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Service and Supply Sector Outlook 2016

The December issue of World Oil includes an outlook by PESA Chairman Gary Halverson on behalf of the service and supply sector. The reprint is below.

PESA Chairman Gary Halverson

PESA Chairman Gary Halverson, Senior VP & President, Drilling & Production Systems, Cameron

Clearly, the oil and gas industry is currently in rough waters. Especially across the service and supply community, the downturn has been and will continue to be rocky and in many cases painful. While we are understandably focused on managing through until the eventual market recovery, where should service and supply companies concentrate, no matter what their product, service, or size?

Those that will emerge strongest will have focused strategically on innovation, collaboration and investing in human capital. It’s up to us as an industry to tackle the challenges and enhance our long-term competitiveness in global energy markets.

Innovation.

The world is experiencing a global shift with dramatic political, economic and industrial changes. In this environment, technical innovation becomes a crucial factor for success. Innovation has allowed us to achieve what was once unimaginable, and led to a resurgence of energy supply. Technological innovations are also powering a manufacturing resurgence, generating new investment and providing economic incentives to reshore manufacturing jobs that were considered lost only a decade ago. As billions of dollars are invested in new businesses, thousands of dollars are saved in household energy costs, rent and royalty payments are paid to private landowners, and tax and royalty revenues are generated for all levels of government.

Integration of combined services is the key to maintaining innovation in a low-cost environment with solutions that are quickly deployable, scalable and addressed to the specific needs of our industry. Full integration of the service and supply sector is about listening, understanding, and bringing solutions to the table, not simply selling products and services to a customer. Energy service firms can change operations by tweaking tried-and-true techniques to service both new and old oilfield dilemmas.

PESA supports policies that promote inherent business principles for a pro-innovation, pro-jobs and pro-security energy policy that will continue to advance the important role the service and supply sector plays in the industry. This sector-wide commitment to innovation and focus on efficiencies is part of the foundation that will see us through the downturn.

Collaboration.

Future innovation in the oil and gas industry will be driven by collaboration. Foresight and planning is a great opportunity for long-term success, and moving forward offers tremendous business potential for suppliers and service organizations throughout the supply chain. In effective collaboration industry must also engage public stakeholders, developing trust in the community. This collaboration affords our right to operate in a responsible and safe manner with lasting benefit. Supporting the crucial health and safety efforts of our employees, customers, and contractors, as well as the minimization of environmental impact in the communities where we live and work is a top priority.

The current market conditions also require internal collaboration to increase production efficiencies and maintain profit margins. The outlook beyond the current cycle for the entire value chain offers long-term mutual bottom line success if focused on efficiencies.

PESA is working with our members to catalyze collaboration between operators and suppliers, to foster and preserve institutional knowledge and create opportunities to network and share best practices.

Human Capital.

When dollars have to go farther, we strive for innovative ways to leverage human capability. In doing so, we will drive down costs and shorten cycle times. Human capital is the single most important factor affecting the energy industry. In 2016 and after, continued M&A activity among the service and supply sector and the operators will contribute to difficult workforce decisions.

Even while faced with necessary reductions, we must not lose sight of investing in human capital. Workforce development for the men and women supporting operations all over the world is critical to our competitive advantage. We also understand the need to ensure our workforce mirrors our industry’s diverse global footprint, contributing to creative solutions and innovation. Women represent 19% of all oil and gas employees, and we need to do better than that as an industry.

PESA equips current and future leaders with the knowledge, training and education that will support the energy industry’s key role in the global market. Enhanced networking at PESA also supports connections with customers, competitors and peers that will drive professional success for individuals and member organizations.

Our industry has a great heritage of turning obstacles and challenges into achievement. Maintaining focus on innovation, collaboration and human capital will sustain and support our sector through this time and help us emerge stronger, smarter and more efficient. Leveraging external resources like PESA will allow us to do more with less, both for our member companies and the industry overall.