Scottish consumers from the full costs of Scottish power generation.”

The report will say that Scotland benefits from a disproportionate amount of support for renewable energy. Scottish projects received 28 per cent – some £560 million – of the total UK subsidy bill in 2012-13. Yet Scotland has just a tenth of the households in the UK.

Mr Davey has warned that if Scotland votes for independence, “maintaining this level of support would take up a greater proportion of national finances, meaning either higher taxes, higher energy bills or cuts in other areas”.

He said that almost 30 per cent of investment in upgrades to the British transmission grid over the next 7 years – more than £6bn – was due to be spent north of the Border and would have to be paid for by Scots alone after independence.

Fergus Ewing, the SNP’s energy minister, has argued that English rather than Scottish households would be at increased risk of blackouts because they would miss out on the power produced by Scottish wind farms.

But the week’s report is expected to dismiss this suggestion, saying separation would have a minimal impact on the rest of the UK.

The report is also expected to cast doubt on Scotland’s ability to attract investment as an independent country.

It will emphasise that Scotland’s current status as an “energy hub” derives from its position as part of the UK because “single regulation across the whole country and long term economic stability are attractive for investors”.

Source:  By Alistair Osborne, and Emily Gosden | The Telegraph | 05 April 2014 | www.telegraph.co.uk

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

The copyright of this article resides with the author or publisher indicated. As part of its noncommercial effort to present the environmental, social, scientific, and economic issues of large-scale wind power development to a global audience seeking such information, National Wind Watch endeavors to observe “fair use” as provided for in section 107 of U.S. Copyright Law and similar “fair dealing” provisions of the copyright laws of other nations. Send requests to excerpt, general inquiries, and comments via e-mail.

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