According to Oil and Gas UK the North Sea is enjoying something of a renaissance
All eyes will be on Aberdeen in the first week of September, as more than 50,000 engineers and technical specialists descend on the Granite City for Offshore Europe, the biennial gathering of the oil and gas industry. One certain topic of conversation at the event will be the state of play in the North Sea. And for the first time in quite a while, there will be real cause for optimism.
According to Oil and Gas UK, the industry’s trade body, the North Sea is enjoying something of a renaissance. The confidence has been attributed to big investments in new developments, and mounting interest in exploring for new reserves and fields that are expected to produce well into the future. Only last month, for example, Royal Dutch Shell gave a long-term commitment to the region, saying it would remain a major producer in the North Sea for years to come.
The positive sentiment is backed up by hard numbers. Recent research from Oil and Gas UK shows that the core offshore workforce – those who spent more than 100 nights a year offshore – reached 25,760 in 2012, the highest figure for many years. The number is expected to be higher still in 2013.
So while the North Sea might be widely referred to as a “sunset sector”, it is far from burning out. Indeed, the theme of the show is “50 years from now”, reflecting renewed levels of confidence in the longevity of the sector.
Iain Hutchison, engineering director of Merlin ERD, a well-engineering consultancy, sums up the buoyant mood in the industry. “Oil will never run out. We will grow old and there will be oil. Our children will grow old and there will still be oil,” he predicts.
The challenge, says Hutchison, will be accessing the smaller pools of resources that remain in the mature North Sea. “Easy-access oil has gone,” he says, “so we will have to spend the next 50 years investing greater efforts to recover smaller volumes from more complex reservoirs, which are often harder to access from our drilling sites, making every barrel more expensive to produce.”
One means of achieving that extraction is through new technology such as extended-reach drilling – the directional drilling of long horizontal wells. This technique allows offshore engineers to reach a larger area from one surface drilling location. It can be used to keep a well in a reservoir for a longer distance to maximise its productivity and drainage capability. There are challenges, though: hole-cleaning, managing both the mechanical loads on the drill string, and downhole pressure.
But advances are being made in this area. The word’s longest borehole was drilled at the Odoptu field, offshore Sakhalin island, Russia, with a measured total depth of 12,345 metres and a horizontal displacement of 11,475 metres. While this sort of performance is unlikely to be repeated in the North Sea, Hutchison believes thatextended-reach drilling will have a role to play.
“Extended-reach drilling is an innovative technology that will be at the forefront of efforts to alleviate the oil supply challenges we will experience in the next 50 years,” says Hutchison. “Better use of existing facilities reduces environmental impact as well achieving early production – a critical consideration for projects that require these high levels of capital investment. By pushing beyond the perceived limits of drilling technology, we can recover oil faster, more safely and more cheaply than originally thought.”
Experience working in the North Sea can lead to jobs in more far-flung locations
In many areas such as the North Sea, exceptional infrastructure is already in place that could enable the production of further oil with minimal effort. “These opportunities exist today, but tomorrow will be too late. Offshore platforms have a finite life and once the infrastructure is gone, so too is the opportunity,” says Hutchison.
New technologies such as extended-reach drilling will be discovered only through a commitment to ongoing research and development in the sector. The offshore industry has a good record in terms of R&D spend as a percentage of turnover, and this will be vital to the oil and gas industry as it tackles future challenges.
“Companies, scientists and engineers continually push the barriers of possibility to find and produce energy,” says Lee Roan, general manager at diversified technology company 3M. “As a result, the sector has made great strides in recovering reserves from the depths of the ocean, and the development of products continues.”
The next 50 years will bring new challenges but significant opportunity, too, says Roan. “Investment in R&D is key to driving the sector forward. At 3M we commit financially to R&D, with 6% of gross revenue invested back into the company for research. But innovation should be embedded in an organisation’s culture. For example, we allow anyone with a fully technical job to use 15% of their time each week to pursue projects of their own choosing.”
Another challenge facing the offshore sector is demographics. The boom time in the North Sea was the 1970s and 80s – with thousands of engineers entering the industry, attracted by high wages and long-term job security. Many of those recruits are now edging close to retirement, and oil and gas firms are having to work hard to attract younger replacements.
However, according to John Harley, general manager for Europe, Africa and the Middle East at WorleyParsons, a services provider to the energy sector, the industry needs to take a more proactive stance to recruitment. “We need to change the way we do business,” he says. “It’s not enough to continue as we are and hope bright sparks will fall into the industry because their parents were engineers.”
WorleyParsons is doing its bit by engaging with schools, says Harley. “We need to generate an excitement in science subjects. I understand these aren’t easy, but perseverance and learning in science can mean exciting career opportunities.
“We need to recapture the pioneering attitudes we saw when the sector was young. Often, oil and gas are seen as the dirty necessity, but we need to change that perception so it is seen as the highly driven and highly innovative industry that it is.”
Scientists must push beyond the perceived limits of drilling technology
One of the key selling points of the offshore industry is its international flavour. Skills honed in the North Sea can be used on projects elsewhere – and offshore activities are truly global. This aspect provides recruits with opportunities.
Drilling and engineering contractor KCA Deutag is a case in point, as Martin Thomson, senior vice president of commercial activity, explains. “We manage more than 8,000 people in 22 countries, operating more than 100 drilling rigs in Africa, Europe, Russia, the Middle East, the Caspian Sea, the Americas and Australasia,” he says.
“Last year, we were awarded offshore and onshore contracts totalling more than $1.6 billion. They included multimillion-dollar agreements in Europe and Africa, as well as entering the dynamic markets of Iraq, Brazil and Canada. This global scope means we can provide exciting perspectives and opportunities to personnel with experience working in the UK Continental Shelf,” says Thomson.
Beyond the export of homegrown talent on a project-by-project basis, there are also opportunities for engineers to oversee local nationalisation programmes. In Azerbaijan, for example, almost 80% of KCA Deutag’s employees are nationals. “Our nationalisation programmes are designed to leave a tangible legacy of skills. Only training and education makes this possible,” says Thomson.
Offshore Europe 2013
The Offshore Europe 2013 conference and exhibition takes place on 3-6 September in Aberdeen. The event features more than 1,500 suppliers and is expected to attract more than 50,000 visitors. For more details, see
www.offshore-europe.co.uk.