Optimism about industry’s future exuded by attendees at two trade shows in Houston
It was refreshing to attend two very different trade shows during this month and come away with a sense of optimism from the attendees at both of them. It’s easy to be pessimistic about the U.S. market, since it has been flat more most of 2024, and wonder whether international and offshore activity can carry the day. But the exhibitors and attendees seemed to be shaking off those concerns and were showing great enthusiasm for the latest technological innovations and enhancements.
The first of these events was SPE’s Artificial Lift Conference and Exhibition, held at The Woodlands Waterway Marriott Hotel & Convention Center, north of Houston. The theme of this year’s conference was “Surveillance and Optimization through the Generations.” The technical program included papers and knowledge sharing poster sessions on the latest artificial lift system designs; artificial lift deployment, surveillance, and optimization, as well as modern digitalization, machine learning, and artificial intelligence techniques focused on oil and gas applications. Both in the paper sessions as well as on the exhibition floor, the topic of ESPs was particularly noticeable. But there was plenty said about PCPs and other, traditional artificial lift installations, too.
Regarding the “Generations” portion of the event’s theme, there was an emphasis on taking care of manpower issues, whether recruiting new employees fresh out of school, retaining existing younger employees, or motivating more senior workers to show leadership and keep technology development moving forward. As Program Committee Chairperson Dr. Victoria Pons noted, “In today’s world, where five generations work side by side to guide our industry into the future, it is important to remember where we came from, who we are and where we are going.” That is good advice, indeed.
What struck this editor was the overall mood of optimism about where the industry is headed, going into 2025, and no particular sense of anything resembling doom. And the enthusiasm for the industry’s continued innovation in artificial lift was palpable.
The second of these events was the Turbomachinery & Pump Symposia (TPS), held at Houston’s George R. Brown Convention Center. Organized by the Turbomachinery Laboratory of the Texas A&M Engineering Experiment Station, the event covered all sectors of the oil and gas industry, along with some presence in CCS, Hydrogen and Renewables. Unlike the SPE event in The Woodlands, TPS had something for everyone in the downstream, midstream and even upstream portions of the industry.
For instance, on the upstream side of things, one company described to this editor a project it has ongoing with Petrobras to not only improve the energy efficiency of FPSOs but also to further reduce emissions from those floating facilities. Those two worthy goals—improving operational efficiency and reducing emissions—seemed to be overarching themes of the technology and projects that this author found among the upstream-oriented discussions and exhibits. And there was some attention given to manpower issues there, too.
Again, just like the SPE event, attendees seemed to be in a very positive mood and very much looking ahead to 2025. And while the TPS was held in Houston, there was a very definite emphasis on projects and technologies being implemented internationally, in various regions. It was refreshing to be inside during the dog days of Houston’s August heat and see the best and latest that companies have to offer while also experiencing unexpected optimism and enthusiasm for the current course of the industry.
An early look at one country from our ongoing survey and forecasting work. Once again, our staff is hard at work on the summer/mid-year version of our drilling survey and forecast. While it’s still too early as of this writing to discern any trends in the numbers, we do want to mention one country as an interesting case—particularly since it is in Western Europe.
I speak of Germany, which has sent us its updated numbers, and one can only deduce that energy security is behind the drilling trend. Indeed, the country this year will drill its highest well total since 2019. Mind you, we’re not talking a huge number of wells, but the 20 wells planned for this year are the most since 29 were drilled in 2019. The pandemic knocked down the drilling total to just six wells in 2020, followed by another six in 2021. For 2022, operators nearly doubled Germany’s drilling to 11 wells. These were followed by 17 wells last year.
Offshore, activity in shallow waters remains relatively steady. After just one well in 2019, there were no new offshore wells in 2020 and 2021. That changed rapidly in 2022, when three offshore holes were drilled, followed by another three in 2023. This year, two offshore wells are expected.
So, we will have to wait a few more weeks to see whether Germany winds up being a bellwether for another moderate increase in Western European drilling. Given the current geopolitical climate, another increase would seem likely.
UK administration endangers Britain’s energy future. Speaking of the UK, one can only conclude from recent actions that the new Labour regime is a collection of economically illiterate knuckleheads. How else to explain the administration of Starmer starting off its term by announcing that it will kick the Energy Profits Levy another three points higher?
Let us remind you that former Conservative Prime Minister Boris Johnson’s government imposed a windfall tax, called the Energy Profits Levy (EPL), on the North Sea oil and gas industry in May 2022 as companies’ earnings increased alongside fuel prices following Russia’s invasion of Ukraine. The administration of Conservative Prime Minister Rishi Sunak continued the EPL up to the UK election of July 4, 2024. Labour then said it would extend the levy until the end of the current parliament and increase the rate from 35% to 38%, bringing the total headline rate of tax on oil and gas profits to 78%.
The new regime also vowed to tighten up the rules around investment allowances that companies can offset against their tax bills, which it described as “unjustifiably generous.” It estimated that these changes would raise another £1.2 billion in annual revenue from the industry. Let us also not forget that Starmer’s group has also vowed to end issuing new licenses in the North Sea basin. As a small concession, the new P.M. has pledged not to revoke existing drilling permits. This will leave intact as many as 82 new licenses granted during the Sunak administration between October 2023 and May 2024. As of mid-July, only a few licenses had yet to be decided.
Nevertheless, the new 78% rate for all taxation on UK North Sea production leaves the basin almost untenable for operators. It’s not surprising that a number of North Sea projects were either cancelled, postponed or modified, leading up to the election. It’s hard to fathom the amount of stupidity prevalent in the Starmer administration at present. We can only hope they get a dose of reality soon, but don’t count on it—ideological, impractical zealots will probably push the UK into some sort of energy emergency before it’s all over.
