At the President’s Luncheon and Annual Meeting at this year’s SPE ATCE on Wednesday, both outgoing 2015 SPE President Helge Hove Haldorsen and incoming 2016 President Nathan Meehan discussed how vital the industry remains in spite of the downturn.
“Our industry is the industry that makes life possible,” Meehan said. “Everything (education, clean water) correlates to energy usage; quality of life depends on oil and gas, and will continue to do so for decades to come.”
Haldorsen echoed these points earlier in his speech saying, “More than 50% of the energy mix (is oil and gas). This is a pretty great industry to be in. We have a great future. Oil and gas will be around for a very long time. The outlook for our business is good.”
Despite all the positivity, both Haldorsen and Meehan said that there is no way to predict what the oil price will be, and that boom and bust cycles are hard to predict. Haldorsen joked that in the old Soviet Union you could tell factories how much to produce. “But, you can’t tell 100 countries and 1000 oil companies what to do.”
Haldorsen said the industry needs to become fit at $50/bbl. “We have to be safer, smarter, cheaper, faster, lower break evens, more sustainable, and with better predictions.”
Currently, he said, we are stuck in a “rhapsody in C,” meaning higher costs, complexity, lack of competitiveness, low returns on investor capital, as well as climate change, and community expectations.
“Houston, we have a problem getting good returns at $50/bbl,” Haldorsen playfully noted.
Haldorsen stressed that the industry needs to be both competitive and collaborative, and likened both to the yin and yang. “Very few industries are more competitive, and very industries are more collaborative. It’s unheard of,” he said.
But going forward, he says that the fittest companies will be the best collaborators. “Sometimes competitiveness has to take a backseat.”
Fundamentally, Haldorsen said that being Fit at 50 requires a complete makeover of the industry, meaning the adoption of new technologies such as automation, digitalization (big data, analytics, the internet of things), as well as coming up with new business models, and even rebalancing both the government and the investor take.
Meehan echoed the need for continued innovation, despite the downturn.
“We don’t know what the future holds,” Meehan said. “We have no control over crude oil prices, but we do have control over our response to prices. It is vital that we adapt to the crude oil price environment.
“During the extended period of low prices in the late 1980s, our industry developed with modern horizontal drilling technologies, MWD, LWD, many of the technologies crucial for deepwater development and we will have to continue to innovate in low price environments now,” he said. “In fact, it may be easier to innovate now when we’re all not just chasing rigs. It’s a necessity. We can survive and thrive.”
Image: Incoming 2016 SPE President Nathan Meehan and 2015 outgoing SPE President Helge Hove Haldorsen.
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