At the various industry events that I have attended these past few years, the “cool kids” on the playground have been collaboration, innovation and standardization. One did not need to go far into an event’s agenda to see one of the three or the whole trio featured in keynotes, roundtables and technical presentations. It appears that their message was, in large part due to the market downturn, received. I’m hearing more this year about a new kid in Oiltown—transformation—and it looks like it is here stay.
“The transformative change going across our industry started a couple of years ago, and it’s accelerating at a pace like I have never seen in my whole career,” Liam Mallon, president of Exxon Mobil Development Co., shared with attendees at this year’s IADC/SPE Drilling Conference and Exhibition held in Fort Worth, Texas. With 35 years of experience working in all corners of the globe, Mallon noted that despite all of the challenges the industry has faced in recent times, it is still an exciting time to be in the oil and gas business.
Driving the transformation is the shale revolution, he said, adding that “in one hand, it is delivering the supplies that we need to meet the world’s energy needs, but at the same time, it likely caused the coining of the lower-for-longer phrase.”
A change in the industry mindset came about while adapting to that lower-forlonger environment.
“Doing more with less is so significant,” he said. “For example, there is more activity as the rig count is 30% higher now than it was a year ago. Also, there were 11 non-U.S. FIDs [final investment decisions] made in 2016. There were 33 in 2017, so there’s been a threefold increase in FIDs outside of the unconventional in the U.S.”
While that increases set spending to go from about $70 billion to about $90 billion, Mallon noted, the staggering bit is that “we have not seen a threefold increase in spending, and that’s because of how the industry is transforming the way it works.”
He believes the industry’s journey is still in its early days, but he has no doubt that the tremendous shift in thinking has led people to not spend money on noneconomic projects, as “the discipline around capital is like we’ve never seen before,” he said.
Time will tell if the industry can maintain that discipline and the lower-forlonger mindset that have driven innovation to find new and improved ways to discover and recover the needed resources for future generations.