Subsea technology for global solutions

Check against delivery

Thank you for the invitation!

It is an honour and pleasure for me to conclude the first day of the Underwater Technology Conference 2012 here in Bergen.

It is tempting to start with a quote from the American marine biologist and explorer William Beebe, who once said that “I can only think of one experience which might exceed in interest a few hours spent under water, and that would be a journey to Mars”.

I’m not sure if I would go quite that far. But there is no doubt that there is an exciting world underwater – and not least interesting possibilities for our business.

The themes you have chosen for this year’s conference are highly relevant. You point to the challenge of recruitment, and ask how we can attract the talent and number of people necessary.

You also describe the projected market growth, and the strain this puts on already stretched resources. This is related to the challenge we face with cost development in the petroleum sector.

 

Technology development on the NCS

You represent an industry that has seen an exceptional growth in recent years.

We often see news about planned subsea developments and large orders of subsea equipment. I am pleased to see that Norwegian-based companies continue to win large subsea contracts and are in the forefront of developing technology under water. The figures are huge.

It was interesting to read the Norwegian daily Aftenposten on Monday, writing about the Norwegian oil and gas supply and service industry. The industry was described as a big success with sensational growth, and developing without people really noticing it.

I think this is correct. It is one of our biggest success stories, and we should tell it more often. I certainly try to tell it.

According to Rystad Energy, the global market share is close to 80 percent on drilling equipment and 50 percent on seismic and subsea equipment. Not bad for a nation of 5 million people.

We have 40 years of experience solving challenges on the Norwegian continental shelf. Exploration and exploitation have been demanding.

Fields have often been in deep waters, or located in remote areas with no infrastructure in place. Technological development has been necessary to make fields economically viable, or possible to develop at all.

And the history continues. We are going further and further north, doing things we would not have dreamed of 20 years ago.

Thanks to this work, Norwegian industry has developed cutting edge technology: Subsea production systems, subsea compression, and multiphase flow over long distances and in deep waters are some examples.

Fairly recent technological advances made the development of Snøhvit and Ormen Lange possible. The Snøhvit gas field in the Barents Sea was discovered in 1984 and the field would not have been profitable without a subsea solution and multiphase flow.

Another technology step forward is the Åsgard subsea compression project.

The closer the compression is to the well, the higher the efficiency and production rates become. Other fields on the Norwegian continental shelf are planning technology tests and qualifications similar to those practised on Åsgard.

The engagement and interaction between oil companies, industry and research institutions have been fundamental in finding solutions to technological challenges. I am truly proud of the way these players have collaborated and are bringing world class technology and technological solutions to the market.

The fact that we have multiple environments and competition between the actors are important. This must continue.

This is also reflected in the international success of Norwegian companies.  We see that the Norwegian subsea industry is expanding on the global market, and we find examples in countries such as Australia, Angola and Brazil. Brazil is a large energy nation, facing many of the same challenges are we do on the continental shelf.

It is important not only to deliver solutions globally, but to further deepen the cooperation between countries with similar challenges. It is natural to mention the cooperation we have with Petrobras and Brazil.

When Norwegian companies are expanding globally, this further strengthens Norway’s leading role in subsea technology.

 

High activity level on the Norwegian Continental Shelf (NCS)

The Norwegian continental shelf is important, further driving the technological development of the subsea industry.

We are seeing a high level of activity on the shelf. We had fantastic exploration results last year. Our biggest discovery last year – Johan Sverdrup – holds resources estimated at between 1.7 and 3.3 billion barrels of oil equivalents, according to Lundin. If the highest figure is the correct one, it will be larger than Ekofisk.

Sverdrup was the largest offshore discovery globally last year. In addition to this, the Skrugard discovery in the Barents Sea was the third biggest. If we succeed on the Norwegian Continental Shelf, we also succeed globally. Let us hope that this development continues.

We have also launched processes to open new areas for petroleum production, for Jan Mayen and for parts of the Barents Sea in the earlier disputed areas.

We see large developments on the horizon: Aasta Hansteen, Dagny and the Draupne fields to mention some. Subsea solutions might play an important role in many of these.

 

Challenges ahead

No doubt, we are seeing a lot of positive developments. There are, however, also challenges.

The biggest challenge is the world’s economic situation, which is demanding. Europe and the USA need to get their economies working again. This has a strong impact on energy prices, and accordingly the development on the Norwegian Continental Shelf.

In the petroleum sector, the main challenges are related to the rising cost levels and the increasing difficulty of recruiting enough personnel with the right skills.

The costs on the Norwegian continental shelf have increased significantly since the turn of the century and are higher than in other, comparable petroleum provinces. The high cost level has a direct effect on overall profitability, on the viability of new projects and on the lifetime of producing fields – and thereby the overall resource management on the Shelf.

This is a complex issue. It has to do with the way suppliers and operators cooperate, how operators involve their suppliers in Norway and abroad, how well projects are prepared before they are carried out, and the access to input such as labour and rig capacity.

I want to stress the importance of thorough planning, in order to implement projects in a cost-effective manner. It is important to seriously consider the complexity of the projects, and involve suppliers with the right qualifications. And we need to be able to learn; what appears to be cheap may turn out to be expensive.

The cost level is a very real challenge to reaching the full potential of our resource base. It is the responsibility of all stakeholders involved in our industry to work actively to keep costs at an acceptable level.

I would like to mention the Rig council in this respect. It was put together this winter, and will deliver its report this summer.

Another important challenge is recruitment. How do we get enough young people to pursue the right education and to start work in the energy sector?

We know that Norway now has a deficit of many thousands of engineers. According to a study, we lack more than 16.000 people with engineering or ICT skills.

Moreover, far too few students choose to study natural sciences when they begin their university studies. If Norway is to retain its position as a leading energy nation over the coming decades, it is important that we do something about this.

We must persuade many more students to study math, chemistry and physics, and to continue doing so at the university or university college level. And we need not only PhD and master students. We need people to all parts of the value chain, and we need motivated and skilled labour.

We have an enormous need for more people in the energy sector, be it oil and gas, hydropower, windpower, grid development or new technology such as carbon capture and storage.

Some companies in the Norwegian energy business need to recruit several hundred science graduates each year for years to come.

In short, we all have a job to do telling students about the possibilities in the energy sector. This is a priority for me, and I also want to challenge you to work actively with this.

Thank you for your attention!