North Sea recovery depends on competitiveness, says OGUK panel

North Sea recovery depends on competitiveness, says OGUK panel

Oil and gas industry players are feeling more confident about 2021, yet building a long-term future for the North Sea energy sector depends on making it more competitive through collaboration, according to members of an OGUK panel.

 

The ‘Road to Recovery - UK Oil and Gas Industry Action’ focused the OGUK Recovery Group and its work to stimulate investment, activity and jobs following the price dip and Covid 19 disruption.

Katy Heidenreich, OGUK’s Operations Director and chair of the webinar, identified key industry levers for recovery – safely increase manning levels, recovering base activity levels, promoting good practice, increasing visibility of work and reviewing decarbonisation.

'What am I saying and where am I saying it?' Michael McCulloch

She also highlighted a recent survey across the organisation’s membership that showed companies are feeling more positive compared about 2021 compared with 2020, although much of the activity they are planning for next year will depend on their ability to get more people offshore.

Neil McCulloch, Executive VP, Technical & Operated Assets at Spirit Energy, said that his company is increasing manning levels but that progress in 2021 may depend on whether this remains practical.

‘The Covid crisis has shown why this industry is so important,’ added McCulloch, praising the sector and its workforce for keeping the lights on despite the challenging conditions. There was general agreement among the panellists; McCulloch and Scott Robertson, Director of Operations at OGUK, both made the further point that the sector must now recover and grow if it is to play a key role in the transition to a zero carbon economy, for example through carbon capture and storage.

There was agreement that the North Sea sector requires investment if this is to be achieved, and therefore must continue to lower unit cost to generate maximum returns.

Yet the traditional method of lowering costs by asking for discounts from the supply chain and service sector – thereby putting further pressure on seafarers – is not the right solution, according to Martin White, Vice President at Halliburton.

‘That doesn’t really work, it’s never worked. There’s nothing left to squeeze from the service sector. It kills innovation and we spend time arguing over money,’ he said.

Instead, he recommended greater collaboration as the best way forward. “It’s never been more important to collaborate to lower costs and increase returns. There have been campaigns in the North Sea with 40% reductions in time and cost – dedicated team that worked together every day, dedicated fit for purpose tools and mobile units, standardisation of operations across multiple platforms and taking learning-curve benefits and applying them everywhere.’

The panellists also highlighted the need for a skilled workforce to enable recovery and growth, especially given the challenging market conditions and the increasing momentum towards zero carbon.

‘Our industry is essential for North East Scotland and for the UK, and it needs to grow and continue to attract the best and brightest talent to Aberdeen. We need a workforce that can take us through the energy transition,’ said White.