Oil-field service (OFS) companies are increasingly looking for work in offshore wind as activity in core markets remains suppressed, an analyst has said.
Scott McClurg, head of energy and sustainability at HSBC, said there was evidence of recovery in the OFS market amid increased confidence in the sector and a lowering of field development costs.
Providing a snapshot of the market, energy consultancy Westwood said there had been double digit percentage increases in installations and orders for floating production systems between the first and fourth quarters of the year.
However, Mr McClurg said the recovery still had a long way to go.
In the meantime, Mr McClurg said there was a clear overlap between the types of services required for OFS and offshore wind.
He said profit margins for work in oil and gas were traditionally wider than in renewables.
But he said there were signs that the tables are turning.
“The margins on offer for offshore wind projects are probably worth considering when you see the margins in the oil sector,” he said.
“There has been a narrowing of the differential.
“The interesting question is – do we see a return to higher margins for the OFS sector in oil and gas over the next few years and what will be the impact of offshore wind projects?
“For majors and large OFS firms, there are now signs that margins are coming back in the near term.
“But margins are better in other sectors than in energy. Energy is seeing competition.”
The opening up of opportunities in offshore wind alongside maintenance and design work means individual OFS companies will need a more flexible approach if they want to capitalise.
They will need to be capable of working on an offshore windfarm one week and an oil platform the next.
He also said supply chain companies were looking at their customer bases and asking how they can better serve their clients, rather than stopping at providing individual products.
“I’m hearing about a switch from providing products to providing analytics,” Mr McClurg said.
“At Offshore Europe, operators with drones gave the example of doing a full survey of a jack-up in so many hours rather than using rope access to create a file with all the data and information that people could use to make more informed decisions.
“This is where data and the assimilation of data and providing solutions is repeatedly reducing costs in OFS and other sectors.
“It’s about providing much more useful data and letting business become slicker.
“That’s where we’re seeing some interesting things happening.
“Another example is using sensors and getting data to avoid sending people offshore.
“Incremental changes like that are interesting and more effective than consolidating in the sector.
“The challenge is to differentiate yourself from your competition.
“Consolidating with another company which offers similar services to your own does not generally give you anything other than a reduction in central costs, which are already tightly managed.
“So companies need to look at bundling services together and build a portfolio of work.
“For example, rather than plugging and abandoning one well, do 20.
“That gives a greater scale of efficiency, and the sector needs more of that because of the inherent cost of doing things offshore.”