OTC: Relic or Relevant?
With OTC 2019 just around the corner, our Managing Partner Sean Buchan reflects on if the conference has stood the test of time as it prepares to celebrate its golden anniversary.
The inaugural Offshore Technology Conference (OTC) was held in Houston, Texas in 1969 and in the half century since, its influence spread across the world of offshore oil and gas. Founded by 12 engineering and scientific organisations in response to the growing need for technological solutions in the developing global offshore extraction industry, attendance reached an extraordinary peak of 108,300 visitors in 2014.
Attendance has dropped off since then. A direct result of the downturn? Or, more pertinently, is it a reflection of OTC’s influence as a whole?
Inarguably, simple economics has impacted on visitor and exhibitor numbers, with organisations generally sanctioning less employee travel. But this should not be used as a mask for deeper discussions about OTC’s place in the industry.
To understand why its influence may have changed, we have to look at the world around it. Starting with the US oil and gas industry which has undergone significant change over the last ten years.
According to McKinsey Energy Insights, US shale oil production will reach 9 million B/D by 2025 with the Permian and Marcellus rig count still steadily increasing. Between 2000 and 2017, offshore production dropped from 25% to 18% of total US crude output (Forbes, 2018) with the shale boom looking destined to leave its offshore cousin adrift in terms of influence. Today however, there are indications that offshore is recovering, with Rystad Energy reporting that offshore spending will topple onshore spend in 2019, driven largely by greenfield project investment.
Aside from production figures, the business environment has also changed over time. Although OTC is the ideal opportunity to demonstrate technology advancements and new ways of working, the chances today of generating sales on the show floor are much reduced, simply because of systems and processes which are now common practice.
Over the last 20 or 30 years, how companies procure services and products has become far more formalised; less striking a deal on a stand and more formal tendering processes, invitations and pre-qualification. Larger companies are perhaps not turning up to trade shows with an expectation of creating direct sales opportunities in the way they once were. That said, they do provide a particular opportunity for some.
Since early 2014 the offshore supply chain has also become leaner and consolidated itself after a testing five years. As many as 60% of oil and gas companies now consider portfolio transformation as a priority now (E&Y, 2018), encouraging further M&A activity. Just a handful of the examples of the consolidation which has shaped the industry of late include Technip and FMC Technologies, Wood Group and Amec Foster Wheeler, as well as Transocean, Songa and Ocean Rig. Trade shows have provided a valuable showcase for these new entities, their reinvigorated brands and capabilities.
Contrary to ever evolving industry trends, the pace of change at trade shows can be slow. They showcase technology, provide a platform for industry leading speakers and distribute rich content, but the broad template hasn’t changed hugely from one year to the next.
With this being said, is OTC doomed to be a relic of the good old days? Certainly not, but I do think that there are opportunities to enhance its influence in the global offshore industry.
At OTC in particular, we see leaders from the industry more often outside the main venue than on company stands. This is in contrast to the likes of ADIPEC where c-suite personnel can more often be found on the show floor. Encouraging more opportunities for these leaders, already in the area, to get more involved in the programme might well be one way of ensuring the lasting legacy of this event.
What has sometimes been overlooked in the show programme is an opportunity to meaningfully tackle macro influences. I believe that to be seen as a modern and attractive industry sector, we should do more than talk around technical aspects. We should be there talking about the human factors too. How we should be developing talent, retaining the talent we have, attracting new talent to the sector and also looking to solve some of the wider issues like reticence to collaborate across the supply chain.
With such an esteemed history, OTC now needs to look to its future. Will this year be the opportunity for the offshore industry to show its mettle, work together transparently and regain its foothold as a promising long-term frontier for the next 50 years? I certainly hope so.