Eye on the Future

The day was full of optimism, beginning with Premier Paul Davis saying the province is within weeks of finalizing a term sheet with Statoil for a new development in the Flemish Pass, even with questionable oil prices.

Various speakers made note of $600 million in exploration commitments by ExxonMobil in 2014; continued early exploration works by Nalcor Energy, leading to high expectations for the next round of bidding for exploration licences and the ongoing Hebron project, scheduled to produce oil in 2017.

Jarand Rystad, managing partner of Rystad Energy, offered analysis on oil pricing and provincial competitiveness, saying his expectation is Newfoundland and Labrador will see all-time highs in oil production in the 2020s.

But the hope for the future was not unbridled.

“I’m sure you’ll understand that operators have many opportunities and choices as to where they spend their capital,” said Derek Owen, president of RDO Consulting, part of a four-person panel on development costs, cautioning against complacency at any level.

He said the local industry’s supply chain is strengthening, businesses have an increasing level of experience, safety culture has improved, and research and development spending has rolled in for new projects as a result of oil projects over the years.

However, more can be done to cut business costs and increase productivity, he said. And decision-makers need to keep their eyes on a long-term prize of assuring a sustainable local industry, and not be distracted by short-term construction jobs.

“We mustn’t rest on our laurels and say we’re doing our best. It might not be good enough.”

Ken Cruickshank, operations manager at Oil and Gas UK, noted the industry in the United Kingdom is encouraging government-sponsored collection of 2-D seismic data as one way to help push new exploration in that area.

Seismic data collection has also been part of Nalcor’s early exploration spending, to attract new entrants and additional drilling.

But U.K. operators are also pressing to decrease downtime, Cruickshank said, collaborating on the use of offshore vessels and pressing productivity through dedicated workshops, to name a few ideas.

Tom Ross, a partner at McLennan Ross, who deals with labour law in Alberta, promoted allowing for large construction projects to look beyond the 16 trade unions — they are 24 in Alberta — for filling available jobs. He suggested alternative unions in Alberta have cut down on time-wasting, on-site jurisdictional disputes.

Liv Monica Stubholt, chair of the 2013 KonKraft Initiative — a special project looking into competitiveness of the Norwegian continental shelf — said there is clear benefit to be had from private industry businesses generally finding ways to collaborate to cut costs, given the global competition.

Meanwhile, oil companies operating in Newfoundland and Labrador are set to provide updates on their work locally today and Thursday, as the conference continues.

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