From UTC-2015 Bergen: It was a bit gloomy here last week. Against a backdrop of leaden skies and news that Statoil was cutting another 2,000 jobs, the subsea industry really did feel ‘under pressure,’ the theme of this year’s Underwater Technology Conference.

Two years ago delegates were discussing the problem of attracting and retaining talent in the subsea industry.

Fast forward 24 months and with the current oil price crisis, that really is no longer an issue. Now it’s all about…wait for it…cutting costs, standardisation and collaboration.

And Per Arne Nilsen, Total’s head of subsea technology, warned during a panel session on costs that there could be worse to come. ‘I have seen a number of crises but this one looks more like the perfect storm than anything I’ve seen before,’ he said.

Helge Haldorsen, 2015 president of SPE International and director general of Statoil Mexico, described the current situation in his keynote address in the Griegshallen as a ‘Rhapsody in C.’

‘Costs are too high, the complexity of developments has gone up, the competitiveness of the industry is eroding, communities wherever we are expect more, climate change is here as is the crashing oil price and for many companies, cashflow after dividend is negative,’ he said.

He said the industry had to work smarter, faster, deeper, more sustainably and in a way that gives a good return. ‘That is the job in front of us.’

Haldorsen suggested the NCS should look at what has been happening in the UK sector in the wake of the Wood report. ‘Operators must collaborate much more and share more helicopters, supply boats and bases to cut costs and do it together.

‘When you ask should I compete or collaborate, pick the one with the most value,’ he added.

Nilsen bemoaned the lack of standardisation that was driving up costs. ‘Every time we have a new project it is a bespoke design. We like to bash ourselves these days to show that we are serious and changing, so if you look at Total and our history, we have been very good at one thing, and that is never repeating anything twice.’

He said the industry needs to be better at using lessons learned and repeating them. He also suggested that the many layers in the subsea supply chain added to costs.

‘In a heated market, every single element of the supply chain would like to have its little share of the easy market, which doesn’t necessarily result in margins you would like to have. Local content is also a challenge for us operating in certain parts of the world in terms of costs.’

He said the subsea industry has created an ‘extremely inefficient’ business over the last 10-15 years with negative productivity. ‘If you look at a Xmas tree today compared to a Xmas tree 10 years ago it’s the same. It has got some more whistles and bells but today we spend three times the man hours to engineer and manufacture it compared to 10 years ago, for no obvious reason. We need to increase efficiency.’

Rasmus Sunde, ceo of Forsys Subsea said that over the last 20 years the cost of subsea hardware has tripled while delivery time has doubled.

‘The cost increase is being driven by poor execution, greater complexity in fields, deeper waters, hpht and the variety of specs. There are two other root causes – optimisation and supply companies coming in too late to projects.’

He said the challenge was that subsea hardware only represents 10% of the cost of a conventional offshore development, so this is not the only part of the industry that needs to work with the customers to drive costs down.

Roald Sirevaag, Statoil’s veep for subsea and diving, called for greater cooperation on trees. ‘We are operating with non-standard specifications. For five inch deepwater trees we asked for four completely different solutions doing exactly the same job. I think we should agree on one type of tree.’

And he also suggested there was a herd like mentality in the industry. ‘We behave like sheep. When everybody buys, we buy, and when everybody stops buying we stop buying.’

Offshore