In 2005, Britain’s £44 billion energy sector couldn’t find enough workers to keep up with the soaring demand for oil. At the industry’s hub in Aberdeen, unemployment was at its lowest since records began – barely a third of the average throughout the rest of the UK.
At that time, Deirdre Michie was manager of external affairs for Shell UK. Part of her job was to promote various initiatives to bring in new workers to feed the offshore industry’s seemingly relentless appetite for staff.
Fast-forward 11 years, and that scenario has been completely turned on its head. Now, as the chief executive of trade body Oil & Gas UK, Michie oversees an industry under severe strain where employment has fallen by roughly a quarter since its peak in 2014.
The catalyst for this has been a long stretch of low oil prices, which would have been all-but unimaginable in 2005. The issue now for Michie is how to stop the rot and retain the remaining 330,000 workers whose jobs rely on the offshore industry. “The oil price has dropped, and investment has fallen dramatically,” she says. “If investment falls, then so do jobs.”
Michie was inspired as a youngster by her mother, the late Lib Dem peer Ray Michie. Among her many accomplishments, her mother represented Argyll & Bute in the House of Commons from 1987 to 2001, when she was then elevated to the House of Lords.
The youngest of Baroness Michie’s three daughters earned her degree in law from the University of Dundee before joining the downstream operations of Anglo-Dutch multi-national Shell in 1986, the start of a 30-plus year career in the offshore sector.
Frequently and aptly described as an “industry veteran”, Michie initially worked in a variety of roles downstream before transferring to Shell’s UK upstream operations as a senior commercial negotiator. She subsequently moved to external affairs and then in 2007 was appointed contracting and procurement manager for Europe, where she was responsible for billions in annual purchases. By 2014 she was heading up a small multi-disciplinary team to develop a sustainable operating model for Shell’s UK upstream operations, paving the way for her move to Oil & Gas UK.
Upon taking the post in May of last year, Michie became the trade body’s first female chief executive. She inherited an organisation of 500 members in the throes of efficiency, collaboration and cost-reduction initiatives to stave off one of the most dramatic oil price collapses of recent times.
“There are still 20 billion barrels of oil equivalent to go for out there,” Michie says of the North Sea.
“What we have got to do is ensure we remain competitive in the global market, and to do that we have to bring down costs. The industry has been spending more than it is earning.”
Some progress has been made on this front. According to the UK Department of Energy & Climate Change, production efficiency fell from 81 per cent in 2004 to just 60 per cent in 2012. Oil & Gas UK believes this has now recovered to 70 per cent.
Lifting costs stood at $29.30 per barrel in 2014, but were cut to $21.95 last year, and are expected to be at $17 by the end of 2016. The goal is to hit $15 by next year.
Much of this is down to the work of the Efficiency Task Force (ETF) set up by Oil & Gas UK in the wake of Michie’s appointment. It is focused on three key areas: business processes, in which companies work together and share resources; standardisation of key equipment; and changing culture and behaviours to tackle industry challenges.
The additional economic uncertainty brought on by the Brexit vote has been an extra burden for the sector, but with the decision now taken, Michie is seeking to ensure that the offshore industry’s challenges stay near the top of the political agenda.
To that end, Oil & Gas UK is putting together suggestions for measures the Government can take to stimulate short-term activity, and will make these public at its regular business breakfast in Aberdeen later this month.
“From our point of view, we need to ensure that as an industry we still have access to markets,” Michie says of the UK’s impending departure from Europe. “We still need access to a global workforce, and we still need access to investment.”
30 SECOND CV
Born: London, 1964
Raised: Malaysia, London, Oban
Education: Oban High School, University of Dundee
First job: Working in a shoe shop in Oban
Ambition at school: I probably wanted to be a politician like my mother
Can’t live without: My husband and my boys
Kindle or book: I am on my iPad now
Favourite city: Scotland’s capital, Edinburgh
Preferred mode of transport: I like cycling
What car do you drive: A Mini
What makes you angry: I get frustrated if we are not delivering and that can grow to anger
What inspires you: My mother. She inspired me to do a lot
Best thing about your job: It is the variety, and the fact that I am representing an industry that I genuinely believe is fantastic