SPE Offshore Europe-2019 conference chairman sees exciting future ahead for UKCS

World Oil (WO): How would you describe the overall health of the offshore industry in Western Europe today, particularly in the UKCS?

Michael Borrell, Senior V.P., North Sea and Russia, Total

Michael Borrell (MB): Before the price crash in 2014, our industry was not in great shape.  Costs were very high and continuing to rise, production was falling and, frankly, the industry had become complacent and less efficient, due to several years of very high oil prices, which made up for many of our failings.  The price crash was a huge wakeup call.

Today, however, we can see that there has been a remarkable turnaround.  Production is increasing, unit operational costs are nearly 50% lower, and investment in new technology is recognized as essential for the long-term future. More than ever, safety is a core value shared across the industry.

How did we make such an effective turnaround?  It wasn’t easy, we have had a few difficult years, and there were job losses, but at the heart of it, I think we need to recognize the professionalism and dedication of our industry’s workforce.  We now have an exciting future ahead of us, and recent exploration successes show there is still a lot of life left in the North Sea basin.

WO: What are some of the greatest technical challenges that the offshore industry faces?

MB: The future is increasingly digital, and the greatest technical challenges will be addressed best by those who grasp that future first.  Costs have been driven down, but now we need to innovate and deploy new technologies, if we are to continue to improve cost performance. Digital tools need to be harnessed in such a way as to allow more work to be performed onshore, and reduce the need for people to work on offshore platforms.  This will have a safety dividend, as well. Through more remote monitoring of offshore machinery, data lakes, to better predict performance and artificial intelligence in geosciences, we will be able to predict more accurately where the resources are, how to best develop them, and how to maximize the efficiency of our plants. 

Furthermore, if the smaller new discoveries typical of mature basins are to be developed, they will need higher degrees of automation. At Total, the use of autonomous robots on offshore facilities has been an area of particular interest, and we are looking forward to testing prototypes of this exciting new technology, later this year at our gas plant in Shetland. 

We have a huge amount of know-how in our industry, but how we continue to invent and incorporate new technologies and processes also underlines our need for new talent.  A large part of whether we are successful in meeting the technical challenges of the coming years will be down to whether or not we recruit a new generation with the diverse skills and backgrounds that will be required.

WO: What is your outlook for the offshore industry in Western Europe (and globally) over the next two to three years?

MB: The pursuit of operational excellence, through a continued focus on safety and new technology to facilitate cost-effective performance, is crucial.  No doubt, the price of oil and gas will continue to be volatile, but I think it’s much more useful to focus our energy on what we do in the field rather than speculate about what might happen next in international politics. 

Illustrated by installation of the topsides at Culzean field last year, where first gas is expected this summer, Total remains committed to its operations offshore the UK. The operator supplies 15% of the UK’s gas demand. Image: Total.

One area that is becoming increasingly important, though, is how we are viewed by society at large.  Whilst across the world there is growing demand for energy, in Western Europe the issue of cleaner energy has never been higher, and this has seen protests against oil and gas companies, regardless of their support for the Paris climate agreement. 

In Western Europe, where we have seen children leaving school to demand action on climate change and large investors questioning the model of our business, we face a challenge to our social license to operate, and it is important that we meet it. It’s very important that we continue to communicate about the importance of accessible and reliable energy, even as we transition to a cleaner, lower-carbon future.  

It’s also important that we talk about what we are doing to reduce our environmental impact.  For example, we need to show that there are large carbon reductions available by moving from coal to gas, especially in countries such as China and India. We also need to make tangible progress on new technologies, such as Carbon Capture Utilization and Storage. 

WO: Is Brexit, and its resolution, a factor for Total in the short-to-medium-term operations of the British sector of the North Sea?

MB: Brexit will have no major impact on Total’s activity in the UK. Total remains committed to its operations in the UK, with plans to invest over $500 million per year over the coming years. As long as the environment put in place is conducive to international trade, we don’t see any reason to change our investment plans.

Total will still continue to supply around 15% of the UK’s gas demand. We don’t see any immediate impact for the 2,500 people that we employ across the UK. Oil and gas produced in the UK are traded on the international markets and are, therefore, not materially impacted by the changes in the EU/UK trade agreements.

WO: No doubt, Offshore Europe is going to be an important forum for the industry this year. What are the biggest topics?

MB: Offshore Europe is going to be an important opportunity for the industry to tackle the key questions we face in 2019. We need to talk about our license to operate—it’s never been more important that we are recognized as part of the solution to the energy transition. We also need to talk about technical excellence offshore. There are so many examples of really amazing practice, there is so much to learn and discuss. We are also going to be meeting at a point when many established companies, and also new entrants, have bold new ideas about how we work, the processes we follow, and the tools
we use.

Finally, we need to talk about the longer-term future.  We need to discuss what needs to happen, to ensure that young people from diverse backgrounds choose our industry as the one to build their career in.