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OTC Attendance Reflects Booming Industry

OTC 2014Photo by Barchfeld PhotographyValve professionals involved in the oil and gas industry were in abundance at this year’s record-breaking Offshore Technology Conference May 5-8 in Houston. They joined the more than 108,000 people who attended, the largest amount in the show’s 45-year history and an increase of 3.3% from last year.

“I thought the show was one of the best attended by key personnel in recent years,” said Leon Brooks, director of sales – Latin America, Distributed Valves Division, Cameron Valves and Measurement. “The overall attitude of exhibitors and attendees was very positive,” he added.

Kelly L. Watson, vice president of marketing, Watson Grinding & Mfg., added that, “This show has broken attendance records for the last two years, and it will continue to grow with the booming industry. Everyone was there with a purpose, whether it was to see the new technologies or gain educational insight or networking.”

In addition to nine panel sessions, 29 keynote presentations, 308 technical paper presentations and numerous luncheons and breakfasts addressing specific issues, a huge exhibit showcased the latest and greatest in the technology designed to make offshore operations profitable and efficient. The floor of OTC’s exhibit covered more than 680,000 square feet featuring products and services of 2,568 companies from 43 countries. International firms represented more than 44% of those who exhibited. For valve companies that attended, the size of the show represented a huge source for new clients.

“We had 34% more leads captured than 2013, and 60% more than 2012 even though we had the same booth size and nearly the same location,” Watson said. “I am exploring a larger booth in 2016 because of the rapid increase in new contacts made, and the fact most of our current customers attend this show,” she added.

Speakers at the sessions come from major, independent and national operators; federal and regional government officials; academia; and companies who have developed some of the specific technologies.

Hot topics this year, according to Brooks, were “concerns in specification changes by the National Oil Companies of most countries, which will create changes going forward in valve designs, and concerns over availability of materials as new construction continues to grow.”

Watson added that one of the main topics of discussion this year was production and supply.

“Marathon Oil’s Lee Tillman [CEO of the company], who spoke at the conference, said that today we find ourselves in the midst of a U.S. supply renaissance,” Watson said. Data from the Energy Information Administration shows that U.S. oil production is seeing its first material supply increase since the 1970s, which is expected to hit 9.6 million barrels a day by 2016. “You could definitely see evidence of that renaissance at this year’s show.”

Some other specific subjects that came up repeatedly during sessions and in talks between attendees included:

Mexico

Gustavo Hernandez-GarciaPhoto by Barchfeld PhotographyRecent major changes in that country have opened up possibilities for new partnering and investment opportunities. The government recently changed its constitution to strip away the monopoly the country’s oil company Pemex has held. Also, the way deep-water leases will be managed going forward has changed so that Pemex will continue to hold responsibility for near coast and shallow water leases while a commission formed in 2008 (the Hydrocarbon Commission) will drive deep-water leasing arrangements.

The opportunity that Mexico presents is vast as the country has reserves of nearly 10.5 billion barrels of oil and 490 billion cubic meters of gas, numbers that don’t take into account recent new discoveries that exist in deeper waters, speakers said.

A representative from Pemex, Gustavo Hernandez-Garcia, acting director of E&P, was on hand for one session to address how the company will transform from a decentralized public entity into a state-owned enterprise that will seek private investors. Hernandez-Garcia said his company looks forward to forming partnerships with other companies, particularly in areas where it doesn’t have expertise such as unconventional sources, deep water, mature fields and shallow water. Partnerships will be key to bringing in technology expertise as well as capital, he said.

Unconventional On Land vs. Far Out to Sea

Although OTC is traditionally a show held to address offshore technology, many discussions this year involved assessing the impact that unconventional onshore resources may have on offshore deep-water developments.

As Watson said, “Although its name is the offshore technology conference, in recent years (since the shale boom), OTC has begun to shift its focus onto both onshore and offshore technologies,” Watson pointed out. “OTC has now become the place for the whole industry to meet.”

One group of panelists concluded the technologies of the two sources of oil don’t necessarily transfer between on- and off-shore, but that what happens in one area will affect the other.

Marathon Oil’s Tillman said both sources will be needed to meet the world’s projected 60% increase in energy consumption over the next three decades. He also said, however, that deep water is burdened by “a dramatic cost escalation” in technology.

Another panelist, Greg Guidry, executive vice president of upstream for Americas for Shell, said the two sources are in delicate balance right now.

“I can’t think of any major incident in deep water that wouldn’t have a dramatic impact on what we do onshore, and I can think of a number of incidents onshore that would have an impact on the acceptance of what we do offshore,” he pointed out.

The Need for Skilled Labor

video screenshotClick on the photo to view a video on a session at OTC 14 that was conducted by the Energy Education InstituteLike VMA, the planners of OTC realize that one of the major challenges today in most industrial fields is replacing the skilled workers that are retiring. OTC sets aside a day each year to encourage students and their teachers to learn about job possibilities in oil and gas.

The Energy Education Institute, which was sponsored by ExxonMobil, brought 150 teachers (a record number) and about 200 hundred high school students to OTC’s classrooms and exhibit hall to show the students what opportunities exist and to provide educators a comprehensive look at the scientific concepts of energy and its importance to the world. The students worked on experiments provided by the National Energy Education Development Project, while teachers participated in sessions designed to open their eyes to the world of oil and gas exploration and development.

“If you look at the needs of energy going forward, in 2040, we need between 50% and 80% more going forward. That will come from very difficult-to-get oil and gas. That means technology and in order to have the workforce who knows the right stuff, we need teachers giving it to them,” explained keynote speaker Helge Hove Haldorsen, vice president of strategy & portfolio, North America, Satoil. He called teachers, “the real rock stars” of science and math.

New Areas of Offshore Potential

offshoreAs with exhibitors and attendees, the speakers came from across the globe, and several countries touted the opportunities that have arisen in their areas of the world.

For example, Susilo Siswoutomo, vice minister of energy and mineral resources from the Republic of Indonesia, said his country has an aggressive plan for oil production. The target is $2.2 million barrels a day by 2018, which creates a need for partners, investment and new technology, he said.

Meanwhile, Kelly Ralston, senior trade investment commissioner with the Australia Trade Commission, said only about 20% of Australia’s offshore basins are currently covered by petroleum titles.

He pointed out that Australia is a land of opportunity both for new sources—the country is rich in hydrocarbons—and new ways of dealing with what’s extracted. Australia is currently third in the world in LNG exports, for example, and looking to get to the top by decade’s end, according to BHP Billton’s Rob Jellis, who is in charge of that company’s global nonoperation production assets.

New Challenges for Technology

One of the new areas where technology will play a role is in solving what to do with the thousands of drilling sites in the world due to be decommissioned or abandoned because they no longer produce.

Chevron, which has 450 platforms just in the Gulf of Mexico that it aims to take out of business, explained a two-year-old program it started to deal with this issue. Technology, such as new systems that can decommission a platform all at once instead of taking it out piece by piece, will make this process far more efficient and safer, speakers said.

Rising Capex Costs

Speakers also talked about the fact that several major oil companies have scaled back capital expenditure (capex) plans for 2014 and beyond. This is occurring for several reasons, including the reality that oil price increases haven’t kept pace with E&P costs, according to industry analyst John Westwood of Douglas-Westwood. Still, almost all the speakers, including Westwood, were optimistic in general. Although operators need to find ways to cut industry costs to remain competitive, “The industry is facing a massive and growing demand, and the key fact here is that we have to drill more and more wells,” Westwood said. He said 670,000 development wells will be needed through 2020. Deepwater alone will see capex growth of almost 130% in the next five years.

Genilee Parente is managing editor of VALVE Magazine. Reach her at This email address is being protected from spambots. You need JavaScript enabled to view it. .

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