LONDON—Collaboration and a drive to improve overall industry efficiency is the key to the upstream oil and gas sector surviving and then thriving during the current low price environment.

A succession of high-profile speakers at the annual SPE/IADC Drilling Conference in London lined up to outline some of the long-term measures their companies have undertaken to raise their game, but also stressed that many of these measures were already being implemented before the price downturn began to occur.

Gary Jones, head of BP’s global wells organization, told delegates on Day 2 of the event that “at BP collaboration has been ongoing already, long before the downturn. We understand collaboration, and of course during the current environment it is even more important.”

Jones pointed out that with oil companies having lost 50% to 60% of their revenues, they have two essential choices—cut capital and stop activity, or do what they do but at a reduced cost. “We work long-term, and we need to keep going with what we are doing, so for us the best option is to do things for less money, to do things more effectively. But it’s not in our interest to cut the margins of suppliers. So we are working with contractors and looking at where we can bring the cost of drilling wells down,” he said.

Shell International’s Ivan Tan, vice president of wells and HSE, commented that the current oil price landscape requires it to be more capital efficient. He highlighted the importance of risk management, and that “the consequences of something going wrong are quite significant so there is some level of conservatism that will come into various aspects of the wells, and then the scope grows.”

Arne Lyngholm, Statoil’s drilling technology chief, engineering, outlined to the audience some examples of the Norwegian operator’s initiatives to improve efficiency, which have been underway for well more than a year. They included a revamp that the company has been undertaking for some time of its engineering process, having so far spent an estimated 25,000 hours looking at and reworking the system to be more efficient. Another example is Statoil’s well designs. According to Lyngholm 60% of its wells (between 95 and 100 this year) are going to be delivered with a standard well design.

He also stressed the continued importance of developing and implementing new technologies: “We need to do what we need to do to develop and implement the technology, and put it to work.” But he added that the industry also needed to work harder at better collaboration, especially between operators, and also to improve industry standards in a number of different areas.

Schlumberger’s Steve Kaufmann, president of drilling & measurements (drilling group), highlighted how the take up of technology generally has been very good over the past couple of years, driving down the lifting costs per barrel significantly in the unconventional arena, and also seeing major benefits in terms of drilling performance and efficiencies in the deepwater Gulf of Mexico.

“But today we do need to collaborate more and understand better what the requirements are that operators want,” he said.

Kaufmann added that the industry as a whole needed to look at its long-term health, what some of the drivers of the business are, try to better discuss how it wants to focus, and to be “more aligned with their needs.”

He also pointed out there were clear areas where there could be better efficiencies, with Schlumberger currently providing 24 different sizes of rotary steerable systems in the deepwater GoM. “There’s a huge opportunity to collaborate. We can streamline that better.”

Kaufmann added that in the current downturn, “industry engagement over the last four or five months has been very good”.

KCA Deutag’s Jack Winton, who leads the operations division, stressed (related to the long-term picture) that “contract certainty is what brings better collaboration,” encouraging contractors to commit to bigger investments in assets that they need to make.

Day 1

On the opening day of the show, a keynote speech by Malcolm Webb, CEO of industry association Oil & Gas UK, flagged up his personal concern over what he feels is the losing battle the E&P business is fighting in terms of influencing European and U.K. energy policy.

Webb, who is retiring this year, said in his opinion the industry “has been losing the battle on energy policy formation in the U.K. and Europe for some time now. As a result, we’re in danger at both a national and a European level of seeing our industry damaged.”

The industry, he continued, has a responsibility to both itself and to society generally to turn this around.

That means having better and meaningful communication with the general public, politicians and other opinion formers. “That will demand very substantial effort from all of us, working collaboratively with one another and with industry organisations,” he added.

Much of the damage has been done because of the better organization and unified approach such as that adopted by industry opponents like the green NGOs; whereas, the oil and gas sector has a “plethora of other national industry associations, even in the upstream. Frankly, this is somewhat wasteful, distracting and confusing”.

Webb believes in the U.K., although he said Oil & Gas UK has been a “tremendous step in the right direction,” that a single U.K. petroleum institute is what is required, embracing all of the offshore and onshore E&P industry, as well as the midstream and the downstream segments. This should focus specifically on oil and gas, rather than on energy generally, he said.

He also encouraged all those working in the oil and gas business to “come out of our shells and communicate with people at all levels about the importance of what we do and the good which our work produces.”

Contact the author, Mark Thomas, at mthomas@hartenergy.com.