Bob Ruddiman: Offshore conference vital to trade ideas

OTC will be set against a backdrop of a 'lower for longer' oil price, writes Bob Ruddiman. Picture: Jeff J Mitchell/Getty Images

For much of that last quarter decade I have joined hundreds of other Aberdonians as we make a similar, albeit much smaller, pilgrimage to Houston to take part in the world’s largest annual oil and gas conference.

The Offshore Technology Conference, or OTC as its known throughout the energy-producing world, is a coming together of delegates from more than 100 countries, to exchange ideas and to advance scientific and technical knowledge for offshore resources and their sustainable development.

It is claimed that if you want to push a deal over the line, secure an important introduction or simply reinvigorate relationships with anyone who is anyone in the UK North Sea sector, then Houston is the only place to be in the first week of May.

As part of a five-strong Pinsent Masons team, who have been visiting OTC for more than 20 years in addition to more regular visits to Houston, we will be making the case to international delegates that the North Sea is open for business, hungry to do deals, and keen to protect our position as the foremost developers of new technologies which enhance hydrocarbon recoveries and improve safety.

OTC (1 to 4 May) will be set against a backdrop of coming to terms with what is now largely accepted as a “lower for longer” price of Brent crude, but there are encouraging signs that the oil and gas downturn appears to be levelling out. The UKCS will be competing against noise emanating from the States about significantly-increased levels of onshore fracking which has received a major boost from a new president adopting an America First approach.

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Not just in the North Sea, but globally, there appears to be a squeeze on the capacity of the supply chain which gets the oil and gas out of the ground and ultimately to our fuel pumps and homes, to keep the economic wheels turning.

Major operators and contractors have made great leaps forward in redefining how they can collaborate to benefit all, and much of the excess has been stripped out. But the concern at OTC for many will be to find a balance and ensure value is shared.

OTC over the last few years has been dominated by multi-billion dollar mega-projects being shelved, while those already partly committed were pushed through, often with some difficulties which led to costly overruns. With those projects now closed out and others on the backburner for the foreseeable future, there will be much more conversation around the need to bring through other strategic developments, or risk a potential situation where in two years we can’t meet global demand for oil and gas.

The optimistic delegates – many from Aberdeen – will be looking to hear more on smaller-scale projects heading to the planning and development stage.

As a “veteran” of OTC, one of the biggest changes has been the rise and fall of nations as major energy suppliers. Prior to the oil price downturn for example, much attention was being focused on deepwater Brazil as the next big thing, but high development costs surrounding hard-to-reach oil and gas has dampened enthusiasm, while China – which 20 years ago was cloaked in mystery – is now a well-established energy player on its home turf and increasingly in basins like the UKCS.

Pinsent Masons’ Beijing office this week welcomed a delegation from the Scottish Chambers of Commerce on a mission to strengthen links with lucrative Chinese markets and we look forward to pushing the case in Houston next week, with our Chinese counterparts and other global producers that, post-Brexit, the UKCS will remain a basin worth investing in.

• Bob Ruddiman is head of energy at legal firm Pinsent Masons

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