Opinion: Could new high-tech oil & gas industry be forged in ‘white heat’ of sub $100 oil?

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Opinion by Energy Voice

Most Energy Voice readers are almost certainly too young to remember the former Prime Minister Harold Wilson or the famous speech he made at a conference in 1963 in which he effectively warned that if the country was to prosper, a “new Britain” would need to be forged in the “white heat” of the so-called “scientific revolution” that was perceived to be taking place at the time.

Wilson was right and that era certainly saw some dramatic technological developments of which the ones that stick in my mind are Concorde as well as other aircraft like the TSR2 and of course the beautiful E Type Jaguar car.

At that stage the country was seen as a global technological leader alongside the US and had even developed its own successful rocket – the Black Arrow – for satellite launching.

Sadly, of course, none of this lasted. Wilson’s aspirations were effectively killed off on the back of neoliberal economics ideology and any lead the UK had along with its huge talent were squandered.

Let me give you one astonishing example of how ideology crippled UK industry potential. I learned only recently from an article quoting the former head of technology at British Telecom, Dr Peter Cochrane, that the company had developed superfast broadband by 1986 and by 1990 had built two factories to manufacture the hardware needed to make it work. In fact, the world’s first wide area fibre optic network was set up in Hastings on the south coast of Englandshire.

However, the then PM – one M Thatcher – decided that BT’s rollout of fibre optic broadband was anti-competitive and that it had a monopoly on both the technology and the service.

Dr Cochrane wrote: “Unfortunately, the Thatcher government decided that it wanted the American cable companies providing the same service to increase competition.

“So the decision was made to close down the local loop roll out and in 1991 that roll out was stopped. The two factories that BT had built to build fibre related components were sold to Fujitsu and HP, the assets were stripped and the expertise was shipped out to South East Asia.”

Utter stupidity? Absolutely, but this bizarre and destructive attitude still seems to prevail.

Throwing away an advantage has become a British habit and we are now doing a lot less science and technology than we should be.

Recent reports from scientific groups point to the fact that the funding of UK science has fallen to an all-time low with public funding as a percentage of GDP now the lowest of all our G8 competitors at around a pathetic half of one percent.

We all know that science and technology are of course hugely important to the energy sector. It is indisputable that without the advances made in almost all aspects of the industry it would not be capable of doing the things it can nowadays especially when it comes to finding and producing in deep water.

However, with the oil price crash and the maturity issues surrounding the future of the UKCS then you’d expect that developing new technologies to reduce costs and improve productivity levels would be high on the industry and government’s agenda and actually it is, but so far that hasn’t resulted in any real activity.

It concerns me greatly that we’ve been here before and didn’t learn any lessons. In the 90s and as a consequence of an albeit short-lived period with a $10 oil price, a range of technology related initiatives such the Industry Technology Facilitator (ITF) were set up and, as far as I can tell, have made pretty much no impact on costs.

Like it or not, most of the new technologies developed in recent years have been evolutionary rather than disruptive and unless the industry starts to think in terms of genuinely disruptive technologies and learns from other sectors then I really think it’s highly unlikely that there will be any real cost gains.

For example, if engineers can accurately put a lander on a moving comet a few million miles away in space and then collect huge and varied amounts of data including video from it then why the hell do we still need so many people on an offshore platform?

In the same vein, why has hardware such as the subsea tree become so complex and so expensive? In the 1990’s WD Loth & Co produced a concept design for a downhole tree arguing quite rightly that valves for downhole trees could be a variation of existing downhole safety valve designs and the production choke could be a ratcheting design of a linear plug and cage choke. Why wasn’t it picked up?

I notice now (with wry amusement) that one of the topics it’s suggested should be looked at by the proposed Oil & Gas Institute is seabed drilling. This is something I and others worked on close to 15 years ago and proved then that it was entirely viable.

The point is that the industry needs to get a lot bolder. Remote operations, simpler trees and seabed drilling are just a very few examples of the ways in which the oil & gas industry could reshape itself. The use of new materials, remanufacturing techniques and 3D printing are others but the industry needs leadership to make this happen and I just feel that once again it’s not getting it.

Why do I say that? Well I can smell obfuscation a mile off. The talk is of another Technology Institute when we already have ITF (the Industry Technology Facilitator); OGIC (the Oil & Gas Innovation Centre); NSRI (the National Subsea Research Initiative) and others just in Scotland and most just in Aberdeen.

It’s the classic recipe for achieving nothing much. It’s one of the main reasons our competitors beat us hands down at the technology game. We have no game plan and no clarity of purpose but much as we did in 90s, we’re talking a really good game.

Am I optimistic about the use of technology to solve the cost and production efficiency issues the UKCS suffers from? No I’m not. There’s no White Heat here, only hand wringing and more of that classic British attitude . . . “but we’ve always done it like that”.