Stop investing in R&D at your peril warns Subsea UKNews // November 26, 2008
Subsea UK is warning companies against the temptation to put investment in research and development on hold as the oil and gas industry begins to feel the effects of the global credit crunch.
The body which champions the UK’s subsea industry – an industry which employs 40,000 and contributes £4.5 billion to the UK economy – fears that oil and gas companies may be re-considering their R&D budgets in light of the recent drop in oil prices.
“A decline, even temporarily, in research and development activities could have a devastating effect on the industry and ultimately on security of supply. With oil and gas production taking place in more complex, challenging and deeper water environments, the need for new technology to successfully extract the remaining reserves, is critical,” says Alistair Birnie, chief executive of Subsea UK.
“If the UK is to hold on to its world-leading position in subsea, we must have technology in all stages of development. The creation and commercialisation of new smart subsea technologies will have an impact on our ability to secure a major share of the predicted £41 billion global market in 2011.”
Subsea is rapidly becoming the technology of choice for the exploitation of reserves in mature offshore hydrocarbon provinces like the UK and the deepwater environments around the world.
With new deepwater provinces coming into play together with the existing areas such as Brazil and Gulf of Mexico, subsea production has become a truly global technology used in every major offshore hydrocarbon province around the world.
Global spend on deepwater developments is estimated to grow by 74 pr cent in the period to 2012.
Mr Birnie adds: “Subsea technology is one of the great successes of the oil and gas industry in recent years but its future development could be at risk."
“The dramatic change in oil price, coupled with a cost base which has risen equally dramatically in the last few years will be forcing companies to reassess their business priorities and their budgets. At a time of escalating costs, we need more than ever to examine how technology can play a role in delivering improved value while enabling an increase in production."
"The industry must continue to work together to identify the gaps between the technology the oil and gas operators need and the technology currently being developed in the sector and Birnie believes the establishment of the National Subsea Research Institute (NSRI) will play a major role in meeting the technology challenge."