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The OTC 50 celebrations and upstream investments

The year long celebration of the Offshore Technology Conference, OTC at 50 ended last Thursday at the New Radiancy Group, NRG Park in Houston, Texas. The celebration of 50 years began at the 2018 edition, culminating in 2019, from May 6- 9.  Founded in 1969, by 12 engineering and scientific organizations, it was a response to the growing technological needs of the global ocean extraction and environmental protection industries.

File: Oil

This year’s theme was “OTC: The Next 50 Years.”In the last 50 years the Offshore Technology Conference has been a market place for energy professionals to exchange ideas and opinions to advance scientific and technical knowledge for offshore resources. The conference in the last five decades has brought together manufacturers of deep-water drilling rigs and offshore platforms, suppliers that make all manner of equipment from hoses to drill bits, and providers of essential services from helicopters to boats. Held for the first time in Houston’s Albert Thomas Convention Center, from 19-21 May 1969, the Conference attracted 2,797 registrants, had 112 papers presented, and 368 exhibit spaces.

As the conference grew, larger facilities at Houston’s NRG Park were booked annually. OTC has been held in Houston each year since, with significant growth in size and worldwide participation. No doubt, the offshore conference has grown, reaching a peak attendance of 108,300 in 2014. OTC is also significant for the Houston economy. Since 1969, OTC has generated approximately US$3 billion in income for the city of Houston, and is the city’s largest convention. At 50, OTC would have been celebrated with fanfare, display of great splendor and magnificence with historical flavor. Its large international participation has provided excellent opportunities for global sharing of technology, expertise, products, and best practices. OTC has brought together industry leaders, investors, buyers, and entrepreneurs to develop markets and business partnerships. Analysts hoped-for more global offshore investments in the upstream sector. They believe that despite volatilities in oil prices, global warming and climate change worries, as well as the shale revolution and OPEC market share rivalries, offshore would continue to thrive, with much to offer beyond the 21st century. Will the onshore-offshore dichotomy thin out? Conference chairman Wafik Beydoun expected this year’s turnout to match 2018. Producers, he said, will be looking for ways to drill faster and more cheaply offshore so they’re competitive with shale drillers.

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And these are challenges of this millennium to be tackled. Off shore’s appetite for exploration would continue to weaken long term as more potential resources are discovered. Exploration will likely be forced into deeper and more remote waters, which could be too expensive to develop given the availability of other competitive sources of crude supply, Audun Martinsen head of oilfield services research, Rystad Energy said. The maintenance and operations service segment is naturally the market with the most volume of work ahead, with 58 percent of the market to be spent in the future representing US$20.5 trillion in expenditures. “Well Services and Commodities, Drilling Contractors, EPCI, and Subsea are equally large markets which we expect will make significant contributions to the service sector in the next 50 years,” Martinsen commented.

Rystad Energy has analyzed the historic investments and oilfield service purchases of the world’s 50,000 oil and gas fields. While the forecast is uncertain, their analysis paints a fascinating picture of how offshore could contribute to the future of the industry they estimate that around 800 billion undiscovered barrels of oil and gas equivalents exist globally, hinting that exploration will still be a business in the next 50 years. It should be underscored that investments in the Upstream were badly hit in the recent past. Analysts say the offshore exploration and production activities have had serious decline in capital expenditure, Capex since the global oil prices slump. In the past four years, global capital expenditures of offshore projects fell by nearly half to US$120 billion, compared to US$210 billion in 2015, according to IHS Markit. It indeed aggravated the rate that scores of companies went into bankruptcy with tens of thousands of jobs that were lost. IHS Markit chief strategist, Upstream, Bob Fryklund, believes that the offshore is the last to recover because of its longer gestation period. But companies have shortened the timeline from discovery to production to three years from seven years, he said.

As the cycle speeds up, offshore producers have become more competitive with onshore producers. Optimism is coming back to the industry because of the discoveries, especially in waters that haven’t traditionally seen a lot of drilling in the Gulf of Mexico and the Mediterranean. The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, was in Houston to address foreign investors. Baru, who spoke on the topic:”Deep-water Operations in Nigeria: The Journey so Far” addressed participants on the different phases of deepwater developments, the place of Nigeria in global deep-water operations as well as capacity growth in the local industry for deep-water operations. He highlighted NNPC’s desire to continue to support and provide opportunities for qualified Nigerian companies within the nation’s burgeoning deep-water space.

VANGUARD


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