2021Global and Regional MarketsJanuary/February

Recovery will not mean a return to the status quo

By Linda Hsieh, Editor & Publisher

2020 is now behind us, but the downturn that began early last year continues to sting. It stings when you still see friends and industry colleagues lose their jobs, negatively impacting the welfare of their families. It stings when you see good companies go into bankruptcy because they simply have no other options.

It also stings when you see perfectly good drilling rigs, many of which were built for hundreds of millions of dollars and could’ve been used for decades more to extract the energy resources this world needs, being forced into obsolescence.

Of course, there are glimmers of hope on the horizon as we embark on the new year. Some countries have begun to roll out COVID-19 vaccines, a prerequisite step before the global economy will truly open back up and energy demand can return to pre-pandemic levels.

However, even when that happens, it’s becoming clearer that our industry won’t – or maybe can’t – just go back to the status quo. Like Kevin Neveu, Precision Drilling President and CEO, said at the IADC World Drilling Conference in December: “We’re at a time of rapid change and volatility.”

Similar sentiments were widely reflected in comments made by the industry leaders who spoke with Drilling Contractor for this year’s Critical Issues in Drilling & Completions Q&A’s (starting on p10). More than ever, leaders are recognizing that “more of the same” won’t be sufficient in the new environment, and they must chart new directions for their organizations and their employees.

Remote Operations

For one, the industry will have to embrace new ways of working. Even before COVID, many organizations had already invested, to some extent, in remote monitoring and remote drilling operations. However, the shift to remote has greatly accelerated over the past year and will continue on, even when there are no more travel bans or social distancing requirements.

For the office-based workforce, too, leaders are beginning to embrace change. Should the focus be less on the physical presence of the worker but rather his or her productivity? Does a meeting need to be in-person, requiring travel time and cost, or can the same objectives be achieved through an online meeting? Erik Kirkemo, Senior VP for Drilling & Wells at Equinor, described in his interview (p20) how he can now sometimes visit up to two rigs a day, something he had never been able to do before, by conducting the visits virtually.

Sandy Esslemont, President and CEO at Parker Drilling, also talked about how his company is adopting a new work methodology for its office-based employees in Houston (p24). Under this arrangement, a third of those employees will not go back into the office on a regular basis, while another third will only be in the office as needed for collaborative meetings. Only the remaining third – whose job functions necessitate their physical presence in the office – will go back.

Of course, digital will not supplant face-to-face, in-person connections in all contexts, but it will serve a valuable function as companies continue to reduce head counts and workers are asked to do more with less.

Creative Financing

Some parts of the oil and gas industry, like US shales, may also find the status quo to be inadequate when it comes to securing funding for the future. Speaking at the IADC Annual General Meeting in November, industry veteran Pete Miller noted that “a lot of banks today just don’t want to do business in the energy industry.” 

Mr Miller, who led National Oilwell Varco for many years, urged industry leaders to think more creatively about financing. US-based banks, in particular, have been scared off by too many E&P bankruptcies. Companies that previously had no trouble accessing cash may have to start looking for new sources of funding, like private equity or international banks.

“We need to make sure that we’re re-engineering ourselves,” Mr Miller said. “Don’t do what you did in the past, because it’s a different future and things are changing.” DC

Linda Hsieh can be reached at linda.hsieh@iadc.org.

About the author

Linda Hsieh is a graduate of the journalism program at the University of Texas at Austin, where she also completed the Business Foundations program at the U.T. McCombs School of Business and minored in Asian Studies. She has been writing for Drilling Contractor since 2005.


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