With oil sitting at around $70 bbl., one would think that the annual Offshore Technology Conference (OTC) would have been a bustling event this year. Unfortunately, the word that best described last week's OTC 2018 in Houston was subdued.
It was the smallest (about 61,300 attendees) since 2007. Attendance was down 43% from its 2014 record of 108,300 when crude prices sat above $100 bbl. The latest decline represents a defining point for OTC and the offshore sector, which is in deep disarray as companies shift money, workers and equipment to Texas and other U.S. shale plays that are far less expensive to develop and produce. Of course, there was a bit of optimism for a recovery due to the prospect of rising oil prices but otherwise things were very subdued. As the Houston Chronicle noted, “With analysts expecting oil prices to remain low for the next several years, many exhibitors and visitors said the halcyon days of record OTC attendance, over-the-top displays and expensive swag appear over — at least in the near term. To illustrate that point, the amount of freight moved to the trade show for the exhibits fell by about one million pounds from last year, according to the movers.”
Due to these factors, especially increasing shale production and unrestrained OPEC output in some areas, last year was a brutal one for the offshore industry, with severe damage to the offshore service vessel market, a continuation from previous years. Consequently, the workboat industry was pretty much non-existent at the exhibition and conference. I found few workboat companies exhibiting or presenting at the venue. Someone said they had seen Bibby Marine at the exhibition but I could not even find them in the list of exhibitors. A couple of bigger vessel companies such as AllSeas were there, and the Newfoundland exhibit included Atlantic Towing, but I didn't see else.
However, not all companies will be able to rely on the Permian Basin, said Julie Wilson, a research director for global exploration at Wood Mackenzie, and some might find success with existing offshore projects. "They still have to grow," Wilson said, "and can grow profitability with good offshore projects that can break even at $50 or below." That’s the optimistic side of OTC. Let’s hope it prevails.