Never let a good crisis go to waste, an industry conference in Oslo, Norway, had been told this morning,
Image from Aker.
The phrase, used by former UK Prime Minister and wartime leader Sir Winston Churchill was quoted by Preben Strøm, director for the Subsea Valley who said the industry was experiencing a correction, due to the massive fall in prices.
But, while it was a tough time for the industry, firms were using the downturn to adapt as it did in previous crashes, he said. The industry had become fat, Strom told OE earlier this week. Over the last 10 years, engineering costs have increased 70%, "salaries are insane," he said.
Also speaking earlier this week, DNV GL's, Head of Department for Well, Subsea and Risers Anders Husby, said: "Cost control is increasingly important. The industry is looking in to different ways to control costs and decrease costs."
To reduce costs, a large focus has been put on standardization and work in this area was started even before oil prices fell due to concern about high costs. Joint industry projects are well underway in areas including subsea forgings and documentation standardization. Statoil has been working on a standardized work over system since 2010.
Lien and Strøm were also keen to point out that the industry is far from dead. Still more than half the oil on the shelf was in the ground and the massive Johan Sverdrup field had only been discovered in 2010, showing potential reminded for successful exploration, and that it would be Norway's largest industrial project since Troll, being built out in phases over the next decades.
The project will create 35,000-50,000 new positions in the market, says Strom. The project's first phase alone will be a NOK110 billion investment. "It is huge and it is easy oil so it should be able to run even at oil prices we see today,"
Subsea Valley is also succeeding, said Strøm. It has more exhibitors than ever, at 150, 30% up on last year, with a strong conference program.
And, according to Norwegian analysts Rystad, oil prices would start to increase in by the end of next year.
The subsea sector would be a strong segment, too, being a key part of future oil developments offshore, said Husby. According to Rystad, global subsea spending is expected to increase from US$36 billion in 2015 to $50 billion in 2018, and subsea production rising to be "on par" with platform based production, Tord Lien, Minister for Petroleum and Energy in Norway, told Subsea Valley, which opened today (April 15) and continues tomorrow,
However, both Strøm and Husby said more still needs to be done to make sure the wider public understand the industry is still moving forward, in order to make sure future generations want to study technology and join the industry, says Strom, because currently the messages tended to be too negative, focusing on job losses, with the concern being that this would detract young people from looking to the industry for their careers.
While concern around recruiting new talent, which was a major issue just 12 months ago, had lessened, a downturn in recruitment now maybe a challenge for the industry in the future, says Husby.