April 2019

First oil

UK E&P industry not overly concerned by Brexit, yet
Kurt Abraham / World Oil

As this issue went to press earlier this month, the Brexit situation in the UK was a mess. And yours truly, who was in London at that time (due to attending the MCEDD conference detailed below), got to witness the non-stop media coverage of what one pundit dubbed the “crisis of a century.” That might be a bit overwrought, but how else does one describe a situation, where the legislative body, the House of Commons, cannot reach any kind of agreement on how to “exit” the European Union, per the Brexit mandate?

As of April 4, the members of Parliament’s lower house had finally, by only one vote, 313–312, approved a measure instructing Prime Minister Theresa May to go back to the EU and ask for another extension on leaving that body while legislators strive to craft a workable exit strategy. This tepid measure came after two weeks of MPs rejecting motion after motion that tried to do the same thing in different ways. As this issue went to press, it remained to be seen whether the EU would grant a very short extension, or a "flexible Brexit" of up to one year.

The UK industry’s take on Brexit. Meanwhile, the British upstream industry, to this point, has not been particularly worried about a Brexit departure from the EU. Being part of a global industry, UK operators and their contractors are perhaps not as easily scared, since they are more equipped to deal with major political and economic challenges than other local industries. That having been said, there was some concern that there was the potential for the supply of certain goods and services from mainland Europe to be disrupted.

Another concern was that there could be the loss of certain, highly skilled workers. A while back,, the trade association, Oil & Gas UK, released a study, showing that “of those directly employed by the oil and gas industry in the UK, 90% are UK national, 5% are EU workers from countries other than the UK and 5% are non-EU.” While 5% might seem small, within that group of EU workers, “70% are skilled, with one in two holding managerial roles.” So, the loss of these individuals could be a disincentive to starting new development projects without these skilled individuals in place.

Earlier this year, Oil & Gas UK laid out what its primary strategy would be, post-Brexit. The major planks include 1) Protecting the offshore industry from future EU regulatory changes; 2) Maintaining a strong voice in Europe; 3) helping to ensure minimal friction between the UK and EU; 4) Protecting energy trading and the internal energy market; and 5) Protecting British operators’ licenses.

MCEDD succeeds with great technical program. The Marine Construction & Engineering Deepwater Development (MCEDD) conference and exhibition, a JV of World Oil and its parent, Gulf Energy Information, with Quest Offshore, was held in London at the beginning of this month. It featured an excellent technical program, as well as substantive panels of industry executives. If one could sum up the common threads of the presentations and comments on deepwater activity, the list would include a drive for yet more efficiencies in operations, along with an emphasis on collaboration, standardization and harnessing the digital transformation.

Operator and contractor executives noted that their push for further cost reductions and efficiencies is derived from a desire to remain competitive with the prolific onshore shale operations, principally in the U.S. They also are concerned about how to keep oil and gas “advantaged” vs. other energy forms, particularly renewables. And from a European point-of-view, there is a need to integrate climate concerns into E&P strategies, moving forward. Some of the major deepwater-oriented technical topics addressed included the use of flexibles and composites; better pipelaying productivity; subsea system reliability; improved and standardized drilling methods; technology qualification and assessment; and flow assurance. WO

About the Authors
Kurt Abraham
World Oil
Kurt Abraham kurt.abraham@worldoil.com
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