This will be my sixth SPE Offshore Europe conference and each one has been in the shadow of a different market outlook – or at least a changing one.
The first question everyone asks is, ‘what will this year be like’? I personally think we are moving toward a more positive outlook, but very cognisant of the challenges we face. For example, operators remain committed to well intervention related activity that maximises production and maintains well integrity, however the exploration and appraisal market still remains suppressed.
Amidst the political turmoil and oil price volatility, the market has stabilised off the back of $50/bbl oil (and yes, because I’ve said that, it will probably have changed by the time you read this!). Activity in the UK North Sea has significantly reduced, with only approximately twenty E&A wells forecasted to be drilled this year, less than half that drilled in 2013, and sadly Aberdeen/the North East has suffered from the inevitable consequences of this. However, “past performance is not necessarily a guide to the future” as the financial warnings often state, and we appear to be seeing signs of increasing activity. This includes new entrants into the market (e.g. Siccar Point, Decipher Energy, Neptune Oil and Gas, etc.) and new collaborative ways of working, which all indicates an increased optimism in the North Sea…..and maybe the light at the end of the tunnel we are all hoping for?
Although now a mature basin, the North Sea, with its substantial unproduced reserves, still remains an area of untapped opportunity. Over the past few years’ significant financial savings and efficiencies have been realised, resulting in large decreases in unit operating costs, from an average of $29.70/bbl in the basin to $15.30/bbl. These cost reductions have resulted in some projects and/or operations becoming financially viable once again.
In line with the UK Government’s MER UK strategy, many operators are also challenged with maximising production from their mature assets – while also deferring costly abandonment and decommissioning. They need expertise and support to address this key challenge, which the UK supply chain is well placed to deliver.
Innovation and collaboration appears to be increasing on everyone’s agenda as the impetus to do something different is growing. As Henry Ford once said “if I had asked people what they wanted, they would have said faster horses”. Change is happening in the industry and I believe this will be evident at Offshore Europe, with the wide range of companies and technologies present. Think of it as a barometer for the health of the offshore industry, not only in the North Sea but globally, through the influence of the exhibitors and visitors to the exhibition.
From my perspective within Expro, we’re continuing to push innovation in the region through some new products, but also by combining existing technologies in exciting new ways. Historically the industry has been too focused (almost obsessed) on developing brand new, high cost technology solutions, bespoke for every individual application.
If there’s one thing I’ve learned, not all breakthroughs in performance necessarily need to be shiny and expensive! Some of the greatest achievements have been through taking a step back, looking at what we have and being more innovative in our approach.
Anthony is presenting at Expro’s SPE Offshore Europe stand 5D110, 5-8th September. Full details are available on our presentation flyer or simply drop by the stand to speak with him.