By Chris Freeman, Partner and Director of Field Development, io oil & gas consulting
Offshore Northern Seas (ONS) 2016 wrapped up today following a busy week of events, technical talks, speaker panels and social events to showcase Scandinavian hospitality.
The biennial Stavanger-based conference this year featured more than 400 speakers and a sense of collaboration for the North Sea that will be necessary in a pricing environment that attendees agree is indeed set to be lower-for-longer, though for how long remains to be seen.
The theme of this year’s event was “Transition” – highlighting the changes and actions that will be necessary to stabilise the industry and what the new normal will be for oil and gas companies. According to conference organisers, this theme was chosen to show a more active approach to forming the next generation of upstream activity, taking control to adjust and actively steer from one situation to another instead of going with the flow.
This theme could not be more fitting: the industry needs to move with the changing times rather than to continue to try to fight them. We at io have long said that the days of cost cutting are over and the industry now needs to transform itself in terms of the way business is performed including much greater collaboration. Rather than obsessing over figures, we must work together to enable the industry to not just survive in times of depressed oil prices, but to thrive and become economically sustainable in the long term. It’s widely acknowledged that the time of $100+/barrel oil is over, and it’s our responsibility and to our advantage to look at getting a full range of projects viable at $20-$30/barrel rather than live in wilful optimism for oil prices to return to the triple-digit figures we saw during the previous ONS in 2014.
Stavanger agreed. The event attracted top-tier speakers including CEOs from BP, Statoil and GE Oil & Gas, as well as government figures and engineers from a number of service companies showcasing the latest in R&D. While consensus among attendees is that any hope of a price recovery will begin in early 2017, economic and political challenges including China’s rate of consumption and ramifications of Brexit still loom, and the reality of transition on a global level is also a factor that needs to be realised.
Crossing the North Sea to learn of regional best practice from a Norwegian point of view is crucial to creating lasting change in the North Sea, and bringing together powerful industry minds in an event such as this will lead the way in continuing to make lasting change. There are many lessons that the UKCS can learn from Norway, which has encompassed active government support and ownership of oil companies that facilitates fast and agile decision-making and efficiencies.
Norway has long been known for a stable fiscal regime, which has seen little change in the past two decades and has allowed for investor stability to make long-term decisions. The country also provides incentives for exploration drilling which, especially in the current environment, encourages E&P and can offer much-needed uplift and provide great returns if and when the oil price does rebound. This system was lauded by Oil & Gas Authority CEO Andy Samuel, who said that the efficiencies created by Norway’s system of drilling could and should be echoed within the UKCS.
At io, we are optimistic about the future of the North Sea, and know that with the right industry partnerships and collaborative thinking, we can make lasting change. Our time at ONS was enlightening, and we look forward to continuing the conversations we started during the week to help to drive the North Sea’s transition.