From Louise Nicolson in Houston, Texas
This week, new survey results from website Energy Voice revealed confidence in oil price recovery remains fragile but investment in tech is key to the future of the industry.
Delegates at the largest oil show in the world, Houston’s Offshore Technology Conference, discussed the findings over a breakfast of sausage and biscuits. The leaders of service companies and E&P operators expressed a tentative positivity – but there wasn’t much confidence the feeling would last.
“Think Road Runner and Wile E Coyote,” explained Philip Rodney, self-confessed optimist and Chairman of legal firm Burness Paull. “Road Runner makes it across the ravine because he doesn’t look down. Coyote pauses, looks down, and falls.”
The stats prove the ravine floor hurts. The industry has endured sustained cost-cutting with further, faster, deeper cuts than those made in the 1980s. Yet a third surveyed say more cuts are expected. In 2016, 120,000 oil and gas industry workers quietly lost their jobs. While other commodity-based industries grab headlines for smaller, politically acknowledged losses, oil industry pain remains largely personal, largely unreported.
Lesson one – Let’s trade war stories. The Houston bars rattle with boasts about the number of downturns survived. “Only two? Tsk, count yourself lucky, this is my fifth!” Oil and gas has always been a cyclical industry. There is strength in the camaraderie and courage to be borrowed from the old-timers.
Lesson two – Learn from our mistakes. I’ve yet to spot the infamous Houston bumper sticker inspired by the 1980s crash: ‘Please God, give me one more oil boom. This time I promise not to piss it away’. It captures the mood nearly forty years on but this time there is a sobering understanding the boom days are probably gone forever. We are facing ‘lower for longer’ or as KPMG’s global head of energy Regina Mayor said this morning, “lower forever”. And that demands new thinking.
Lesson three – Embrace a brave new world. Operating in the world’s harshest environments has always demanded technological innovation. However, exponential bounds in digital technology offer the efficiencies we need. Think drilling rigs operated by iPads or bots churning previously impenetrable supply chain data. Think predictive maintenance and integrated operations. Oil and gas is, and always will be, a frontier industry.
Jimmy Milne, Chairman of Balmoral Group, concluded matters with trademark flair. Translated from the Scottish dialect Doric for US delegates, he quoted Churchill: “It is no use saying, ‘We are doing our best.’ You have got to succeed in doing what is necessary.” So, with Churchillian resolve, we drained our mugs of filter coffee and stepped out into the Houston humidity to track our next customer.