Opportunities to emerge from challenges, says NOF chief
Be part of a cultural shift required in the oil and gas sector, and broaden activities and markets too – that’s the advice to producers from George Rafferty as oil prices continue to fall.
As we move further into 2016, the oil and gas sector is in a position that demands continued change. The industry must build upon the work conducted in 2015 to address cost control issues and the need to operate in a low oil price market, but also increase the drive to diversify; grasp new opportunities that emerge from the challenges we face in our cyclical industry.
The oil and gas sector is addressing the current period of serious transition through a greater level of collaboration between the industry, the supply chain and bodies including the Oil & Gas Authority. This will help ensure a more sustainable future for the North Sea, which still holds considerable opportunities for decades to come.
Oil and gas as a sector is cyclical, and many businesses within the industry have been through challenging times before. However, this current period is unique. The challenges are different from previously.
That said, there is a determination within the industry and, in particular, the supply chain to create a sustainable operating environment. This will be achieved by operators and contractors working closely with suppliers to create and bring to market game-changing technologies that address industry challenges.
NOF Energy’s Smarter Supply Chain initiative has seen positive moves from contractors and operators, not only to engage with suppliers, but to embark on projects with closer working arrangements that will help develop bespoke tailored solutions more efficiently.
There is also, of course, the multi-billion pound decommissioning of North Sea assets on the horizon, which will also require the support of the supply chain. Companies that can diversify their operations to be part of the decommissioning supply chain will see new opportunities open up for them.
This is the clear message the industry, including NOF Energy, is sending out. Be part of the cultural shift required in the oil and gas sector, but also broaden activities and markets.
The UK supply chain has to maximise on its achievements in the North Sea, in new geographic markets and alternative sectors. NOF Energy is supporting members with ambitions to apply their skills, technologies and services into markets across different continents that are keen to utilise UK expertise.
There is a strong track record of companies, many of them NOF Energy members located in the North East, transferring complementary skills, products and services, developed in the oil and gas sector, to other industries.
Most notable example of this is the offshore wind sector where companies from the region such as JDR Cables, DeepOcean, Barrier, Modus Seabed Intervention, SMD, IHC Engineering Business and OSBIT Power, among many others, have succeeded in applying their expertise to renewables projects in UK waters and further afield.
Offshore wind is one of the UK’s real success stories and has been at the heart of the country’s renewable energy transformation. A valuable clean energy resource, it has also provided a major boost for the UK economy, creating a range of new job opportunities. Offshore wind has supported more than 13,000 jobs already, with potential to grow up to more than 25,000 by 2025, particularly if investor confidence is maintained.
The country already has five gigawatts of offshore wind installed, around half the capacity across the world. With more offshore wind farms being constructed over the next five years, the UK looks set to continue to build on this momentum.
This region’s supply chain, which includes the companies within the Energi Coast group, has made considerable strides in building a reputation for this part of the country in the offshore renewables industry, and DONG Energy Wind Power is already engaged with local suppliers, including JDR Cables and Offshore Structures Britain, on our projects at Race Bank, off the Norfolk coast, and Burbo Bank Extension, Liverpool Bay.
Now is a time to think more broadly, rather than retain a narrow focus upon one sector. Wherever possible, technological advances should mean greater opportunity, not merely an easier or quicker way to do one job. Ability not only to create wider opportunities for those in our sector is mirrored by those on the outside bringing new ways of working into our industry.
This shared knowledge and diversification is an excellent way of adapting to new challenges and creating new partnerships that are more dynamic, have broader experience and can do existing and new work better.
While 2016 will be a challenging year, it has the potential also to be the start of another pioneering chapter in the story of the energy sector supply chain.
To read more insights and views on the year ahead, take a look at the recently published BQ Yearbook.