Tragedy tempers spirits, but not the crowds

Russell McCulley
Saturday, June 12, 2010

Around 73,000 attendees packed this year’s OTC in Houston, nearly 5000 more than last year. But the still-unfolding Deepwater Horizon drama in the Gulf of Mexico kept the usual celebratory mood at bay, writes Russell McCulley.

It wasn’t exactly the proverbial elephant in the convention hall: a number of speakers addressed headon the tragic explosion and fire aboard the Deepwater Horizon rig, and the ensuing oil spill playing out in real-time on TV monitors scattered around the Reliant Center dominated private conversations. Even when conference speakers largely managed to get through a presentation without mentioning it, the 20 April disaster, which killed nine Transocean workers and two from M-I Swaco, nevertheless provided a sobering subtext, one that inevitably cropped up when the floor was opened for questions.

‘Obviously, with the incident that’s going on in the Gulf of Mexico, that’s definitely put a more somber mood to the whole thing, and changed the dialogue quite a bit,’ said OTC chairwoman Susan Cunningham as the annual event drew to a close.

It changed the agenda, too: BP, which operates the Macondo prospect and had the Transocean rig under contract there, cancelled a technical session and lunch presentation. The Minerals Management Service also cancelled a scheduled press conference and a popular industry safety awards luncheon. Both the supermajor and the government agency that oversees its activities in the Gulf suggested that the ongoing emergency response required their full attention and all available staff – a valid reason, but to press ahead with OTC appearances would almost certainly have made a bad public relations situation worse.

Cunningham, senior VP of exploration at Noble Energy and a long-standing member of OE’s editorial advisory panel, said the program cancellations were ‘disappointing’ but ‘totally understandable’.

‘We’re always disappointed when somebody has to cancel something that’s significant for the conference, but you float. You go with it. And everyone’s been pretty understanding.’

Despite the grim scene in the Gulf, the 41st OTC was the best-attended in 28 years and covered some 568,000ft2 of exhibition space. The conference handed out distinguished achievement awards to Anadarko Petroleum and Enterprise Products Partners for work on the Gulf of Mexico’s Independence Hub development (OE November 2007), and to subsea equipment standardization pioneer Hugh Elkins, who logged more than 50 years in the industry, including a stint as business development director for National Oilwell Varco before retiring. ‘I don’t want what we’re living with today to take away, first of all, from the recognition we’re providing these honorees,’ said Noble Energy chairman and CEO Chuck Davidson, presenting the awards.

Noble was well represented at special events – not surprising, perhaps, given Cunningham’s role as chair – including a panel discussion on the future of exploration. Noble’s director of international exploration Jim Demarest noted ‘fierce’ competition from NOCs, which are wielding increasing influence over home-turf resources and tightening restrictions on IOCs looking for a share of the some of the globe’s most productive offshore basins. ‘Access to acreage is quite difficult in some places,’ Demarest said.

Other challenges facing the industry are the muchdiscussed issues surrounding the decline of ‘easy oil’ and the necessity to seek reserves in more difficult reservoirs, harsher environments and deeper waters.

Anadarko VP of international operations Frank Patterson noted that the deepwater Gulf of Mexico discoveries in recent years hold an average 83mmboe – about the equivalent of one day’s worldwide oil consumption.

‘Today the world consumes the average deepwater field in the Gulf of Mexico every day,’ he said. Keeping pace with that demand puts E&P;companies ‘on a fairly serious treadmill,’ Patterson said. About one thousand new wells per year are needed ‘to deliver what the world needs,’ he said.

At a separate gathering, former Shell Oil president John Hofmeister, now chief executive of the industry group Citizens for Affordable Energy, presented domestic drilling as just about the only solution for decreasing the US’s dependence on imported oil while taking potshots at Washington and the White House.

‘The US could become like Venezuela, with frequent blackouts and a major energy crisis on its hands if changes don’t come soon,’ he said. ‘We will look back in 25-50 years at this time as a period of disgraceful leadership concerning energy policy.’

Energy investment banker and peak oil theorist Matt Simmons was back, still warning of dwindling reserves – both oil and fresh water – and the end of ‘easy oil,’ but with a new twist: Simmons has become a leading advocate of offshore wind power, particularly a project offshore Maine that backers say will use floating wind turbines to produce fuel-quality liquid ammonia (OE March).

Renewable energy is, in fact, gradually asserting itself at the oil & gas-heavy OTC, a trend that Cunningham says she will encourage during her term as chair, which concludes in 2011. ‘We have, in the last several years, been trying to increase the content of all offshore energy sources, and I expect that will continue,’ she said. ‘I think it’s becoming more of an industry consensus that the future is a portfolio of energies.’

Also likely to be on tap for 2011: a slate of programs and presentations examining the Deepwater Horizon disaster. The oil spill was entering its second month as OE was going to press and is destined to be the worst in US history.

‘I do expect there will be talks that relate to what happened, whatever the impacts are,’ Cunningham said. ‘We’ll have a better feel for that within a year.’ OE

Categories: North America Gulf of Mexico

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