More than 500 people took part in Energy Voice’s research campaign, dubbed $Sub 50: New Perspective and Hidden Opportunities.
The campaign covered current challenges, technology, diversification and industry cuts. The results, which were analysed by Douglas Westwood, are visualized below.
The findings were revealed at sold-out breakfast at this year’s OTC. More than 180 attended.
Alan Kennedy, head of oilfield services for KPMG in the UK, said the survey showed a “degree of optimism”.
Kennedy, who attended the results launch, said quick housekeeping fixes, like contractor rate cuts must now be filtered out for fundamental change.
He said: “There’s a degree of optimism that we are on a gradual path to recovery for commodity prices but the industry is far from being out of the woods in terms of cost reduction and efficiency. The quick housekeeping fixes – primarily reductions in headcount – have been realised but there are more fundamental changes to be achieved to put the industry on a sustainable footing. Genuine collaboration, new operating and finance models, the sharing of risk and reward are cases in point where cultures have to change. It is vital that the industry pushes ahead with these to avoid the pitfalls of previous boom and bust cycles.
“In the meantime, the impacts of lower for longer continue to ripple through the industry. The picture is by no means uniform and there are businesses trading successfully despite the hugely challenging market conditions. However, with so many projects cancelled and cost-cutting continuing, businesses in the sector are facing increasing liquidity challenges and we will see further failures in the market. The flip side will be that those businesses with the stamina and resources to pull through should be able to capitalise on the upturn when it arrives.”
The majority (51%) of respondents said technology investment should be directed towards improving recovery rate from existing fields.
Ian Phillips, chief executive of the Oil & Gas Innovation, said the new Oil & Gas Technology Centre would play a critical role in sector recovery.
“Technology innovation is going to play a key role in maximising economic recovery in the UKCS and in driving export growth in our supply chain. While R&D budgets have been impacted in the wider cost reduction programme in the upstream industry, we see a continuing commitment to innovation in products from the supply chain,” he said.
“At OGIC, we are currently working with a range of companies and research institutes on projects. The UK industry through the Technology Leadership Board has identified its priority areas for technology development, those that will address the immediate challenges in the UKCS, and progress is being made against these. The development of the Oil & Gas Technology Centre in Aberdeen, backed by £180m of Government funding, will enable the industry to deliver the technology that will significantly improve E&P outcomes in the North Sea and which will be exportable to other oil and gas basins globally.”
The research report added: “Whilst capital outlay is reduced in the current environment, the emphasis on capital efficiency ensures that production optimisation remains high on companies’ agendas. With many greenfield projects delayed or deferred, Douglas Westwood anticipates that prioritised investment in the improved / enhanced production from existing projects / assets will remain a key focus area for operators in the mid-term.”
The research and panel discussion are sponsored by the Regional Economic Development Initiative (REDI) in Texas and Burness Paull, a leading Scottish law firm.