Subdued OTC Kicks Off As Industry Remains On Life Support
This week, thousands of energy professionals will fill the halls of Houston's NRG Center for the Offshore Technology Conference, the world's largest energy trade show. But this year you will not find the high-tech demos or elaborate new contraptions the conference has become known for. The industry is instead focused on cutting costs. Offshore drilling remains the most expensive form of extraction. With oil prices floating around $50/barrel, the cost of operation is hard to justify. Worldwide, offshore rig utilization slipped to just below 70%, down from 75% this time last year.
Nearly two-thirds of the panel discussions this year are about cost reduction as the industry struggles to compete with other forms, like shale drilling. In areas like the Permian, horizontal rigs are producing oil for less than $40/barrel. Land-based rigs are also more versatile, able to start and shut down quickly in response to trends. Offshore rigs costs billions, requiring sustained operation to recoup the investment.
Secretary of the Interior Ryan Zinke was on hand Monday to help assuage concerns. He signed orders creating a new special post dedicated to helping the energy industry and starting a comprehensive review of the government's five-year energy plan.
Still, the energy industry has continued to struggle and has lost more than 40,000 jobs globally.