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Day 1 opening plenary on “How to Inspire the Next Generation,” featuring: Professor Brian Cox; Keisuke Sadamori, IEA; Liz Rogers, Head of Environment and Social Responsibility, BP; Simon Bittleston, Vice President Research, Schlumberger; Matt Corbin, UK Managing Director, Aker Solutions. Images from OE Staff. |
Cost cutting and efficiency measures were supplanted by a new rhetoric at SPE Offshore Europe 2015.
Transformation is the new requirement for the lower-for-longer oil price environment for which most are now bracing themselves.
At least two speakers during the event, which had its second highest number of visitors in its history, despite the downturn, appealed to their oilfield audience to “not waste a good crisis,” while 2015 SPE President Helge Hove Haldorsen said from Day 1 of the show, held in Aberdeen, that we can’t just cost cut.
While there is much gloom in the industry, with dark clouds expected to remain hanging for some 12-18 months, there is a glimpse of a technological, digital, silver lining. Could this be the nudge the industry has needed to fully embrace what Haldorsen describes as E&P2.0.
Our reporters, Audrey Leon, Audrey Raj, Emma Gordon, John Bradbury and Elaine Maslin covered the event. Here are some highlights:
Day 1
The industry needs to adapt quickly to the new oil price environment, and the answer is not just cost cutting, said Helge Hove Haldorsen, 2015 SPE President and senior Statoil executive. Cost cutting will not be enough, he says, with new technology, business models and collaboration required to achieve an E&P2.0.
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Looney. |
New, small technology companies are already rising to the challenge, offering real-time data analysis types of service, says PwC’s corporate finance partner Jon Shelley told OE on the show’s first day. Adoption of such technologies cannot come soon enough for Elizabeth Torstad, CEO of DNV GL Oil & Gas. She told OE: “We are moving to an even more connected and data-savvy world and the industry needs to be prepared to take full advantage of digitalization and “internet of things” in terms of efficiencies and safety.
It is an industry worth fighting for, BP chief operating officer Bernard Looney, told the Day 1 SPE Offshore Europe lunch session, with energy demand still on the rise and hydrocarbons still the main source of it for decades to come.
Day 2
John Pearson, AMEC’s Group President Northern Europe and CIS, was one of those whose cry to the industry was “don’t waste a good crisis.” “The core issue here is inefficiency,” he told the Day 2 breakfast briefing. “We have become very inefficient over the years. We did this to ourselves and we can get ourselves out of it. This is in our hands to fix.”
DNV GL CEO and Group President Remi Eriksen told another press briefing that “it is time to call time on complexity” in the industry. “But rather than feeling bleak, I’d like to say to the industry, ‘let’s work together so that we don’t waste a good crisis’.” Liv Hovem, director of Europe and Africa, Oil and Gas, DNV GL, said: “My key message is that joint innovation and smart standardization are critical to strip back complexity and in turn, lower costs and enable rapid and efficient technology implementation.”
For Proserv CEO David Lamont, who held a press briefing on the sidelines of the show, there are reasons for optimism. “It [the low oil price] is bringing about change that would have taken quite a while to introduce,” he said. “We must embrace and rekindle the pioneering spirit that made the North Sea great in the past to ensure the North Sea industry doesn’t fade out prematurely, but really flourishes in its later life.”
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Pearson. |
The industry transformation is underway, Oil & Gas UK CEO Deirdre Michie told SPE Offshore Europe, commenting on the body’s 2015 Economic Survey, which said UK North Sea oil and gas firms were set to have saved £2.1 billion by the end of 2016. Although with 5500 jobs already lost, or 15% of the total, since late 2014, is that really enough, OE staff asked.
Mark Richardson, North Sea Projects Group Manager for Apache North Sea, outlined how Apache is using military methods to keep their assets efficient and cash generating, specifically, Mission Command Project Management. “It is about understanding the risks,” he said. “We have check gates, but it is their [the people who run the projects] responsibility to understand the risks. It is a much more productive way of doing business.
Work to improve efficiency, productivity and profitability in the basin, and therefore also its attractiveness as a place to invest, was outlined by Oil and Gas Authority CEO Andy Samuel at the Day 2 luncheon. He said the organization, only formed 1 April this year, is due to publish its five-year plan by the end of the year, with much progress already made. The proof of the pudding will be in the eating, OE staff reflected.
According to experts at the University of Aberdeen, there’s lots of pudding to eat, if it’s cooked correctly. In a technical session, they outlined how their studies showed a potential to increase production by 970-218 MMbbl and increase the production life of remaining fields by and average five years by “ensuring access to infrastructure on a fair and reasonable basis.” The university experts have modelled the effect of unbundling access to infrastructure from asset ownership and worked out that doing so could increase the net present value of North Sea fields by up to £10.93 billion and could see up to 34 new fields developed.
There is also huge potential for an entirely new business stream opening up in the North Sea. In a report commissioned for SPE Offshore Europe, Wood Mackenzie says the low oil price is halting the investment in mature fields seen in the past few years, which was supported by the high oil price. As a result, they say, decommissioning activity and spend are forecast to ramp up over the next five years. In fact, 140 fields could cease production over the next five years, suggests Wood Mackenzie, even if oil prices return to US$85/bbl. They also put the cost of decommissioning the UK North Sea’s assets at an eye watering £54 million, with a high proportion of that likely to be blown on plugging and abandonment.
Day 3
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Michie. |
The government wants us to help ourselves and not always depend on tax changes, said EnQuest’s North Sea president, Neil McCulloch, at the Small Operator’s Panel on Day 3 of the show.
“Yes, the current oil price is very unhelpful and our industry is continuing to face its toughest challenge,” he said. “We are spending more than we are earning, suggesting that we have also become inefficient and productivity is relatively low. We should, however, be encouraged that we are in fact seeing some improvement that demonstrate that our efforts to restore international competitiveness are now starting to take effect,” McCulloch added.
Robin Allan, Premier Oil’sdirector of business units was a little blunter about the prospects for the North Sea. He said unless the collaborative work goes to a whole new level, he doesn’t particularly see an optimistic future for the UK North Sea as it not economically viable going forward.
“Most of the cost saving we have seen has come from cutting on work that has not been necessary to reduce field cost. Our cost in Asia and our business there are much lower on every aspect compared to here,” he said.
Rounding up the show, co-chairman Charles Woodburn said: "One of the challenges facing the industry is inspiring the next generation. I hope that the honest and open conversation we have had over the last few days will lead to real progress in this area. While we don’t have all the answers yet, it’s important we take this dialogue and turn it into a clear framework that can be delivered by the industry as a whole.”
Attendance figures remained very strong at 55,947 with delegates drawn from 104 countries. Attendance was the second highest in the long history of the show. A record 1535 global organisations from 44 countries exhibited this year, showcasing their products, services and expertise. This included 336 companies exhibiting at the event for the first time. The sold-out space covered 27,228sq m, with more inside space than ever before.
OE (Offshore Engineer) is the official show daily media partner for SPE Offshore Europe, under a relationship dating back 30 years with the show. The next SPE Offshore Europe returns to Aberdeen 5-8 September 2017, sporting a new section - the Decommissioning Zone.
What were your show highlights? Tell the team at [email protected]
Read more:
OE15: An industry worth fighting for
OE15: Reasons for optimism in a down market
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