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Offshore oil platform, north Scotland
© astudio/Shutterstock
yabo 11选5
16 January 201512:05

Oil industry cuts jobs and exploration budgets in response to falling prices

Mat Hope

01.16.15

Mat Hope

16.01.2015 | 12:05pm
yabo 11选5 Oil industry cuts jobs and exploration budgets in response to falling prices

Oil prices slumped to asix-year lowearlier this week. In response, oil companies around the world have been cutting jobs and exploration and production budgets.

The situation has become worrying enough that the UK government today ordereda reviewinto how low prices put the North Sea industry at risk.

For months, analysts havewarnedof the effect such a price dip could have on the industry.

This week, a number of companies,including fossil-fuel giants Shell and BP, announced they were reducing their budgets for 2015 and cutting hundreds of jobs as a consequence of the low oil price.

Carbon Brief looks at the cuts some of the industry’s key players are making in response to the oil price drop.

Cutting budgets and jobs

The oil price is currently around$48 per barrel, down from a high of about $115 last July. Lots of oil companies have had to adjust their budgets as a consequence. In particular, they’ve had to revise how much they’re going to spend on new projects, known as ‘capital expenditure’, or ‘capex’ for short.

Companies put jobs at risk when they reduce their capex budgets, as fewer projects mean fewer workers are needed.

Here’s a list of the budget and job cuts recently announced by major oil companies:

Screen Shot 2015-01-16 At 12.15.12
Source: Various. See thisGoogle Doc对全部参考s.

And here’s what some smaller companies are doing:

smaller oil companies job cuts

Source: Various. See thisGoogle Doc对全部参考s.

It’s possible this is just the start of the industry’s cuts.

ConsultancyWood Mackenzieestimates that companies may pull the plug on new projects worth up to£55 billion. In particular, any planned project that has yet to have its funding confirmed – the dark blue bars on the chart below – is at risk if oil prices stay low:

wood mackensie estimates
Source:Wood Mackenzie

Carbon Brief has taken a detailed looked at which projects are most at risk inthis previous article. But it’s worth a reminder that work by thinktankCarbon Trackersuggests almost $10 trillion of company investments are potentially at risk if the oil price is below $60. Production could be cut in half in 2015 if the oil price stays at around $50 per barrel, this chart suggests:

carbon tracker graph

Source:Carbon Tracker

预计项目的主要伤亡particularly hard to reach spots, such as the Arctic. Such projects worth around $2.8 trillion in capex have a breakeven price of at least $100, Carbon Tracker estimates.

Climate impact

If companies are drilling for less oil, it’s potentially good news for climate change. If the world is going to avoid the worst impacts of climate change, lots of fossil fuels are going to be left in the ground.

A recentNature paper, as well as previousCarbon TrackerandIntergovernmental Panel on Climate Changeanalyses, suggest about 80 per cent of the world’s fossil fuel reserves must remain ‘unburned’ if the world is going to prevent temperatures rising by more than two degrees above pre-industrial levels.

That implies a major transformation of the world’s energy system. But whether the low carbon energy industry will be hurt or helped by falling oil prices is still open to debate. Carbon Brief has previously looked at the ins and outs of that debatehere.

Main image: Offshore oil platform, north Scotland.
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