With the opening of SPE Offshore Europe 2017 and the industry showing signs of recovery, it is time to shed some positive light on the future of our industry. The past three years have been extremely tough, but we have also learnt a lot. We have seen a few initiatives from industry stakeholders that have resulted in a 50% reduction of operating costs in the UKCS since 2014.
While much of the effort comes from incremental improvements along the supply chain, other initiatives are more transformational. Indeed, we are starting to observe a rethinking of the way we do things, including new types of collaboration, embracing the benefits of early engagement and innovative procurement approaches.
One such example of new collaboration in our industry is Statoil’s Mariner project, which has adopted a different kind of contracting model. This includes features like early engagement to address some of the technical challenges ahead of the project start, as well as improved commercial alignment.
Other opportunities for the industry to transform are apparent. As we are now in a new reality of lower-for-longer commodity prices, re-inventing ourselves is necessary. The opportunities are twofold: one lies in the way we work, in particular, through the development of further types of collaborative relationships—both between operators and between operators and service companies.
Another comes from technology, in the form of distinct technologies that improve efficiency and innovative digital, big-data technologies that are game changers. These will facilitate our industry’s transformation. The rewards and benefits of transformation are immense: enabling sustainable operating cost reductions; modernising our industry; contributing to increased safety and making it more attractive to the younger generation.
Breaking with tradition
While stronger alignment between the different players can deliver huge technical and economic benefits, it can often conflict with a procurement effort that is focused on cost reduction, which is sometimes to the detriment of the overall project value. It is evident that progress on the collaboration front is not as fast as one would have hoped.
This is a major challenge, as its involves transforming a mindset that has been deep-rooted in the industry for decades. At the end of the day, the current way of working is also a persistent barrier to technology development and productivity. If the supply chain does not allow for the value that technology adds, our industry will struggle to develop the technology that delivers the benefits expected, and there is a risk that innovation will dry up.
A digital destiny
More investment is needed in R&D to fast-track the journey from drawing board to deployment. Compared to other sectors, the industry has been slow to welcome the digital dawn. However, new technologies and processes developed through digitalisation, automation, big data, etc., should be considered as enablers and facilitators: it is the willingness of the industry to embrace the efficiencies they can bring that will sustain and help stabilise the industry in the long term.
Bringing the industry into the digital age will also make it more attractive to the younger generation as a career choice. The deep slumps of our cyclical industry often get in the way of our attractiveness as an employer. This is a major challenge and core to our ambitions to be more sustainable and to reconnect with young people who have been raised as digital natives. Severe headcount reductions and job uncertainty have given us a poor image but on top of that, we also lag behind other industries in terms of technology adoption.
Digitalisation and automation will also have a huge impact on safety with the possibility of having more people working from the office as opposed to offshore. For the drilling sector, as an example, there is the potential to massively reduce drilling costs and transform the drilling environment.
A platform for change
SPE Offshore Europe will facilitate constructive discussion, which, I hope, will lead to action. We have invited leaders from outside the industry to share their experiences and best practices. Other industries have adopted new procurement approaches; it is clear that our industry can learn from these practices.
We are now in a new reality that requires joined forces and collaboration. The advancement of digital technologies can only be realised if we embrace the opportunities they can bring and by doing so, can welcome a new generation of engineers, innovators and leaders. The industry is definitely ready for it. I look forward to seeing the technology of tomorrow on show this week and learning how it has made a difference in operations when SPE Offshore Europe returns in 2019.
Catherine MacGregor is the chair of SPE Offshore Europe 2017 and president, Drilling Group, Schlumberger.