The North Sea Story: Oil, Gas and Sustainable Development

Core Activities
From the 1960s the oil and gas industries have conducted large-scale drilling, infrastructure development (onshore and offshore), shipping, terrestrial and aerial transport and other related activities in the North Sea, associated with exploration, extraction, transport, processing and delivery of hydrocarbons. These activities have generated, and continue to generate, significant environmental, economic and social impacts and long-term effects. Dialogue, negotiation and cooperation among oil companies, local authorities, communities, national government agencies, universities, environmentalists, civil society organisations, fishermen’s associations, workers’ unions, local businesses, farmers and others, have enabled the effective management of these impacts and effects, and facilitated the adaptation to change and to new opportunities by local communities and organisations.

The following is a summary of key events and processes associated with the activities of the oil and gas industries in the UK’s North Sea waters (for information and analysis relating to Norway’s North Sea experience, see the Norwegian Model):

  • In the 1960s exploration revealed significant offshore deposits of oil and gas along the coasts of Scotland.
  • In 1974, in response to widespread public support among the people of Shetland Islands and Scotland for measures that would ensure benefits for local communities and minimize  negative impacts from the activities of the oil and gas industries, the UK Parliament passed the Zetland County Council Act 1974, which gave the new Shetland Islands Council (SIC) extraordinary powers over most of the seas around the Shetland Islands (except for a large area governed by Lerwick Port Authority), powers which remain unique to Shetland, in the UK. These powers include: a) special powers for SIC of compulsory purchase relating to Sullom Voe, where the main oil and gas terminal was built; b) SIC was made the harbour authority for the whole of the territorial sea around Shetland Islands; and c) SIC was granted financial powers to borrow, invest and participate in business. These powers were the foundation for SIC’s successful negotiations with the oil industry over the terms and benefits of their operations on the islands and in the surrounding sea.
  • The first commercial extraction of oil occurred in 1975, using tankers to ship the oil to onshore storage and processing facilities.
  • During the 1970s intense infrastructure development took place along Scotland’s coasts, specially in and around Aberdeen, Peterhead and other ports, and in North Sea waters of UK’s continental shelf (UKCS), including onshore and offshore developments in the Shetland Islands.
  • During the 1980s gas reserves became increasingly important, as attention focussed on gas as a cleaner source of energy. New technology was developed to meet the new demands for gas, and to maximise yields from smaller oil and gas fields.

  • During the 1980s numerous alliances were formed between international oil corporations, local and national UK companies, local authorities, universities, environmental organisations and civil society associations, to address key issues related to community needs, supply chain demands, technological innovation, environmental concerns, safety and health.

  • Adapting to change became a significant challenge for local authorities, communities and businesses in Scotland. The new situation generated an influx of people to Aberdeen, which became the ‘oil capital’ of the UK, and increased demand for local services and goods that created thousands of new jobs and many income-generating opportunities for local entrepreneurs. Demands for skilled workers and technology for the new industry were met by universities and technical colleges through the creation of new teaching, research and development programmes and projects.

  • Developing a supply chain to meet the diverse demands of the growing industry led to the development of innovative relationships between producers/suppliers and the industry. These relations evolved from purely transactional exchanges into partnerships aimed at creating win-win solutions to the multiple supply chain challenges encountered.

  •  Working in North Sea oil projects, especially on offshore facilities, has always been dangerous. On 6th July 1988 the Piper Alpha offshore production platform exploded, killing 167 workers. To date this disaster is the North Sea industrial accident that has caused the biggest loss of life. The terrible accident led to stricter legislation and more rigorous monitoring and enforcement, as well as increased collaboration between workers’ representatives and company managers, regarding safety and health standards. In Norway, a significantly greater degree of workers’ participation in developing, managing and monitoring safety and health procedures in North Sea oil industry work environments, has led to less accidents and a greater protection of human life and natural environments (see the paper The Norwegian Model-Ryggvik by historian Helge Ryggvik for details and analyses).

Significant Changes Generated by North Sea Oil and Gas Production
North Sea oil and gas developments have generated numerous and diverse benefits for Scotland, the Shetland Islands and the UK in general. These include a very significant contribution towards meeting the UK’s growing energy demands; generating considerable fiscal revenues over several decades for HM Treasury; creating hundreds of thousands of jobs and income-generating opportunities and thousands of new industries and businesses; providing the foundations and incentives for a new national energy distribution and delivery system; promoting and enabling the development of new skills among North Sea oil workers and the development of technological innovations, both of which are significant UK export products today; as well creating the conditions and incentives to foster myriad relations of cooperation in research, technological development, training, environmental protection and social investment amongst public, private and community actors.

A very significant development in UK’s North Sea experience is the role played by local government authorities in ensuring benefits to local communities from the the activities of the oil and gas companies operating in the region, as well as in monitoring and evaluating the impacts and long term effects of these operations, and in facilitating the adaptation of communities to the changes and new opportunities associated with those operations. The role played by Shetland Islands Council (SIC), which includes active protagonism in many multi-stakeholder environmental and social monitoring and planning forums, is an eloquent expression of this important change. Jonathan Wills is a Shetland Islands’ environmentalist, writer and community leader, currently an elected independent councillor of SIC. In a conversation with LEF in May 2013, he described the changes that have occurred in the Shetland Islands as a result of the operations of the oil and gas industry on the the islands and in the UK’s North Sea waters, as well as the significance of those changes.

The achievements and contributions of the North Sea oil and gas developments, in the context of sustainable development, constitute a very important source of learning for communities, local authorities, businesses, universities and other actors involved in, or affected by, similar industrial developments in different parts of the world. Proposals by noted environmentalists (see Sakhalin-Oil-Doing-it-Right) and learning exchanges implemented by LEF (see Sakhalin Visit Report), have promoted shared learning among people from Russia, Venezuela, Iran and other countries, around the many significant lessons derived from the North Sea oil and gas developments.

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