Europe's biggest subsea-focused industry event kicks off tomorrow. Of course the oil price and low levels of activity in the industry will be on everyone's minds.
OE, principal media sponsor for Subsea Expo, spoke to Neil Gordon, CEO of conference organizer Subsea UK, about the current challenges and the outlook for 2016 and beyond.
The theme for this year’s Subsea Expo is 'Time for Transformation’, why?
There’s not a quick fix solution to the range of issues currently facing the industry. Short–term measures and knee-jerk cost-cutting may have worked in the past, but this time we must take a long-term approach and implement fundamental changes that will deliver lasting results.
We have an opportunity to define our future by truly embedding the behavioral changes that will bring widespread efficiencies and sustain our industry for decades to come. We simply can’t afford to carry on as we were and expect things to improve.
As one of the world’s most mature and complex basins, operating in the UKCS is becoming increasingly challenging and if we are to maximize economic recovery, implementing transformational change quickly and effectively will be key.
The UK still boasts the single largest concentration of subsea capability and excellence in the world. Our challenge is to maintain that position in the face of the current low oil price and increasing global competition. This means we need to work together to be smarter, more efficient and quicker at developing new technology.
There is light at the end of the tunnel, however there is no way to predict when the global oil market will rebalance, so we can’t bury our heads in the sand and wait for that moment to come. There is still a long road ahead of us and companies no matter how big or small must embrace change and adapt to the new lower oil price.
It’s time to put words into action. There is no denying that this is going to be a tough year - some extremely tough decisions must be made, but those who adapt now will be the winners in the long term.
How do you see the outlook for the industry in 2016 and beyond?
Subsea techniques and technology were largely honed in the North Sea in the eighties and for many UK subsea companies this province continues to be their biggest market. However, with fewer discoveries and ageing fields, this market will reduce in significance in the medium to long-term with larger, emerging provinces coming to the fore. There are still significant opportunities in North Sea around production optimization and IRM. We need to squeeze more from our existing assets and to do that viably we need to develop new technology and smarter integrity solutions that keep these ageing assets healthy.
The Small Pools initiative, led by our technology arm NSRI, is exploring disruptive and enabling technologies and innovation to make recovery from these economically viable. With more than 210 pools containing around 3 billion boe in the UKCS, the prize here is significant.
Global demand is likely to continue to be dominated by developments in Africa, Latin America and North America, influenced largely by their continued focus on deepwater activity. We expect the Gulf of Mexico to dominate the subsea plays of North America. Asia and the Australian region are the emerging provinces and should see a combined market share growth over the next five years.
While the subsea market has the potential to see healthy levels of growth during the next five years, low global oil prices undoubtedly impact on subsea developments going forward. As budgets are cut, capex projects will continue to be delayed or abandoned, affecting the overall growth rate of the subsea market. In the short term growth is unlikely to return until 2017 when there is likely to be a slow recovery of oil price.
What changes are needed for the sector to recovery?
Getting the cost base down is absolutely critical and while there has been significant cost-cutting across the industry the focus is now very much on the longer term program of building better efficiency into the way we do business. The final stage of this industry wide strategy is the transformational change in behavior allowing much better collaboration to bring forward smarter ways of working, standardisation and new technologies. Companies need to work closer with their suppliers and customers to create value and efficiency.
What are you looking forward to hearing about at Subsea Expo?
Subsea Expo provides an opportunity for the industry to come together, discuss their subsea challenges and work towards a common goal. We look forward to hearing about all of the great things that companies are doing to ensure that we have a strong future in the North Sea and our leading position in the global market is maintained.
With so many of the globe’s leading subsea companies under one roof, the conference has fast become the best place to hear about the latest technological advances in the sector. We will be hearing exactly how the industry is making concerted efforts to implement change and develop new solutions that will increase production and recovery of hydrocarbon reserves at a lower cost.
There are real, long-term prospects for the subsea sector and it’s vital that we are well positioned to exploit these opportunities - it’s time to roll our sleeves up and find the best way to drive this sector forward.
Neil Gordon initially studied business in Aberdeen then trained as a commercial diver, spending eight years carrying out numerous diving assignments in the UK and Norwegian waters involving new construction projects, pipeline surveys, welding and inspection. He has over 25 years' management experience in director and business development roles, combined with over 15 years in the subsea industry.
Prior to joining Subsea UK, he spent four years managing the National Hyperbaric Centre. He has experience working in India, Middle-east, Africa and Brazil and has worked with the Oil and Gas Producers diving operations sub-committee on client representative training and competency for subsea projects. He was also an active member of the IMCA diving safety, medical, technical and training committee.
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Subsea Expo: Tackling the UKCS' small pools
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