The new normal

Neil Gordon, chief executive of Subsea UK

January 1, 2017

Neil Gordon, chief executive of Subsea UK.

When looking at oil price trends over the years since the 1920s, it becomes apparent that apart from the cyclical spikes every few years, US$100 plus was never going to be the norm. However, we became complacent in that unprecedented period of sustained, high oil price and the thought of living in $50-$55 oil seemed unthinkable in 2014. Well, two years on and we’ve got to get used to it. This is the new norm and the recovery is much more about how we deal with the current price, rather than waiting for oil prices to “recover.”

That’s why the theme for Subsea Expo, which begins on 1 February at Aberdeen’s Exhibition and Conference Centre, is “Adapting to the New Norm” and will focus on the behavioral changes the industry must make to deliver the cost savings and efficiencies needed to sustain the sector for decades to come.

While I am in no doubt that there will be tough times ahead in the short-term, I do believe the subsea industry in this country is in a strong position to embrace the new norm and, indeed, can capitalize upon it, largely because of our focus on technology, which is fundamental to this new norm.

Despite the drop in sales and confidence in the industry, the UK subsea sector is maintaining high levels of investment in technology. In our recent snapshot survey of members, almost 80% of respondents reported that they were still investing in new technology to secure long-term future growth.

Underwater technology, systems, and processes made in the UK have been helping North Sea operators recover hydrocarbons since the 1980s.

There is no doubt that the industry has become much more receptive to new ways of working and new technologies, and we are starting to see the benefits of real collaboration towards reducing costs and driving efficiencies.

However, with fewer discoveries and aging fields, the focus is very much on working with the existing assets to extend “life-of-field” without running up unnecessary high costs. Operators are increasing production by using existing, less mainstream technologies that can be readily implemented to enhance and upgrade aging subsea systems.

Devising smarter ways of applying these technologies can also reduce inefficiencies and counter the tendency towards over-engineering, which became a feature of the high cost, high oil price environment.

This doesn’t mean that new technologies are no longer needed. In order to extract higher yields from our existing assets and to do that viably we need to develop new technology and smarter integrity solutions that keep these aging assets healthy.

Companies need to invest wisely in the current market and focus on developing technology that will deliver efficiencies and add real value to the industry.

An example of the type of innovation needed is in condition based monitoring, specifically tools that can monitor the health and integrity of subsea systems and calculate when it requires attention, instead of carrying out regular and costly inspection campaigns. This allows operators to carry out planned, risk-based maintenance and repair programs when it’s required, rather than reacting when something gets to a critical state which can lead to unplanned interventions and higher costs or even worse, loss of production.

Last year we saw the launch of a new innovative vessel share initiative, which has the potential to provide industry with significant savings through encouraging collaboration, cost-efficiencies, and ultimately increased productivity. The concept focuses on a vessel share agreement, with collaboration from several clients, to deliver a single linked campaign workscope that addresses each client’s individual demands.

The model is aimed at reducing the costs associated with mobilization and demobilization periods while also distributing further cost savings for individual clients, helping to ensure a reduction in non-productive time and an increase in overall work time – a cohesive approach to project delivery.

This type of smart collaboration and smarter applications of existing technologies, along with new innovations will help secure the subsea sector’s future and the sustainability of our industry in the new norm.

Subsea Expo runs 1-3 February in Aberdeen. For more information, see