BHGE's Neil Saunders stresses the importance of a leaner, healthier energy sector
It’s great to be back in Stavanger this week for ONS, connecting with customers and peers, highlighting innovation, and sharing information and best practices designed to steer the energy industry forward. We shouldn’t underestimate the importance of Norway and the wider North Sea region for its role—past, present, and future—in technology research, development, and incubation.
With much debate in recent years about the future of the North Sea, it’s sometimes easy to forget that this was the birthplace of subsea, and is where much of the world-leading technology that serves the global offshore industry today was first developed.
If you look at the agenda for the next couple of days, you’ll see many of the topics we’re used to discussing featured—from technology to collaboration, and new business models. Lowering costs, improving efficiency, supplier-led solutions, and standardization have been discussed often but, despite the appetite to make them a reality, in many cases the cash abundant market we lived through a few years ago meant concrete actions failed to materialize. The downcycle has both necessitated them and created an environment in which it is possible to evaluate alternative solutions.
Technology remains fundamentally important. In fact, more than 20 of the sessions being held at ONS this week are directly focused on new technologies being introduced to the petroleum sector. Today though, it is just one part of the equation required to sustainably meet the world’s energy needs.
At the start of the year, BHGE rolled out its 50-50-50 strategy, consisting of three pillars. Reducing the cost of doing business by 50% is one of these. What we mean by that is reducing total system costs by improving efficiencies, reducing cycle time, and improving asset utilization and reliability of equipment delivered. Yes, it’s a bold target, but as an industry we need to look at every opportunity to become leaner, fitter and healthier.
Imagine, if we can show up with a solution that is potentially 50% more cost-effective in terms of total cost of ownership, what sort of difference that would make to your business. On this journey, we are leaving no stone unturned, from people productivity—offshore, on the shop floor, or in the office—to reliability, and looking across our fullstream portfolio to drive customer outcomes across the value chain. The power of digital is important too, but must be aligned to customer needs and business objectives, as well as deliver tangible outcomes.
Product cost is also critical. By that I don’t just mean value engineering, but a significant change in design philosophy. Our new lightweight, compact subsea tree, part of our Subsea Connect vision, is a great example. It offers a big change—in cost, yes, but also in weight, size, and modularity, which will impact how the equipment is manufactured, delivered, installed, and operated, enabling a significant reduction in expenditure across the total life of field—or TOTEX. We’re developing the technical and commercial solutions required to make oil and gas projects a reality, regardless of the price per barrel.
Real change will take a collective effort. Regardless of the decades of domain expertise in this region, if the conventional ways of working are perpetuated, the North Sea will struggle to survive. That said, with the way that companies are showing up today—BHGE included—there is cause for optimism. We are more in tune with customer outcomes than ever before, more invested in delivering in a cost-effective way, and more understanding of the importance of total cost of ownership and life-of-field costs. That is what is needed to make the North Sea work.
Take some of our recent collaborations, with Nexen, Chrysaor and Siccar Point Energy. They work because of the new ways in which we are coming to the table. I’m excited by the direction our industry is headed. We are more instinctive around customer value than ever before. It’s no longer a case of ‘our outcome’ and ‘their outcome’. The gap between the two is closing and that is what is going to deliver long-term sustainability. The future of this basin is unlikely to look the same as it does today, but I have every confidence that the North Sea has the know-how, imagination and resolve to ensure its continued relevance.
