Aberdeen, Aspc Stats

[CGS]

Undertook some light reading with regards to the Oil Price correlation topic above. 

Quick summary of findings - Oil Price, Employment Rates, Interest Rates seemingly drive the house price inflation or otherwise (in places such as Aberdeen, Houston, Stavanger etc). The long term oil price predictions drive the underlying economics which in turn encourages investment in the basin (which then drives jobs, contracting etc). Political stability and fiscal tax regimes play a large part too of course. There are a multitude of other factors of course e.g financial gearing, break even price, lending / private equity, joint venture risk sharing, exchange rates, recoverable reserves, production profile, abandonment etc.

Demand Factors ref. House Prices (from the PDF below) - Population, Geographical Preferences, Unemployment, Consumer Confidence, Interest Rates, Income for Households, Inflation

Supply Factors ref. House Prices Housing stock, Construction Cost & Building Standards 

Banks willingness to lend and their valuations determine Loan To Value ratios in the background.

Have a read for yourself and draw your own conclusions. Aberdeen is also a nice place to live in terms of proximity to beaches, mountains, forests, etc. Climate wise it's not the warmest but is certainly a good deal drier than the west coast of Scotland. Access to quality education is also a key factor for most.

In the end, it boils down to everyone's appetite for risk. No-one can predict what will happen down the line.....

 

 

[cashinmattress]

24 minutes ago, CGS said:

No-one can predict what will happen down the line.....

The decline of the basin and DECOM is entirely 'predictable'...

https://oilandgasuk.co.uk/decommissioninginsight/

See section 4.

Perhaps the 'unprecitable' part is whether or not industry is going to leave a huge or gargantuan burden of DECOM cost to the UK taxpayer. 

[CGS]

27 minutes ago, cashinmattress said:

The decline of the basin and DECOM is entirely 'predictable'...

https://oilandgasuk.co.uk/decommissioninginsight/

See section 4.

Perhaps the 'unprecitable' part is whether or not industry is going to leave a huge or gargantuan burden of DECOM cost to the UK taxpayer. 

Check out Section 3 where it states............

1. Timing of Cessation of Production is notoriously hard to predict

2. It mentions a falling oil price (written in 2017) - that oil price is above $80

3. It also says, despite the fall in oil price, decomm. has not accelerated. It goes onto state that the "(UKCS) focus is to maintain or extend field life by reducing costs & increasing operation efficiency"

Section 4 also stated that "the timing of this activity is inherently uncertain and could be pushed out as the industry strives to maximise economic recovery."

In the late 90's, the advice was to avoid the UKCS oil industry as it was in terminal decline. Two decades on and that has been proven to be misplaced wisdom. Why, because no-one can predict when the NE's fortunes will end and Aberdeen/shire proves it's resilience time and time again. Yes, it shall end one day but the reason a large proportion of people still choose to reside in the NE is because it keeps proving to be a valued source of employment and an attractive place to be. 

To illustrate the how tricky it can be to predict the oil price, we used to hear about Lower for Longer, then it was Lower Forever. These type of comments are barely uttered these days and there's even glib talk of $100 (which is not good for anyone IMHO)

Besides, the readers of this forum are led to believe such sources of information (O&GUK, the OGA etc) were potential sources of "baloney" in your opinion ? When that document was published the oil price had averaged $50-55 for 2017. 

The other colossal unknown is the part that future technology and innovation shall play......of course, such developments can also threaten jobs and livelihoods.

Here's another read that for general consumption :-

https://www.scotsman.com/news/innovation-and-tech-is-driving-the-north-sea-back-to-growth-1-4806058

[cashinmattress]

1 hour ago, CGS said:

Check out Section 3 where it states............

1. Timing of Cessation of Production is notoriously hard to predict

2. It mentions a falling oil price (written in 2017) - that oil price is above $80

3. It also says, despite the fall in oil price, decomm. has not accelerated. It goes onto state that the "(UKCS) focus is to maintain or extend field life by reducing costs & increasing operation efficiency"

Section 4 also stated that "the timing of this activity is inherently uncertain and could be pushed out as the industry strives to maximise economic recovery."

In the late 90's, the advice was to avoid the UKCS oil industry as it was in terminal decline. Two decades on and that has been proven to be misplaced wisdom. Why, because no-one can predict when the NE's fortunes will end and Aberdeen/shire proves it's resilience time and time again. Yes, it shall end one day but the reason a large proportion of people still choose to reside in the NE is because it keeps proving to be a valued source of employment and an attractive place to be. 

To illustrate the how tricky it can be to predict the oil price, we used to hear about Lower for Longer, then it was Lower Forever. These type of comments are barely uttered these days and there's even glib talk of $100 (which is not good for anyone IMHO)

Besides, the readers of this forum are led to believe such sources of information (O&GUK, the OGA etc) were potential sources of "baloney" in your opinion ? When that document was published the oil price had averaged $50-55 for 2017. 

The other colossal unknown is the part that future technology and innovation shall play......of course, such developments can also threaten jobs and livelihoods.

Here's another read that for general consumption :-

https://www.scotsman.com/news/innovation-and-tech-is-driving-the-north-sea-back-to-growth-1-4806058

Stuff your reports.

The North Sea is in terminal decline. I think everybody knows this by now. We're talking keeping antiques running here.

This 'transferable tax history' scheme is fatally flawed in its current draft as well.

Further, Aberdeen is a one horse town. Nothing can change that.

There has been far too much speculation in the property market.

On your bit from the 90's... you are referring to the CRINE initiative, if you aren't aware of it... which rationalised a lot of how it worked then.

[Diver Dan]

On 06/09/2018 at 12:35, Diver Dan said:

Rightmove sales info for July is out.

https://www.rightmove.co.uk/house-prices/detail.html?columnToSort=DEED_DATE&originalIncode=&outcode=&incode=&country=scotland&locality=&buildType=1&propertyType=0&landRegTenureType=ANY&year=30&radius=0.0&sortOrder=descending&locationIdentifier=REGION^4&referrer=detailPage

410 sales in Aberdeen that month.

Currently 6176 for sale and 716 for rent on ASPC.

1303 to rent on Citylets

Aspc's total for sale has dropped slightly from the high-water mark of just over 6200 in the last few weeks as it did last year. I think we'll see this number decrease steadily over the next few months before it starts to rise again for Spring Bounce 2019™.

Any thoughts?

Rightmove Aberdeen

301 Sales in Aberdeen according to Rightmove:

6102 For Sale on ASPC and 690 For Rent

1279 For Rent on Citylets

In contrast to what Aberdein and Considine were saying recently, the housing market activity actually seems to have been a bit subdued in August.

Q3 reports should be coming in soon.

[shortbread]

On 30/09/2018 at 21:22, CGS said:

Check out Section 3 where it states............

1. Timing of Cessation of Production is notoriously hard to predict

2. It mentions a falling oil price (written in 2017) - that oil price is above $80

3. It also says, despite the fall in oil price, decomm. has not accelerated. It goes onto state that the "(UKCS) focus is to maintain or extend field life by reducing costs & increasing operation efficiency"

Section 4 also stated that "the timing of this activity is inherently uncertain and could be pushed out as the industry strives to maximise economic recovery."

In the late 90's, the advice was to avoid the UKCS oil industry as it was in terminal decline. Two decades on and that has been proven to be misplaced wisdom. Why, because no-one can predict when the NE's fortunes will end and Aberdeen/shire proves it's resilience time and time again. Yes, it shall end one day but the reason a large proportion of people still choose to reside in the NE is because it keeps proving to be a valued source of employment and an attractive place to be. 

 

I understand your opinion CGS and I do see a lot of buoyancy in the O&G sector. 

This presently is the perfect storm for Oil price hikes: Venezuela completely down, ME tensions, Iran sanctions, supposed tightening in the oil markets, OPEC declining to boost production. Yes the best oil can do (even after a lot of bullish bets) is to linger in the $80 mark. Albeit it is a lot better than the $50s, what we are seeing now is in my belief the best case scenario. It will continue to peak just before the November Iran sanctions kick in simply to see prices deflate soon after.

If news is to be believed US is already handing out waivers on Iranian oil imports. Iran simply saw the decline in exports to be made up with higher oil prices. US Shale production is also growing stronger. The big question is, is the supply side really that tight? The demand side is in best case scenario stagnant, so continuing growth in prices is questionable. 

Where does that leave Aberdeen? I do not see recovery/growth. The present infrastructure/idle supplier resources/capacity is more that capable to handle any spurt in O&G action. Some of the major players are consolidating portfolio and others are quitting altogether. Stability is good news at present, but let us not mistake it for growth.

The issue for Aberdeen is not whether there is oil in the North sea, the issue is there id oil available elsewhere. While costs have drastically lowered recently it will only go up. There will be continued resistance form the workforce, push comes to shove additional taxation form Westminister etc... The North Sea is not the most ideal scenario to invest billions into, plenty of fish elsewhere. That is if everyone is interested in investing, a big if in case the oil prices head south again.

Even if there is oil out there which many believe is not the case, who exactly is exploring and finding them. Apart from some Shetland action there is nowhere enough discoveries to keep it chugging along to the next decade. Ten years down the line we will still be discussing recoveries and bounce back when the actual economy is shrinking before everyones eyes.

Which brings us to house prices. The population is falling, has been so for the last few years and will be amplified once Brexit kicks in. Considering there are 6k+ house available for sale, more new builds in the pipe line, who will buy them? In that case if the prices pip lower, how is it a good investment? Something has to drastically change in local property demand for house prices to recover. I am not even taking tightening credit going forward due to rate rises!

 

 

 

 

[shortbread]

https://oilprice.com/Energy/Crude-Oil/North-Sea-Oil-Renaissance-Could-Flop.html

[cashinmattress]

1 hour ago, shortbread said:

https://oilprice.com/Energy/Crude-Oil/North-Sea-Oil-Renaissance-Could-Flop.html

Aberdeen is unable to deliver projects effectively.

[hurlerontheditch]

1 hour ago, cashinmattress said:

Aberdeen is unable to deliver projects effectively.

I worked in Aberdeen for 4 years. projects were so inefficient. a project would start then all these small consultancies would get a study to do. In my opinion a lot of them were pointless studies. producing specifications and reports for equipment that was repeat order equipment. a lot of the specs and reports were never used as it was brownfield extension work, adding more well sets etc. when i challenged this i was told this was the way projects were run. there was a reason draftsmen were driving 911 GT3's into work!

 

when i moved south and worked on major projects in west Africa and Oz the studies performed were generally ones that were actually needed.

[cashinmattress]

50 minutes ago, hurlerontheditch said:

I worked in Aberdeen for 4 years. projects were so inefficient. a project would start then all these small consultancies would get a study to do. In my opinion a lot of them were pointless studies. producing specifications and reports for equipment that was repeat order equipment. a lot of the specs and reports were never used as it was brownfield extension work, adding more well sets etc. when i challenged this i was told this was the way projects were run. there was a reason draftsmen were driving 911 GT3's into work!

 

when i moved south and worked on major projects in west Africa and Oz the studies performed were generally ones that were actually needed.

EPC firms are exceptionally good at spending 75% of their collected wisdom and intellect fabricating dissent in order to push chargeable hours on a client... and maybe.. just maybe 25% on actual engineering.

The EU directives are so awash with legal grey areas that the EPC's abuse HEAVILY to invoice clients and squeeze suppliers. It doesn't help that the focal point in the clients office, usually a major, is on equally silly money and is likely a 'good old boy' with no common sense, or some youngster fresh of the internal training program with no real engineering practice.

Group think, rule by committee and a culture of dishonesty intertwined with a lack of accountability and lack of continuity. Like drones.

There is absolutely nothing a young skilled graduate cant do in short order, supervised and trained/supported that a senior EPC type engineer does. Nothing.

Yet in Aberdeen you have people running a project plan earning silly money, and draffies driving Porches as noted... and in the good days you got 'found out' but jumped ship for an extra quid to the competition.

I'm sure the usual suspects will disagree.

In the end most of the folk up there will be out of work and generally unemployable. Sad.

[hurlerontheditch]

32 minutes ago, cashinmattress said:

EPC firms are exceptionally good at spending 75% of their collected wisdom and intellect fabricating dissent in order to push chargeable hours on a client... and maybe.. just maybe 25% on actual engineering.

The EU directives are so awash with legal grey areas that the EPC's abuse HEAVILY to invoice clients and squeeze suppliers. It doesn't help that the focal point in the clients office, usually a major, is on equally silly money and is likely a 'good old boy' with no common sense, or some youngster fresh of the internal training program with no real engineering practice.

Group think, rule by committee and a culture of dishonesty intertwined with a lack of accountability and lack of continuity. Like drones.

There is absolutely nothing a young skilled graduate cant do in short order, supervised and trained/supported that a senior EPC type engineer does. Nothing.

Yet in Aberdeen you have people running a project plan earning silly money, and draffies driving Porches as noted... and in the good days you got 'found out' but jumped ship for an extra quid to the competition.

I'm sure the usual suspects will disagree.

In the end most of the folk up there will be out of work and generally unemployable. Sad.

we must have crossed paths in real life!!

 

[Ignorantbliss]

Latest edition of the Aberdeenshire Local Development Plan 2021 Newsletter came out today - link.

Main item of interest is that the council are now passing views on the proposed developments submitted by developers.

It takes a bit of searching through the various area committee meeting minutes (accessible via this link, look for a section titled along the lines of "Aberdeenshire Local Development Plan 2021 - Main Issues Report"), but overall going by what I have read so far the council is not overly impressed by the quality of the submissions received.

Consequently a lot of the proposals are rejected - interesting to see all the big developments around Westhill get the thumbs down. 

It would appear that our local builders are a bunch of chancers, well, who would have thought!

Where the council is in favour of a proposal, what caught the eye is the number of times you see comments about "underdevelopment of land" within a proposal, with the council then recommending that the development should have 50-100% extra homes delivered on the site.  

I do wonder if the councillors ever visit the new estates being built as the big problem with them in my view (and why I would never buy a home in one) is that they are too dense with the consequent issues that brings with parking etc.

[hurlerontheditch]

 

https://www.bbc.co.uk/news/uk-scotland-north-east-orkney-shetland-45835531

 

 

Quote

"However, with oil now sitting above $80 - and suggestions that global events could push it higher - savvy buyers and investors are returning to the market in Aberdeen."

[cashinmattress]

2 hours ago, hurlerontheditch said:

https://www.bbc.co.uk/news/uk-scotland-north-east-orkney-shetland-45835531

savvy buyers...

savvy investors...

uh huh

[Oily]

On 15/10/2018 at 08:35, hurlerontheditch said:

 

https://www.bbc.co.uk/news/uk-scotland-north-east-orkney-shetland-45835531

 

 

 Bloomin disgrace....saw a number of comments on Facebook yesterday from people who clearly believed the hype because it was written by an 'expert'. The naivety of folks beggers belief. And I saw another solicitor backing up this article today.

It is misleading to compare the current situation with the 1980's as ALL the circumstances are different, not least in 1985 nearly all the NS oil and gas was yet to be produced whereas now only the hard/expensive to exploit opportunities remain.

Also with regard economic diversification - well that's a lot easier to say than do - you only have to look at Dundee (lost Timex, NCR, jute, publishing); the central belt (lost coal, shipbuilding, car manufacturing); north of England (lost textiles and manufacturing) to see how well they're doing.  Aberdeen has lost papermaking, fishing, granite quarrying and farming (as a major employer) but the slack was more than taken up by the oil industry, whose days/years are numbered. The chances of Aberdeen becoming a major employer as a result of becoming a centre of excellence for the oil and gas industry are zero.

[hurlerontheditch]

1 minute ago, Oily said:

 Bloomin disgrace....saw a number of comments on Facebook yesterday from people who clearly believed the hype because it was written by an 'expert'. The naivety of folks beggers belief. And I saw another solicitor backing up this article today.

It is misleading to compare the current situation with the 1980's as ALL the circumstances are different, not least in 1985 nearly all the NS oil and gas was yet to be produced whereas now only the hard/expensive to exploit opportunities remain.

Also with regard economic diversification - well that's a lot easier to say than do - you only have to look at Dundee (lost Timex, NCR, jute, publishing); the central belt (lost coal, shipbuilding, car manufacturing); north of England (lost textiles and manufacturing) to see how well they're doing.  Aberdeen has lost papermaking, fishing, granite quarrying and farming (as a major employer) but the slack was more than taken up by the oil industry, whose days/years are numbered. The chances of Aberdeen becoming a major employer as a result of becoming a centre of excellence for the oil and gas industry are zero.

totally

 

look at Aker moving their manufacturing out of Aberdeen to near London

[SOLZHENITSYN]

On 30/09/2018 at 23:46, cashinmattress said:

Stuff your reports.

The North Sea is in terminal decline. I think everybody knows this by now. We're talking keeping antiques running here.

This 'transferable tax history' scheme is fatally flawed in its current draft as well.

Further, Aberdeen is a one horse town. Nothing can change that.

There has been far too much speculation in the property market.

On your bit from the 90's... you are referring to the CRINE initiative, if you aren't aware of it... which rationalised a lot of how it worked then.

As someone that works in the North Sea, we are seeing a lot of the super majors slowly starting to return to the basin over the past 24 months.

yes, discovered barrels are obviously in decline, but I wouldn’t write the basin off just yet.

enhanced recovery from existing discoveries and potential to find new exploration plays are game changers.

Statoil, Exxon, BP, Shell, Total - all shown renewed interest in the basin recently.

[Gregor]

4 hours ago, SOLZHENITSYN said:

As someone that works in the North Sea, we are seeing a lot of the super majors slowly starting to return to the basin over the past 24 months.

yes, discovered barrels are obviously in decline, but I wouldn’t write the basin off just yet.

enhanced recovery from existing discoveries and potential to find new exploration plays are game changers.

Statoil, Exxon, BP, Shell, Total - all shown renewed interest in the basin recently.

I know the forum is ‘house price crash’ but it’s nice to hear a balanced /positive view to change up from Those predicting doom to Aberdeen with the upmost glee. 

 

[EME]

Sorry, here’s more positive news:

Tourists do come to Aberdeen.

I’ve got my “west end executive” BTL flat listed as a short term holiday let on well known sites. So far i’ve made more than double what I would renting it out the traditional way.

The best part is I’m not paying council tax, I’m getting small business rates relief.

Got a day rate increase last month too, first in 2.5 years.

Things are on the up.

 

[Unexpected]

On ‎09‎/‎10‎/‎2018 at 09:30, hurlerontheditch said:

I worked in Aberdeen for 4 years. projects were so inefficient. a project would start then all these small consultancies would get a study to do. In my opinion a lot of them were pointless studies. producing specifications and reports for equipment that was repeat order equipment. a lot of the specs and reports were never used as it was brownfield extension work, adding more well sets etc. when i challenged this i was told this was the way projects were run. there was a reason draftsmen were driving 911 GT3's into work!

 

when i moved south and worked on major projects in west Africa and Oz the studies performed were generally ones that were actually needed.

Strangely, I've worked for major subsea companies in Aberdeen and London for many years and none of the draffies in any of the companies I've worked for have ever turned up in a Porsche or other similar sports car. Loads of sports cars around of course but not belonging to draffies. Most of them are savers and more interested in paying off their house than having a flashy car.

[hurlerontheditch]

11 minutes ago, Unexpected said:

Strangely, I've worked for major subsea companies in Aberdeen and London for many years and none of the draffies in any of the companies I've worked for have ever turned up in a Porsche or other similar sports car. Loads of sports cars around of course but not belonging to draffies. Most of them are savers and more interested in paying off their house than having a flashy car.

I know in 2008 in Aberdeen there were two drafties who drove a GT3 with a roll cage and the other a jag! brand new. used to work 10 hours a day on a large hourly rate!

[EME]

Yup, young daft draffies with an extra grand a month spare to blow on a flash car.

No chance they’d save  the required £100,000 up first. 

Not uncommon in any industry to be honest. There’s always one show off with a loud orange car in an office.

You don’t need to be a millionaire to have a flash car these days.

[shortbread]

HM Land Registry, Aug House Price Index

Aberdeen fall continues, -4%

Quote

Scotland house prices grew by 4.1% in the year to August 2018, up from 3.6% in the year to July 2018. Scotland house prices are growing quicker than the UK annual rate of 3.2% in the year to August 2018. 

House prices increased over the last year in 28 out of 32 local authority areas. The biggest price increase was in West Dunbartonshire, where prices increased in the year to August 2018 by 11.9% to £111,000. The largest decrease was recorded in City of Aberdeen, where average prices fell over the year by 4.0% to £161,000.

 

Average price change

Sales Volumes

The sliding sales volumes is a big worry across Scotland. While the shortage of supply is a valid excuse elsewhere, Aberdeen is a different story altogether with plenty of surplus stock. 

[cashinmattress]

19 hours ago, SOLZHENITSYN said:

As someone that works in the North Sea, we are seeing a lot of the super majors slowly starting to return to the basin over the past 24 months.

yes, discovered barrels are obviously in decline, but I wouldn’t write the basin off just yet.

enhanced recovery from existing discoveries and potential to find new exploration plays are game changers.

Statoil, Exxon, BP, Shell, Total - all shown renewed interest in the basin recently.

Perhaps so... but this is short term stuff. You're basing your observation on what?... exploration & development drilling are down.. way down... such that new wells are not replacing those being decommissioned.

You have to think in terms that majors do... 10, 15, 20+ year planning horizons... although I think planning anything over 10 years in the basin is a bit overly optimistic.

As should anybody wanting to buy into Aberdeen housing, right?

Even with cost cutting measures the North Sea is still one of, if not the, highest cost basins.

The (new) PE players who have bought up ageing major assets are here for quick profits, whereby they'll abandon ship. 

Further, there is a continuing trend to move out of the NE of Scotland because of costs.

And of course... everybody is aware of the £30, 40, 60, 80 billion??.. mostly taxpayer funded decommissioning liabilities.

It is also running very lean... and if your'e a type that works in the basin you've seen the same silly cuts I have... or had.. I've switched to renewables while the getting's good. (silly cuts as in ones that are critical to safety!!)

Sure, the majors will have lots of stake in certain wells, fields, but are they building infrastructure? 

Is anyone building enough infrastructure to replace the assets decommissioned?

If the basin starts showing profit in a sustainable way.. do you not think HM.gov is going to swoop down with new levies and taxes?

6104 properties on ASPC... property prices have wiped out all equity for marginal to small down-payment buyers in the last decade or so... think very carefully before putting down your pay packet in this town.

IMO it's as good as it will get. The only people that are really in the know are the geologists, and they're a tight-lipped bunch normally.

[SOLZHENITSYN]

9 hours ago, cashinmattress said:

Perhaps so... but this is short term stuff. You're basing your observation on what?... exploration & development drilling are down.. way down... such that new wells are not replacing those being decommissioned.

You have to think in terms that majors do... 10, 15, 20+ year planning horizons... although I think planning anything over 10 years in the basin is a bit overly optimistic.

As should anybody wanting to buy into Aberdeen housing, right?

Even with cost cutting measures the North Sea is still one of, if not the, highest cost basins.

The (new) PE players who have bought up ageing major assets are here for quick profits, whereby they'll abandon ship. 

Further, there is a continuing trend to move out of the NE of Scotland because of costs.

And of course... everybody is aware of the £30, 40, 60, 80 billion??.. mostly taxpayer funded decommissioning liabilities.

It is also running very lean... and if your'e a type that works in the basin you've seen the same silly cuts I have... or had.. I've switched to renewables while the getting's good. (silly cuts as in ones that are critical to safety!!)

Sure, the majors will have lots of stake in certain wells, fields, but are they building infrastructure? 

Is anyone building enough infrastructure to replace the assets decommissioned?

If the basin starts showing profit in a sustainable way.. do you not think HM.gov is going to swoop down with new levies and taxes?

6104 properties on ASPC... property prices have wiped out all equity for marginal to small down-payment buyers in the last decade or so... think very carefully before putting down your pay packet in this town.

IMO it's as good as it will get. The only people that are really in the know are the geologists, and they're a tight-lipped bunch normally.

I am an exploration geologist

The North Sea has some of the highest value per barrel prospects/discoveries in the world.

obviously reserve numbers are on a downwards trajectory. That won’t change.

but the value is there.