The Topsides UK 2016 Conference and Exhibition in Aberdeen has come and gone. The first of a planned series of annual oil and gas industry local meetings focused on the current market downturn, which in turn brought forth several interesting ideas.
The first conference of its kind in the UKCS and Europe focused on operating topsides facilities more efficiently through enhanced production, increased productivity and lowered operating spend.
Featured speakers, amongst other notables, included Nikki Tierney, Partner at Performance Improvement People, Eddie McCullough, Senior Partner with Optimus Seventh Generation, Allan Merritt, who is Managing Director at Arnlea Systems, David Rennie, International Sector Head, Oil and Gas at Scottish Enterprise and Steve Moir, Engineering Manager at Sky Futures.
So it was an impressive and knowledgeable group.
Of course major concern was the depressed price of oil. Andrew Reid of Douglas – Westwood gave an illuminating presentation (see the graph). The yellow line is demand, the green line supply.
© Andrew Reid, Douglas-Westwood
Demand clearly has kept rising with a steady upward trend. Supply however has kept steadily above demand creating the low price on commodities market. OPEC has maintained high production, consequently pushing prices down and causing problems for high cost suppliers.
Obviously the hope for the market is that oil prices will moderate and the incentive to invest long-term will thereby increase. That noted, supply will also grow due to numerous deep water investments.
Oil companies have taken steps to decrease production cost. Brian Welinder made a presentation about how Maersk Oil reduced their lifting cost from $89 to $10 per barrel.
However, substantial part of the unit cost reduction was achieved by increased production. So there is a damned if you do and damned if you don’t aspect to the situation. Companies increase production trying to reduce cost but higher supply depresses oil prices.
Cost reduction and smaller investment usually also means laying-off staff. Steve Johnson of Simply Joined Consulting said that companies are afraid they not only will have to reduce employment, but also lose necessary remaining employees because of the uncertain nature of the market.
Companies have to come up with a plan to prevent key employees from leaving. Why? When the industry recovers (and it will), lost employees may well be difficult to attract back into the fold.
Managers will also have to change their approach to management. As Nikki Tierney (Performance Improvement People) said, imprudent decisions made under pressure may have unfortunate long-term consequences.
Instead of asking “what have you done today”, supervisors must learn to ask “how did you do it” and try to find new ways how to achieve standard goals.
Craig Thompson from FPAL showed how their tools can help growing business network. FPAL Performance Feedback is a tool affording performance assessment after a part of a project is completed. With an aggregated and standardised scoring system, both buyers and suppliers can evaluate and assess their track record and performance.
In trouble times cost savings are vital.
However, safety cannot be compromised. Savings on safety must not of course increase the risk of incidents or worsen conditions. The same applies to environmental issues. These HSSEQ topics were covered in presentations by Michail Tzouvelekis from Dräger and Ann McGregor from Stork.
Health and Safety at work, Shetland Islands 2015
Raff Celentano of CPS outlined how the company’s “Fabrication and Construction” solutions helped drive down costs and afforded greater control of the supply chain and enhanced visibility in their engineering services and projects.
The CPS Single Service Offering Model enables cost reduction of up to 40% through their innovative construction-based approach to decommissioning.
The next Topsides UK conference will be held in Aberdeen in March 2017. Central European Staffing (CES) will be there. We are looking forward to the future as do our partners and to engaging in productive meetings on salient topics.