Oil and gas remains at forefront of sector ahead of Subsea Expo in Aberdeen
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The global subsea industry – that sector devoted to activity from the seabed to the surface – will once again flock to Aberdeen from February 11-13 for its most prestigious gathering, Subsea Expo.
Last year, a record 6500 visitors attended the annual exhibition and conference from 58 countries. This year, Subsea Expo will be held in Aberdeen’s new events complex, providing much more space than the old AECC, with potential for a far greater number of attendees.
Under the title of New Perspectives and now in its 15th year, Subsea Expo will champion the best Scotland has to offer as an internationally-recognised subsea centre of excellence. And while the oil and gas industry will continue to take up much of the attention, renewables and other markets will also have a major part to play.
Launching this year’s event, Subsea UK chief executive Neil Gordon suggested it was time to view the sector through a new lens – as an underwater engineering industry, serving the oil and gas, renewables, oceanology, defence and emerging areas such as aquaculture and deep-sea mining.
Key issues such as the energy transition, digital disruption and the challenges of meeting the Scottish and UK net-zero carbon emissions targets of 2045 and 2050 respectively will be major talking points.
The subsea space is an exciting one to be in for two reasons.
Firstly, we’re very good at it in Scotland. Its technical complexities and demands for highly skilled delivery play to our internationally-recognised strengths in expertise and competence.
Secondly, subsea really does represent a level playing field where a host of disparate industries can come together as Mr Gordon suggested. A seabed is a seabed after all, and the skills used in the installation of an oil and gas platform or a wind turbine are generally cross-transferrable.
In that sense, subsea represents an arena where the energy transition can be seen to be happening in a very real way.
However, there is also plenty of reason for optimism from subsea’s traditional oil and gas market. A report from GlobalData Energy suggests 21 oil and gas projects will start in north-west Europe in 2020 – and the UK will lead the way with 12 mainly located in North Sea shallow waters.
This year, the UK industry is also set for a resurgence in deepwater activity (that is more than 1000ft water depth) following a dearth of new projects coming online in 2018 and 2019.
Looking at the wider global perspective, independent research company Rystad Energy has forecasted that investment in deepwater projects is the only segment of the industry that will grow above five per cent – at 6.3 per cent – this year. Such data is supported by the optimism generated by massive offshore finds announced recently in places such as Russia, Guyana, Cyprus and Mauritania.
This means that while activity is set to pick up at home, a growing number of oil and gas projects abroad suggests there is double the reason to believe that offshore activity, and specifically subsea activity, will improve in the year ahead.
But companies will have to continue to work hard to earn that success. With forecasts suggesting the oil price will remain around the $65 to $70 mark into the middle of the decade, the days of hoping business will pick up on the back of favourable financial conditions are over. The focus has to be on what the industry can do for itself.
This means continuing reductions in project budgets and operating costs, which have come down drastically since 2014. As an example, latest figures for unit operating costs on the UK Continental Shelf (UKCS) are holding at around $15 per barrel, which is less than half of what the costs were six years ago.
Greater process efficiencies including new technology adoption and increased digitalisation will help to reduce operating expenditure.
The subsea sector has much to play for across a range of verticals, but the oil and gas industry will continue to provide rich pickings for those prepared to reach for them.