The huge crowd of attendees from 110 countries, along with the more than 2,000 exhibitors at this year’s Offshore Technology Conference in Houston appears to make it official: the industry has segued from boomlet to boom.
When the final numbers were tallied, registration topped out at 59,236, which is a 24-year high for the event.
In addition to the many gee-whiz exhibits, the extensive technical program included an array of panel discussions and other sessions.
“Independent Spirits Driving Offshore Industry” was one of the panels to attract a sizeable audience.
Remember several years back when the occasional independent would venture out -- not just to the mature offshore shelf, but into deep water -- by piggybacking on the majors? Today, they’re more likely to work alongside the majors even in the ultra-deepwater, and their role worldwide is increasing.
Vanco Energy, for instance, reportedly just inked a deal for Ukraine’s first deepwater drilling rights. The company holds an extensive acreage position off Africa.
The latter part of the independents panel discussion took a different twist in that a series of multiple choice questions were posed by the moderators to solicit the opinions of the audience. This was followed by comments from the presenters.
Q: Regarding your expectations for future commodity prices: High prices will be sustained for:
(a) Three-five years?
(b) One-two years?
Response:
- (a) 42 percent
- (b) 26 percent.
Not a lot of folks likely would argue with the comment from Brian Reinsborough, vice president of exploration at Nexen, that $72 is extremely high. While there will be oil shocks, the company’s view is the current price isn’t sustainable and will settle into the $50s range.
On the other hand, Devon Energy’s outlook is that high prices will be sustained for a long time. However, the company -- like many of its peers -- doesn’t invest that way, according to Earl Reynolds, vice president and general manager.
Reinsborough emphasized some areas of the world help make America more energy independent. For example, Canadian oil sands, which are believed to contain vast reserves, are a safe bet for the industry -- the region is stable. However, a lot of production around the world, which was once viewed as unconventional -- and pricey -- could not be sustained if oil were to drop to, say, $25. Continuing unconventional E&P supports current prices.
Q: Given work force shortages, what are your expectations of changes to come?
Response: The industry will remain chronically understaffed for many years, according to 86 percent of the respondents.
Devon is actively recruiting on campuses, offering multi-experience opportunities, Reynolds said, and it also is looking outside North America. Basically, however, companies are robbing from each other.
Reinsborough noted that attracting people has a lot to do with giving them responsibility. The labor market is very tight in Canada, which may jeopardize some projects coming on in time. Nexen also is looking overseas for people.
Q: How long will we continue to see a shortage of drilling equipment and supplies?
Response:
- Three years -- 45 percent.
- Five years -- 28 percent.
Mariner Energy is considering how far out to extend contracts, according to Cory Loegering, vice president of deepwater at the company. More rigs will become available, but he questioned who will be available to operate them.
Q: Will access to people or to resources be the biggest challenge to our business over the next three-five years?
Response:
- Access to people: 48 percent.
- Access to resources: 34 percent.
In deep water, technical excellence is crucial, noted John Simon, vice president of development at Amerada Hess, but it’s widely known the universities aren’t graduating the number of people the industry needs. Regarding resources, he cited what has become a common lament among operators: access to opportunities is becoming hugely competitive around the globe.
Reynolds considers the resource issue to be more of a challenge than talent. He emphasized the need to have a clear strategy and relationships in place to conduct business outside North America going forward.
Q: Primary strategy for future growth of independent operators: Organic growth through the bit? Acquisition of underexploited assets? Acquisition of companies with strategies that fit?
Response:
- All of the above: 43 percent.
Nexen takes a balanced approach to growth, according to Reinsborough, while Reynolds noted Devon remains consistent with its approach, whereby the company has grown via acquisitions. Acquisition of companies is on Mariner’s radar, Loegering said, but he noted all three methods are related.
Q: Should independent operators buy back their stock?
Response:
- Yes -- 56 percent.
- No -- 24 percent.
Nexen doesn’t need to buy back stock, Reinsborough said. His take on buybacks is that it means a company doesn’t have enough opportunities in inventory. Money should be put into growth programs rather than stock.
Devon has a different outlook on this issue, according to Reynolds. He said the company thinks buybacks are good investments for shareholders.
Q: Do independents use (a) only proven technology and push it to the limits? (b) Some new technology?
Response:
- (a)Yes -- 47 percent.
- (b) Yes -- 41 percent.
Loegering commented that Mariner uses proven technology and pushes it to the limits at which point new technology then begins to evolve.
Reynolds predicted the industry likely may see the independents using some highly innovative technology if commodity prices remain at lofty levels.
Regarding technology, it is noteworthy to mention that the independents led in many ways to unlock the deepwater Gulf of Mexico -- think Kerr McGee -- as Simon pointed out.