2019 is winding down and it’s that time again across all the boardrooms where plans are being made and leaders are playing soothsayer on what is next in 2020 and beyond.
The industry did in fact, have a relatively stable year on oil price. However, supply has again been strong and as we end 2019, there is excess to demand building. The industry has easily replaced the lost barrels from Venezuela, Libya and Iran with supply by the US, Iraq, Norway, the UAE and a new player in Guyana. Although this will create some commotion in the first half of 2020, restraint shown by OPEC, led by Saudi’s keen interest in protecting their recent IPO evaluation, should allow stable pricing well into the year.
In recent history, the ‘survival of the fittest’ mentality has delayed the larger, long-term projects for smaller, shorter cycle activity. The UK oil and gas sector suffered from this in the past few years as many operators continued to hold back on capital to examine their cost base and shed expense as well as continue to push deep cuts onto their suppliers. This trend thankfully started to ease in 2018. Since then, there has been a continued marked shift for better collaboration between operators and their suppliers in the UK and somewhat globally, that has showed promising results. Collaboration with the oilfield service sector is imperative. It is what drives innovation and efficiency. Wise operators have finally come to the realisation that you cannot live and thrive in the pond if you destroy the ecosystem that feeds it.
With this collaboration, the results from significant projects in 2018 and 2019 in the UK sector have shown a drastic reduction in overhead spend, downtime and development costs. As a small confirmation of this trend, as a mid-tier innovative home grown supplier, Tendeka has noted a return to being brought into the conversations earlier, collaborating closer together and being able to focus on the real problems at hand rather than prioritising cost cutting over effective problem solving.
The more the UK operator base invests in these types of local companies that specialise in specific key problems, the more they in turn will invest in solving the pertinent challenges.
In reflecting on 2019 and beyond, the catchphrase of the next decade will undoubtedly be net zero emissions. This has caused a whole lot of head scratching, action, indecision and some drama across the entire sector. In some parts of the globe the oil Industry has been almost tarnished overnight as a villain, as maligned as ‘Big tobacco’.
We should all take a moment to reflect and educate ourselves on what oil companies can bring to the world and in fact embrace and encourage their willingness to do something about continuing to move towards cleaner and more efficient energy. It is prudent to note that these companies are not antiquated oil companies but rather energy companies striving to bring all kinds of alternative fuels, business models and budgets for a greener world. Whether they do this out of survival or balance sheet, who cares, as long as they do it. They are the foremost deployed to make any significant change in our energy consumption and emissions.
Like any change in modern industrialisation with global ramifications, the ability to execute it on a global scale trails significantly behind the idea or political rhetoric. To keep the lights on, food on the table, planes in the air, and pretty much have a hand in everything we enjoy in our daily lives, fossil fuels will be needed for at least another 50 years. The need now is to balance ever growing demand with the ever-steeper energy decline curves. Does that mean we should not strive for cleaner better alternatives? Absolutely not. Educating ourselves and focusing on what is impactful over catchphrases and misguided spend is the answer.
The UK government’s move to target zero net emissions by 2050 is admirable for a host of reasons and is the right thing to do. The answer lies in not targeting the necessary fossil fuel industry and crush it under regulations. In fact, if you build a program that encourages leaders to capitalize on achieving this target, they will be the best positioned, and most prominent force to make it happen. ‘Big Oil’ is not the problem, it should play its role as part of the solution.
Read the article online at: https://www.oilfieldtechnology.com/special-reports/24122019/embracing-a-new-decade-of-stability-and-sustainability/