SubseaUK Chief Executive Neil Gordon charts the sector’s performance, and what challenges lie ahead in 2017.
What has been your experience of the sector in 2016?
This has been the worst global downturn in our history and the environment in which we operate has changed for us all. In 2016, the subsea sector had to adjust, reduce costs, tighten its belts and continue to make some tough decisions. Despite the drop in sales and confidence in the industry throughout 2016, the subsea sector in this country is maintaining high levels of investment in technology. In our recent snapshot survey of members, almost 80% of respondents reported that they were still investing in new technology to secure long-term future growth. Alongside collaboration; transformation and behavioural change have been key phrases of the last 12 months. For many, the latter is about changing the way we do things and working smarter. But it is also about the way in which we behave towards each other, both on the client side and on the supply side. Thankfully, the majority of companies in the supply chain are working much more collaboratively with relationships centred on driving value and efficiency.
How would you characterise this year’s theme – “Adapting to The New Norm” – and what does it mean for subsea firms?
This is the ‘new norm’ and we need to deal with the current price, rather than waiting for oil prices to rise if we are to prosper. We cannot ignore the real changes that are happening in the world. It is time to step up to the plate, adapt to the new environment and adopt a fundamentally different mind-set. It is vital that the industry takes a long-term approach – it is about making things simpler, safer, and more efficient today to deliver lasting results for decades to come. Although there are still tough times ahead, I do believe the UK subsea industry is now in a strong position to embrace the new norm due to the focus on innovation and technology. That is why the theme for Subsea Expo will focus on the behavioural changes the industry must make to deliver the cost efficiencies needed to sustain the sector for decades to come.
In terms of innovation, what technologies are subsea firms looking to now?
An example of the type of innovation needed is in condition-based monitoring, specifically tools which can monitor the health and integrity of subsea systems and calculate when it requires attention, instead of carrying out regular and often costly inspection campaigns. This allows operators to carry out planned, risk-based maintenance and repair programmes when it is required, rather than reacting when something gets to a critical state which can lead to unplanned interventions and higher costs. Last year we saw the launch of a new innovative vessel share initiative, which has the potential to provide the subsea industry with significant savings through encouraging collaboration, cost-efficiencies and ultimately increased productivity. The concept focuses on a vessel share agreement, with collaboration from several clients, to deliver a single linked campaign workscope that addresses each client’s individual demands. The model is aimed at reducing the costs associated with mobilisation and demobilisation periods whilst also distributing further cost savings for individual clients, helping to ensure a reduction in non-productive time and an increase in overall work time – a cohesive approach to project delivery.
In recent comments you have said the sector “needs to do more” to remain competitive – what do you mean by this?
There has been a remarkable amount of great work by industry, government and regulators in increasing production, particularly from ageing assets, and in reducing lifting costs. However, there is still a huge amount to be done, particularly around stimulating investment to create new capital expenditure to replace the big projects that will close out in 2018. But we are much better positioned than we were a year ago. Smart collaboration and smarter applications of existing technologies, along with new innovations, will secure the subsea sector’s future and the sustainability of our industry in the new norm. Innovation and continuous improvement will be the driving force of our future – it is how we will increase the productivity of our sector by improving efficiency and adding real value to operations, but no matter what the future holds, we cannot afford to be complacent and slip back into old habits. The changes must be embedded into everything we do. Underwater technology, systems and processes made in the UK have been helping North Sea operators recover hydrocarbons since the 1980s. There is no doubt that the industry has become much more receptive to new ways of working and new technologies, and we are starting to see the benefits of real collaboration towards reducing costs and driving efficiencies. However, with fewer discoveries and ageing fields, the focus is very much on working with the existing assets to extend “life-of-field” without running up unnecessary high costs. Operators are increasing production by using existing, less mainstream technologies that can be readily implemented to enhance and upgrade ageing subsea systems.
What sessions/areas of discussion are you most looking forward to at the conference?
Subsea Expo is a platform that brings together leading figures from our industry to discuss how we can transform and lay solid foundations for a brighter future. The 2017 programme is packed with high-profile industry speakers from a number of companies including Aker Solutions, Xodus Group, Wood Group and Shell UK. Their presentations will cover global opportunities for the sector, fields of the future, diversification, integrity management, life extension and unlocking marginal fields. I am particularly looking forward to hosting the plenary session where we will set the scene for the week and stimulate debate with presentations from a number of high-profile industry figures. David Lamont of Proserv will discuss adapting to the current market and make a case for using innovative approaches, technologies and methodologies to help drive efficiency and productivity in the offshore sector. Mark Richardson of Apache will also give an operator’s perspective on the current industry situation and Andrew Reid from Douglas Westwood will be looking at the market outlook for the subsea industry. The session will also welcome Phil Simons from Subsea 7 who will focus on the current market from a SURF contractor’s viewpoint.
With increasing pressure on the industry to find economically viable ways to develop marginal oilfields in the UK North Sea and further afield, NSRI (National Subsea Research Initiative) is looking to help the industry adopt a collaborative and integrated approach to exploit the potential of untapped small pools. NSRI, the research arm of Subsea UK, will be hosting a workshop at Subsea Expo 2017 on Thursday, February 2 to highlight the work that has been done to maximise economic recovery from small pool developments across the UKCS. The event will welcome a host of industry experts to the stage to showcase their involvement and provide a platform to discuss the next steps, looking at what is required to unlock reserves that have previously been deemed uneconomic.
The Oil and Gas Authority (OGA) recently announced that approximately 350 unsanctioned discoveries containing more than 3 billion boe remain in the UKCS. It was discovered that the majority of small pools are in close proximity to existing infrastructure; however, some are stranded and will require novel, standalone facilities. NSRI chairman Peter Blake commented: “These discoveries, while economically challenged, represent a significant potential to extend the economic life of the basin. The challenges are myriad: stranded pools distant from infrastructure, fluids incompatible with potential hosts, complex ownership structures. However, what is common to them all is that they need new ways of thinking, application of new technologies and greater collaboration to develop economic solutions.
“To keep our industry alive we need to kick-start these developments. Following an extensive mapping exercise, we now know exactly where these small pools are located and we are working to change the existing industry paradigms to unlock their potential. “Often, conventional solutions prove too costly or unsuitable for marginal fields, so smarter engineering combined with better ways to manage technical and economic risk is required. “If the subsea industry can rise to this challenge of economically tapping into these pools, the North Sea could have a whole new lease of life.”
The session, which will be chaired by Mr Blake, will welcome speakers from the OGA, Oil and Gas UK, EnQuest, the Oil and Gas Technology Centre, Technip and Subsea 7. The presentations will look at activity currently under way to effectively unlock the potential value of small pools, as well as highlight the approach and mind-set required to progress economically viable marginal fields. “We need the industry to embrace the size of the prize and come up with modern cost-effective approaches to safely exploit marginal and stranded fields. We hope the session will help to break down some of the barriers and identify ways to help speed up the development of fit-for-purpose solutions which will go some way in securing the long-term future of the North Sea industry,” added Mr Blake.