At the end of April and beginning of May, Houston hosted the 50th edition of the Offshore Technology Conference (OTC), at which energy industry experts shared their experience, the latest technology breakthroughs, and the ways forward to a thriving offshore oil and gas sector.
The 50th annual gathering of industry professionals focused on the state of the offshore sector, the ways to cut costs and boost value, breakthrough technology achievements amid the low oil prices, and industry-leading safety practices.
More than 2,300 exhibiting companies—including nearly 300 new exhibitors—representing 44 countries showcased their latest offshore technology solutions and services during the event that attracted more than 61,300 attendees from more than 100 countries. This year’s exhibition covered more than 585,000 net square feet, including outdoor exhibits. International companies made up 55 percent of exhibitors.
“We are very pleased with this year’s attendance, as it is above our 52,570 attendance average across OTC’s 50 editions. We are also seeing high interest in next year’s event. 2019 exhibition space in NRG Center was sold out before our 2018 event, and rebooking for the other exhibition areas is underway,” said Wafik Beydoun, 2018 OTC Board of Directors Chairman.
OTC celebrated its 50th edition with special events on 30 April, including an opening ceremony and ribbon pulling, Legacy Luncheon, and Chairman’s Panel on Energy Transformation. CEOs and presidents from the global energy industry attended the 50th edition celebration, including Patrick Pouyanné from Total; Ryan Lance from ConocoPhillips; Jeff Miller from Halliburton; Clay Williams from National Oilwell Varco; Eldar Saetre from Statoil; Remi Eriksen from DNV GL; Lorenzo Simoneli from GE company Baker Hughes; Steve Demetriou from Jacobs Engineering Group; Luis Araujo from Aker Solutions; Rod Larson, from Oceaneering International; and Jean Cahuzac from Subsea 7. The managers’ presentations provided insights into the future of the offshore sector.
The Spotlight on New Technology Awards that OTC is handing out annually recognized 17 technologies from exhibiting companies, including two companies who won the Small Business Award.
OTC’s 2018 Distinguished Achievement Award for Individuals went to Brian Skeels and the Distinguished Achievement Award for Companies, Organizations and Institutions went to Shell and SBM Offshore. OTC’s Heritage Award was presented to Cesar del Vecchio, while Tom Sifferman received a Special Citation.
For the Spotlight awards, nominations were open to all exhibitors at OTC, and each nomination was evaluated by specialists drawn from the OTC board of directors as well as the program committee. The specialists selected the winning technologies based on four key criteria:
New and innovative: The technology must be less than two years old, original, groundbreaking, and capable of having a major impact;
Proven: The technology must be proven either through full-scale application or successful prototype testing;
Broad interest: The technology must have broad appeal for the industry;
Significant impact: The technology must provide significant benefits beyond existing technologies.
In the Spotlight on New Technology awards, the winning technologies and services were:
Aegion Coating Services, producer of ACS HT-200
Ampelmann, producer of N-type
Baker Hughes, a GE company (BHGE), producer of TerrAdapt adaptive drill bit
Baker Hughes, producer of DEEPFRAC deepwater multi-stage fracturing service
Delmar Systems, Inc., producer of RARPLUS
Dril-Quip Inc., producer of HFRe – Hands Free Marine Drilling Riser System
Expro, producer of Next Generation Landing Strings (NGLS)
Halliburton, producer of GeoBalance® Automated Managed Pressure Drilling (MPD) System
Halliburton, producer of 9½-inch Azimuthal Lithodensity (ALD) LWD Service
LORD Corporation, producer of 10K Completion Workover Riser Flexible Joint
NOV, producer of NOVOS
NOV, producer of Seabox
Oceaneering International, Inc., producer of E-ROV System
Oliden Technology, producer of GeoFusion 475 Laterolog Resistivity and Imaging LWD tool
Teledyne Marine, producer of FlameGuard P5-200 electrical penetrator
The two Small Business Awards went to:
CoreAll, producer of Intelligent Coring System
Luoyang Wire Rope Inspection Technology Co., Ltd., producer of TCK.W Automatic Real-time Online Wire Rope Inspection System
“We can never forget that companies like the 2018 Spotlight Award winners are driving the technological advancements necessary to propel our industry for the next 50 years,” Spotlight Award Committee Chair Paul Jones said in an OTC press release.
Innovator and industry pioneer Brian Skeels with more than 35 years of experience in subsea completion and pipeline design received OTC’s 2018 Distinguished Achievement Award for Individuals, recognizing his accomplishments in pioneering new subsea completions in record depths and his work in developing new tieback connections that have set and redefined industry standards. Skeels spent five years working on Exxon’s famous submerged production system and underwater manifold centre, before joining FMC Technologies in late 1984.
Shell and SBM Offshore received the Distinguished Achievement Award for Companies, Organizations and Institutions for bringing the world’s deepest oil and gas project online—Shell’s Stones Field, which is in 9,500 ft water depth in the Gulf of Mexico and produces to the Turritella FPSO. The project uses an industry-first pairing of a steel lazy wave riser system with the largest disconnectable buoy turret mooring system, and an artificial lift system designed for 15,000 psi.
OTC’s Heritage Award went to Cesar del Vecchio, an engineer of nearly 40 years of experience and an expert in the integrity management of mooring systems. Del Vecchio was recognized for developing safe and economic deepwater mooring systems. Del Vecchio, who has worked as a senior consultant for Petrobras, is currently a senior consultant at Stress Engineering Services, consulting on mooring systems, fibre ropes, mooring materials, fatigue and structural integrity assessment.
Tom Sifferman, a licensed professional engineer with more than 45 years of experience working in the petroleum industry, received a Special Citation for outstanding work in the offshore sector. Mr. Sifferman is a Society of Petroleum Engineers Distinguished Member and a fellow with the American Society of Mechanical Engineers. He holds 17 issued U.S. patents and has served as chair and organizer of flow assurance sessions for OTC since 2006.
Industry Executives’ Views
Apart from the OTC awards, the annual gathering in Houston saw the participation of leading industry executives and experts who shared insights into the state of the offshore sector, the challenges it faces, and the flagship projects and solutions the industry has come up with to solve those challenges.
Much has happened in the offshore oil industry in the 50 years of OTC events, but the drive to innovate to bring oil and gas from offshore fields continues.
“Offshore oil and gas is absolutely essential to the world’s economic prosperity, to human advancement and will remain so at least for the rest of our lives,” ConocoPhillips chairman and CEO Ryan Lance said at OTC’s opening ceremony.
Offshore oil and gas developments rely on technological innovations and breakthroughs to push for lower breakeven costs and boost efficiencies, just like onshore oil and gas projects, industry leaders said, and they firmly believe that innovations will continue to emerge and continue to improve safety and efficiency. Big data analytics, digital fields, the Industrial Internet of Things (IIoT), and the ‘digital disruption’ as a whole will play a vital role in the future of the offshore oil and gas field services and solutions.
“Our industry,” ConocoPhillips’s Lance said, “is the poster child for innovation.”
BP’s group head of technology David Eyton presented BP’s latest Technology Outlook, according to which 4.9 trillion boe could be recovered using today’s technology. Emerging technologies could potentially add another 2.4 trillion boe resources by 2050.
Although the recent oil industry downturn has led to some companies abandoning offshore, Chevron is not one of them. The U.S. supermajor continues to consider offshore as important to its upstream portfolio as the hottest U.S. shale play, the Permian Basin.
“For us, it’s not either offshore or the Permian—it’s both,” Jeff Shellebarger, president of North America E&P at Chevron, said at an OTC session.
“At Chevron, we see deep water as a material part of our overall upstream portfolio, and as such we have put together the size, the scale and the organizational capability needed to be successful in the Gulf of Mexico,” he said. In 2018 alone, Chevron plans to invest US$8 billion in its U.S. operations, with the bulk going to deepwater GoM and the Permian.
Chevron saw first production at its partner Hess’ operated Stampede project in January 2018 and successfully installed a Big Foot tension-leg platform in February. Chevron plans to start drilling from the Big Foot platform in the next two to three months and expects first oil from the project by the end of this year. The company also continues to invest in brownfield opportunities and is participating in the Mad Dog Phase 2 project with first oil expected in 2021, Shellebarger said.
While technology and innovation drive efficiency, the industry also needs to eliminate inefficiencies in order to achieve sustainable lower breakeven cost levels, according to Leigh-Ann Russell, head of procurement and supply chain management for BP.
“As I walk the line from our end-to-end supply chain, we have massive, massive waste,” Russell said at the OTC. The world’s recoverable resources are enough to meet global demand through 2050—twice over.
“With that context, we cannot afford to be complacent on cost in our industry,” she said, noting that it would be equally costly to return to the boom-and-bust mentality. “We need to lower costs in a sustainable way,” said Russell.
Trends in Project Development after the Downturn
One of the ways to deliver offshore projects at reasonable costs amid a lower-for-longer oil price is increased standardization and digitalization and collaboration between upstream companies, oilfield service providers and the supply chain, leaders with Shell, Baker Hughes, and Jacobs Engineering said at OTC, explaining how collaboration helped them reduce costs by 30 percent on the Appomattox Field development offshore Louisiana in the Gulf of Mexico. The project, currently around 75 percent complete, is on track for first oil by the end of the decade.
“The project was sanctioned in 2015 when the oil and gas industry was at one of its darkest hours. It was one of just eight projects with more than 50 million barrel estimated reserve sanctioned that year,” session moderator Hani Elshahawi with Shell said.
“What’s most striking about that project is that it was undertaken at a time when the rest of the industry was hunkering down in the lower-for-longer future. What’s even more impressive is that the project costs were reduced post FID by an additional 30% without compromising safety or quality.”
“If you look at the year of 2013, 2014, it always used to be that oil is at a price of $110 or $120 and it’ll remain there, and it seemed there was an entitlement that oil would be high,” Lorenzo Simonelli, president and CEO of Baker Hughes, said. “We should look at it a different way. If oil is going to be $20, how do we make a project go forward?”
New approaches to digitalization and standardization can help the offshore industry more forward, according to Simonelli.
“I think Appomattox is the first of several projects where this new behaviour in the supplier and operator relationship was formed,” he said.
Brazil’s Petrobras looks to engage suppliers in the first phase of project development, strike strategic alliances with other operators, and lease subsea equipment, Petrobras engineer Marcello Roberto said at OTC. According to him, the key challenge over the next decades will be to incorporate technological advances into practical subsea applications.
Another way to improve project economics and efficiency is through mergers and acquisitions (M&A) and partnerships.
Hundreds of hours worth of customized engineering is not a sustainable approach, Neil Saunders, president and CEO of oilfield equipment for Baker Hughes, said.
Companies are brought together by technology—because this can be the key part of the project that makes it feasible.
The industry has recently seen two types of combinations, according to Subsea 7 CEO Jean Cahuzac. One is firms providing similar technology and services combining to provide more synergies and economies of scale. The other type is combinations of complementary businesses that could perform better as one. Subsea 7 has pursued both types, but “only at the right price”, said Cahuzac.
The Digitalization Drive
Digitalization is gaining traction in the oil and gas industry as companies continue to look to innovative ways to transform their business and improve profits and profit margins. According to Wood Mackenzie, digitalization could help save the E&NR sectors (upstream, refining and metals and mining) up to US$150 billion annually in operating costs.
In the upstream, U.S. shale operators have typically saved up to 10 percent on drilling and completing wells by using digital technologies, mostly through Internet of Things/sensor data, enterprise data management, analytics and automation, WoodMac says.
Yet, the fragmentation of data and data governance and management are some of the biggest hurdles in the sector.
“Long term, for the oil and gas industry to really benefit from data as an asset, enterprise data management will need to be incorporated across the entire value chain. By cleaning, sorting and structuring data, digital technologies will be far easier to deploy and more importantly far easier to scale. From oil producer to oil refiner, data will be a common, consistent language that companies can share and converse into maximize returns,” Wood Mackenzie’s Preston Cody says.
Digitalization has the potential to transform the offshore industry, according to Per Christian Johnsrud, Product Commercialization Manager at Aker Solutions.
“If you go around OTC this year it’s all about digitalization and I agree: Digitalization is going to change the way we operate in our business,” Johnsrud said at an OTC panel.
The offshore industry and technology will continue to be crucially important to global oil and gas supply in the future, panellists and executives reckon. New technologies will continue to enable the offshore sector to explore for and produce from deepwater fields.
“We have learned that these new resources, for them to be economical, need to be large or very productive as compared to an onshore well. Key technologies developed in the past 50 years, like geophysical imaging, ROVs, horizontal and multilateral drilling, subsea systems and station-keeping technologies, have enabled us to explore for and produce from these fields,” OTC Chairman Wafik Beydoun said.
The industry’s ability to adapt to rapidly changing price conditions will help it continue to meet the world’s growing energy demand.
“The trend seems now to use technology innovations to execute projects with a much shorter turnaround time, to run safer and more efficient operations with fewer people on site,” Beydoun said. “The ROV is just a start. I believe we’ll have robots on platforms.”