OPINION: The North Sea oil and gas industry’s long history of offshore innovation is facing perhaps its biggest challenge yet as the notoriously cyclical business weathers a downturn unlike any other.
What makes the current situation different is the uncertainty over how the coronavirus pandemic will play out and what it will mean for oil demand — and work environments — in the coming months.
But perhaps the more profound difference this time is that the downturn comes as pressure mounts for the energy industry to play a more active role in reducing greenhouse gas emissions — especially in Western Europe, where many governments have set ambitious net-zero carbon targets.
Just about any new technology development initiative must embrace those goals.
For North Sea oil and gas, that means things like electrification of offshore platforms and subsea installations, better inspection and monitoring tools, and digital technologies to enable less carbon-intensive operations.
But there also are many offshore technologies that have indirect climate benefits.
Just about anything that helps cut the time it takes to perform a job, such as drilling a well, not only saves money but also tends to cut down an operator’s overall carbon footprint.
The more immediate concern for many technology companies in the North Sea supply chain is simply survival.
It is encouraging to see governments step up with financial support, but many firms are struggling, with no clear path back to normal.
The oil majors’ push to become “integrated energy” companies offers a blueprint of sorts for the services sector, and we are already seeing contractors and suppliers broadening their markets to include offshore renewable energy and other segments of the 'blue' economy.
There is room for innovation as North Sea operators look to maximise recovery at existing fields and commercialise smaller and more remote deposits.
The shift from hydrocarbons to renewable energy is accelerating, but the need for oil and gas will be with us for decades to come.
Agility and innovation will be key if the North Sea industry is to maintain its technological edge.
(This is an Upstream opinion article.)