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#OE17 – Prosperity can be Seen in our Region’s Future and not Just its Past

#OE17 – Prosperity can be Seen in our Region’s Future and not Just its Past

An early start helped to beat the traffic heading to Offshore Europe 2017 at the AECC.  Aberdeen and Grampian Chamber of Commerce hosted a packed out Business Breakfast.  Colette Cohen of the OGTC was an engaging host, her opening remarks emphasised a resilient industry, which has become more efficient, optimising cost savings and identifying technology as key to the next generation.

Mark Hutchinson, CIO at Ernst and Young provided an entertaining whistlestop tour through what he termed the 4th Industrial Revolution.  While the world’s demand for processing power has grown exponentially, so too the cost of technology to the consumer is reducing almost as rapidly.

Graham Gillies from Baker Hughes (a GE Company) continued the theme, but brought it back more specifically to oil and gas.  His three themes were a sustainable footprint (driven by a one-contractor ‘fullstream’ offering), sustainable technology and greater operator/contractor collaboration.  These have been buzzwords in the industry for the last couple of years but he underpinned this with the recent example of Baker working with Alpha Petroleum in this manner.

Remi Eriksen of DNV GL completed the breakfast briefing with a fascinating projection of energy use and needs through to 2050.  Use of fossil fuels will be balanced by increased alternative sources but will still make up 50% of world consumption in 2050.  His firm projects energy demand to flatten after 2030.  I immediately wrote “Why?” on my pad, fortunately he provided an answer! Apparently energy efficiency will improve faster than the growth of the global economy after that point.  Electrical energy from renewables will become more affordable and energy generally ought to become cheaper for those in energy poverty.

After a brief Q&A, it was time to rush up to the Plenary Session which formally opens the Exhibition.  The session was ably chaired by Catherine MacGregor of Schlumberger.  She pointed to the desirability of workers from the North Sea in other regions, due to the rigour of the workplace systems, experience of a harsh environment (offshore rather than in the centre of Aberdeen) and interface with a complex existing oil and gas infrastructure.

Andrew Jones MP, Exchequer Secretary to the Treasury promised a continued commitment to a stable fiscal environment, although the specific details remain to be seen.

Bob Dudley, CEO of BP struck a very positive note.  He highlighted the big discovery by Hurricane West of Shetland and talked about the BP involvement in Schiehallion and Clare Ridge.  The lifting cost in the North Sea is down by over half to $15 per barrel, with the intention to lower this $12.  Technology has been critical in this regard.  With BP’s North Sea exploration at levels not seen for many years, maybe we can all be slightly optimistic that despite the volatile geopolitical climate, there is increasing energy demand.

Ben Van Beurden, CEO of Shell reaffirmed his company’s commitment to the North Sea, despite recent divestments and the decommissioning of the Brent field. 

Robin Watson, CEO of Wood Group compared the challenge for the service sector to that of the Lewis and Clark expedition across America.  They thought they would need canoes, they found mountains!  The service sector has had its own mountains to climb (cash strapped, 350,000 jobs lost) but has shown a commitment to innovation and efficiency gains.  As also noted earlier in the morning, he was positive that oil and gas will remain a significant part of the fuel mix for the foreseeable future.

My big takeaway from a packed morning was that the overall message was constructively optimistic, notably different to 2015.  The exhibition stands were buzzing as I headed for the car park.  Even if the oil price is “lower for longer” or even “forever”, advances in technology and collaboration are allowing business to continue and prosperity can be seen as something in our region’s future, rather than just its past.

Neil Smith

Partner

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