I rather think that Offshore Europe last week was good for the Oil & Gas Technology Centre Initiative and its CEO Colette Cohen. Given its scale, I certain that the OGTC eclipsed the UK North Sea’s other technology-related initiatives.
I’ve been wondering about their medium to long-term futures on and off for a while. By that I mean ITF (Industry Technology Facilitator), OGIC (Oil & Gas Innovation Centre) and NSRI (National Subsea Research Initiative).
However, before teasing through their maybe futures, there is an irony here in that, 25 years ago, there were two perfectly good organisations with technology development remits that, in effect, were able to do much of what the OGTC is supposed to do today.
They were the PSTI (Petroleum Science & Technology Institute) and MTD (Marine Technology Directorate) in which Energy columnist Dick Winchester held a senior role, plus Scottish Enterprise was then doing a reasonably effective job of nurturing baby companies with new technologies too.
However, by comparison, OGTC has a lot more public money though, sooner or later, the companies playing on the UK North Sea stage will have to dig reluctant hands into their pockets and cough-up their part of the match funding deal that underpins the centre’s raison d’etre.
OGTC already appears to have a lot of clout and is keen to be the where to go to place when it comes to fostering strategic technology development programmes … short, medium and long-term.
So is there any point in having ITF, OGIC or NSRI anymore? Should they be scrapped or subsumed by OGTC?
ITF is a creation of the late 1990s crisis and brutally replaced the comparatively well-funded Centre for Marine & Petroleum Technology which in turn had been forged out of welding the MTD and PSTI together.
ITF lives or dies on subscriptions raised from the companies in membership and I don’t think current CEO Paddy O’Brien would be overly offended when I say that money has always been tight.
I suppose history might be reasonably kind to ITF, especially during Paddy’s time, but it strikes me that the organisation is now redundant and struggled to gain real traction in its early years.
If I was a member company weighing up where to put R&D-related support pennies, I think I’d be very reluctant to keep on subbing ITF when under growing pressure to contribute to OGTC funding.
OGIC is very different; its lifespan is finite, will eventually run its course and that will be that. One could then imagine an orderly portfolio handover to OGTC. I can see it remaining intact for a while yet, working ever closer with the OGTC. That it is so closely networked with the universities is something that I think Cohen may already value, though I’ve not asked her.
Since launching in February 2014, with £10.6million from the Scottish Funding Council, still young OGIC, based at the Innovation Park in Aberdeen, has established itself as a vital bridge between energy businesses and the world-class research capabilities in Scotland’s universities.
OGIC basically services the SME market; it is not hobbled by membership organisation practices of the kind that limit ITF. The imperative is technology development and it appears to have quite a portfolio built up under the leadership of Ian Phillips.
As for NSRI, it should be born in mind that today’s organisation is very different to the R&D-focused body as originally conceived and unfortunately tucked under the arm of Aberdeen University.
I can see it performing a valuable interface role with the huge subsea community and I would imagine that parent Subsea UK will be keen to keep it as the doorway into OGTC.
In short, of the three, I believe it is ITF that is the most vulnerable and least likely to survive.
OGIC could have immense strategic value subject to SFC agreement, bearing in mind that OGTC is a UK-funded initiative whereas OGIC is not.
NSRI could prove invaluable if respected, and I’m not saying that isn’t the case already.
I think it’s vital to keep the structure simple; there’s been too much fragmentation in the past and with far too small sums of money to play with, like the Oil & Gas Industry Taskforce-initiated Nova Technology Management fund at the end of the crisis-wracked1990s for example.
I always thought it was a pitiful wee critter as it struggled to foster small companies with technology aspirations. My recall is that it started out with a £5million pot and did make some investments.
Mind you, the same tenet applies to any form of what amounts to economic development. However, there is too much complexity in the UK for my liking; it makes life hard for small firms trying to make headway, regardless of industry sector.
Regardless of the content of this year’s Offshore Europe conference or of how this or that initiative evolves, it would seem that the North Sea is in a much better place today than when oil prices dropped into the basement three years ago.
Money can be made by those who have their house in order and perhaps, just perhaps, prices are edging back up to at least the $60 mark as supply cutbacks and underinvestment in deepwater exploration especially might lead to a shortfall in 2019 or 2020, while demand edges up.
On the other hand, seeing will be believing after three very hard years on the trot. The spectre for me is US shale. Every time someone says it’s unsustainable, American producers prove that they can do it.
And right now there’s a stack of part constructed wells in the Permian ready for rapid completion when required.
Another 135 such wells have been added to the inventory in recent weeks, bringing the tally of drilled but uncompleted wells to 2,330, which is 73% more than a year back.
The Americans don’t give a stuff about anyone but themselves; they’re not going to rein back production for anyone, anywhere. That suggests that the North Sea is likely to remain on edge for at least another year and more likely longer than that.
That does not preclude North Sea operators from making a reasonable return. But they must have the right mind-set and that includes not abusing the supply chain so critical to future success, including technology innovation, being starved to death.