By William Hill

Upheaval, change and advances are nothing new for the global energy sector. They have shaped the business for at least the past decade. But what the market is facing in 2020 is something else: The coronavirus pandemic, falling oil prices and collapsing demand could prove to be an existential threat for some operators.

Although many of the challenges are shared by other industries worldwide–not least shipping–the offshore sector involves risk factors that other markets do not face.

The collapse in demand, driven in part by OPEC maneuvers, was deepened when countries shut down industrial and commercial operations, closed their borders, and limited road and air traffic in response to COVID-19. Fuel consumption and demand plummeted.

Operating rigs themselves are potential “Ground Zeroes” for coronavirus infection, with close-knit communities of workers unable to socially distance without disruption to operations.

In many respects, the pandemic could not have come at a worse time. The offshore market and major operators had started facing up to the global decarbonization challenge and to rethink the role the sector must play in supporting carbon reduction ambitions.

But no matter how severe the challenges are, they could bring about opportunities for the industry to rethink, revise and refocus on a future with a diversified energy mix and solve some of the issues that were already wrinkling brows before COVID-19 appeared.

More than ever, the industry’s expertise and resources will be called upon to help make sense of the key issues the market faces. For offshore service providers, now is the time to take a wide view of all the issues, take decisive action to update their approach, and ultimately help the market navigate these difficult times.

And while the word “unprecedented” is being bandied about, it’s not a situation that service providers are approaching entirely blind. For years, they have navigated the forces reshaping the sector and added value, remained flexible and adapted to help operators focus on cost savings.

The skills and knowledge of offshore service providers will form the backbone of the sector’s response. It is therefore vital to tackle the perennial challenges of efficiency, knowledge-bleed and digitalization. Though seemingly unrelated, they are all part of the matrix serving the sector. Solving digitalization or knowledge-bleed is vital in the pursuit of efficiency. Their common pursuit may ultimately form a new mindset to how we handle offshore as a whole.

Innovation Remains Strong

A growing chorus of voices, both within and beyond the offshore community, argue that COVID-19 may be the accelerating agent for some of the innovations that the market was already starting to adopt. While this may seem to fly in the face of the focus on cost savings, it is widely accepted that technology can save more money than it costs.

The quest for efficiency remains at the top of the agenda for every offshore business. It is no surprise, then, that the industry has enthusiastically embraced digitalization and the power of data.

Data is an increasingly powerful decision-making tool. As the sector invests in new technologies, the wealth of information at an operator and supplier’s fingertips is vast. Everything from sensor readings and vessel or asset tracking to deployment data is now boosting efficiency and cutting costs.

At the same time, there has been a shift from retrospective reporting to demanding real-time analytics. Customers now want in-depth insight into the exact costs and time required for each stage of a project. Real-time analytics enable service providers to make a constant flow of data available to customers, upon which they can make informed decisions and accurate forecasts.

Such data insight has enormous potential for the sector. It could form the basis on which projects are shelved before any significant infrastructural investment is made, or progressed on a firm foundation of meaningful knowledge and experience. With a focus always on cost, the power of data to enable decisions with greater certainty may help to buoy the market and spur investment.

Human Capital

Beyond digital, one of the greatest assets service providers have at their disposal is their wealth of human capital, with hands-on experience and expertise that can serve their customers in oil and gas and the renewables sectors well.

Vast swaths of talent are leaving the sector as the business ebbs and flows. Offshore projects are often hindered by organizations having to recruit and train individuals to successfully manage complicated projects. This pressure is heightened when projects have to navigate complex local regulatory and legal requirements, or are taking place in difficult operating conditions.

Service providers are called on to fill the gap here as well. Knowledge-bleed has become such an issue in recent years that many contracts now explicitly stipulate a requirement for the outright secondment of service provider employees into an operator’s business.

These green shoots of collaboration are a key element of the market’s wider mindset change. Questions remain, however, about how to inspire and recruit the next generation of offshore professionals. The wider trend in renewables, and the innovation and development it inspires, may spark a renaissance of human capital within the offshore sector.

A Moment to Reflect

While facing the biggest challenge in living memory, the offshore industry also has a once-in-a-lifetime opportunity to generate real change. In our fast-paced world, the COVID-19 pandemic is a rare moment to pause and consider the future trajectory of the market.

This is a chance to respond in a thoughtful and holistic way, driving and supporting the wider change of approach throughout the sector. As service providers take on new prominence, they have the opportunity to work at the cutting-edge of developments that will ultimately help to reshape our market, our energy mix and our world.

William Hill is the executive group vice president of GAC Energy.