North Sea oil boom may make Aberdeen 'Texas of Europe'

Press, Volume CXII, Issue 33092, 6 December 1972, Page 27

North Sea oil boom may make Aberdeen ' Texas of Europe'

(By

RAYMONDR. COFFEY,

of the "Chicago Daily News," through N.Z.P~A.)

ABERDEEN. The rule book for the newly-opened American school in Aberdeen specifically bans the wearing of cowboy boots—reflecting the

fact that almost all its 43 students come from Texas.

The menu at the Marcliffe Hotel, where the lunch-time crowd all seem to wear 10gallon hats, now offers hamburgers and steak sandwiches.

And its bar, in Scotland of all places, stocks Old Grand Dad and Kentucky Tavern Bourbon. Five new hotels, including inevitably a holiday inn, are being built and two California companies plan to establish factories here. The big boys have put together SUS3OO,OOO ($NZ252,000) to buy a manor house set in nine acres of ground and turn it into a local "petroleum club.” The great North Sea oil boom is well and truly under way in Aberdeen, which has high hopes as they put it of becoming the "Texas of Europe.” As the above suggests, Americans hold a high stake and a strong hand in the game.

Not a drop of oil has been brought ashore in Britain yet and the first deliveries from

, wells in British waters are b not expected until 1974. ! But there is no doubt that i oil men have found a new [ bonanza in the North Sea, , which it is confidently pre- ' dieted will be bringing in three million to four mil- ! lion barrels a day by 1980.

British Petroleum, whose “forties” field, discovered less than two years ago was the first major find in British waters, recently floated perhaps the biggest bank loan in history—sUS9oo million (SNZ7S6 million) — to develop the field and get the oil moving. Though barely started, the oil boom already is making the major impact on Aberdeen and north-east Scotland. 2000 Americans About 110 companies associated with the oil business have set up offices in Aberdeen sb far—and about half of those are American firms.

With the bom have also come about 2000 Americans, including wives and children. The companies already have provided about 1500 jobs in an area where unemployment is at record levels and that is only the beginning.

For example, Mr Malcolm Bruce, of the north-east Scotland Development Authority noted, Vetco Inc, of Venture California and Baker Oil Tools, also of California, both plan to build factories that

will employ 200 men each. There was no way yet, he said, really to calculate the “spin off” economic benefits to restaurant, hotels, laundries, car and truck rental firms and the dozen of other businesses that service and supply the oil men. Inevitably the invasion of American and other foreign oil men has created some minor frictions—mainly a feeling that Scotland and Scottish people weren’t getting a fair share of the boom. Thus, as Mr Bruce observed, when the Americans first arrived they “brought everything they needed with them” or had it “flown in from Houston.” , This produced mutterings from Scottish businessmen that as one official put it, a “Texas Mafia” was at work seeing to it that all the business went to American suppliers and service companies. Boom profits But now, as Mr Bruce said: “The Americans have discovered that they can buy ballpoint pens and toilet paper just round the comer” and local businessmen are able to cut themselves in for a share of the boom profits. The British Government is also having some influence in making sure that British firms get a crack at the business. It recently has begun to make noises indicating that when bids are considered for the next round of leases in the North Sea, it will take into consideration whether the bidding companies are offering opportunities to British service and supply firms. On the American side, oil men are generally delighted with Scotland.

It is a legend in the business that oil is found only in the most God-awful places on earth and the conditions under which drilling rig crews work in the North Sea—with winds up to 100 miles an hour and huge waves—are as formidable as oil men have run into anywhere in the world. ‘Great’ on shore But on shore in Scotland things are great, according to Mr Joe Vasentine, of Long Beach, California, who is with the Vetco firm. For one thing there is no language problem. “Hell, in Saudi Arabia I’d probably die of thirst before I could learn how to ask for a drink,” he said. The only real problem according to Mr Vasentine and others is that there is a housing shortage, and local people blame the Americans for a staggering increase in the price of houses. Mr Vasentine, whose family is still in Yarmouth, England, for example, tried to rent one old house “which looked like something left over from the Boer War” and found himself being asked for SUS3OO (SNZ2S2) a month. Eighteen months ago, he said, he could have got it for half that. Then he tried to buy a house outside Aberdeen but found the builder was putting them up at the rate of only four a month and Mr Vasentine would have been number 72 on the waiting list. Two views What becomes clear in Aberdeen is that the oil boom generally is seen from two different viewpoints — the strictly Scottish view and the view of Britain as a whole and the rest of the industrial world. The narrower Scottish view is that the oil is in waters off Scottish coasts and is a Scottish asset that should be used to cure Scotland’s chronic economic depression. At its most extreme, this view is expressed by the Scottish Nationalist Party whose long-standing platform calls for separation and independence of Scotland from Britain. The party has managed to elect only one of the

71 Scottish members in the British Parliament but it does poll a respectable vote in the local Scottish elections.

It is now waging a "the oil is ours (Scotland’s)” carsticker and billboard campaign, claiming that the oil can and should make Scotland an independent political and economic entity. Share of royalties Representatives of the major political parties are also saying that at least a major share of the oil royalties should go directly to Scotland — and not into the general British Treasury. There is, it can be fairly said, widespread dissatisfaction with the failure of Britain’s Conservative Government so far at least, to make sure the oil boom pays off for Scotland as well as for the American and other foreign oil companies. As Mr Bruce, of the Development Authority noted, Scotland has a major “emigration problem” because of its chronic depression. “For a start Scotland supplies half the British Army,” he said, just because young Scotsmen could not find any other jobs.

Also, he said, there were now about 12,000 university students in Aberdeen alone—many more than the north of Scotland could possibly absorb given its current economic problems. Hence, he said, these students were, in effect, being “educated for export.” Broader view The oil boom, Scotsmen feel, should help promote a regional development to create opportunities at home. In the broader view, Britain sees the oil boom as major medicine for its chronic balance of payments problem—medicine that should be worth more than SUS2OOO million a year a decade from now, according to some. If it sells the oil abroad it will earn foreign exchange —if it uses it at home it will save the money now spent on importing oil. Britain now uses about two million barrels of oil a day. By 1975 the North Sea should be producing at least half the present demand (though demand is constantly growing). As important as the economic benefits is the fact, as officials at all levels in Government and the oil industry point out, that North Sea oil is “politically secure oil.” The North Sea reserves, vast as they are (12,000 million barrels, some guess) are still a drop in the bucket compared with the oil deposits in the Middle East. But the North Sea oil won’t be subject to the political twists and turn of the volatile Middle East and the constant jacking up of prices. Leverage in deals Having it could give Britain and other countries around the North Sea some additional leverage in their dealings with the Middle East sheikhs. American companies that have already struck "commercial” oil-finds in the ■ North Sea include Mobil,' Amoco, Phillips, Signal and Hamilton Brothers. Up to a dozen rigs were looking for oil in British waters last summer and another 15 drilling rigs are now being built for North Sea use. Besides the money they will make from the oil they produce, American oil men also see the North Sea operations as advancing the whole technology of offshore drilling. They have never had to contend with such conditions before and, as Mr Vasentine said: “We’re all learning . . . it’s a whole new world out there.” The day could come, some suggest, when they’ll be

drilling for oil in the middle of the Atlantic Ocean—thanks in part to what they’re learning in the North Sea. With all the excitement already generated, one can’t help but wonder what it’s going to be like in Aberdeen the day the first oil actually comes ashore.