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Oil & Gin: will Scottish spirits become more valuable than Scottish oil?
Aug 14, 2015
Below is an excerpt from the August 2015 edition of GINNED! Magazine about Rock Rose Gin and the Dunnet Bay Distillery. Every month, Craft Gin Club Members receive a bottle of amazing small-batch gins and gin complements accompanied by GINNED! Magazine which is full of information about the gin, the distillery and loads of fascinating features.
Before he listened to his heart and pursued his passion of brewing and distilling, Martin Murray, the distiller behind Rock Rose Gin, spent ten years guided by his head which led him to spend ten years working in Oil & Gas as an engineer largely in his native Scotland. It’s no secret that in Scotland Oil & Gas is of huge importance, it being the biggest industry in terms of contribution to GDP and one that plays heavily in the debates on Scottish Independence.
But even as the Independence movement debates its main objective, it is having internal debates about the impact of Scottish oil on the country’s future, primarily because different estimations of this impact exist. Here, we shine a light on these estimations as well as facts about the industry which, depending on your interpretation, may find itself between a Rock Rose and a hard place in the coming decades.
Peak Production
Most estimates show that Scotland’s North Sea Oil & Gas industry hit peak production in 1999 when it produced about 6 million barrels per day. By 2013, this figure had dropped to approximately 1.5 million barrels, the same rate as in 1977 and a rate that is expected to continue its decline.
Reserves
Differences over estimates of future reserves are a primary source of contention in the independence debate. The Scottish National Party claims that there are 24 billion barrels left in the ground but leading oil expert Sir Ian Wood estimates these reserves at only 15-16.5 billion barrels.
Tax Revenues
The amount of money that goes to Westminster’s coffers from Oil & Gas companies is just as volatile as the oil price. For instance, from 2011 to 2012 tax revenues amounted to £10.9 billion but from 2013 to 2014 that figure dropped 57% to £4.7 billion, a figure that preceded March 2015 tax breaks.
Production Costs
Although the North Sea claims the world’s highest number of deep sea drilling sites, those sites are becoming increasingly expensive, especially when compared with other regions such as the Gulf of Mexico. In 2004 it cost £4 to extract one barrel of oil. In 2013 the same task cost £17.
Exports
Oil & Gas produced from Scottish fields makes up 28% of the country’s total exports including 20% of exports to the rest of the UK and a whopping 40% of all of Scotland’s international exports. By comparison, Scotch whisky, the third largest contributor to Scottish GDP, accounts for 20% of the country’s exports.
Investment and Employment
Despite the £14 billion invested in new North Sea production in 2013, over £9 billion was needed to maintain existing rigs and wells, many of which are scheduled to run dry in a few years. Production cost rise are causing firms to cut back on costs, primarily employment which will affect the 160,000 people in Aberdeen that depend on the sector. 🍸
