Mood brightens at OTC
As industry rebounds, convention no longer dry hole of pessimism
Thousands of energy professionals poured into the halls of Houston’s NRG Center on Monday, gawking at giant, gleaming contraptions destined for the depths of the Gulf of Mexico or the plains of West Texas.
The oil industry’s sluggish but increasingly visible rebound came into sharper focus on the first of four days of the Offshore Technology Conference, the world’s largest energy trade show, where denizens of the oil patch appeared far more upbeat about the industry’s fortunes than last year. Although it didn’t take much.
“Last year was like a funeral,” said Peter Moran, a general manager at Connecticut-based engineered cable company RSCC. “This year is like being in the ICU. Everyone’s ready for it to come back.”
The 2016 edition of the annual exposition got underway only about two months after oil prices plunged to the lowest point in more than a dozen years, bottoming at just over $26 a barrel in February that year. Young college students and laid-off workers tried desperately to find employers at OTC, filling out applications and leaving behind ré-
sumés at display booths. This year, vendors said they haven’t seen or met anyone looking for a job.
Michael Neal, a salesman at screw and bolt provider All-Pro Fasteners, recalled veterans of the oil industry, three decades on the job, who had lost their job in the downturn and tried to find new ones at OTC last year.
“That’s when you knew it was really bad,” Neal said. “That was the worst it has been in a long time. I haven’t seen any of them here today at all.”
In recent months, oil prices have exceeded or hovered near the $50-a-barrel mark, high enough to spur a wave of drilling in shale plays in West Texas, but not quite enough to unleash a full-scale march back into deepwater oil fields.
Over the last few months, the surge in U.S. shale drilling has kept Red Wing Shoes — a vendor at OTC — busy making boots, hard hats and safety goggles for roustabouts heading back into the U.S. oil patches — at least, the ones on dry land.
A good barometer for jobs
In North America, oil companies are conducting so-called manpower studies — reviews of how many workers they’ll need for new oil and gas projects — and filling out orders for workers’ protective gear, said Robert Warren, vice president of global sales and distribution for Red Wing Shoes, a Minnesota-based manufacturer of safety wear.
“There weren’t any manpower studies last year,” Warren said on the expo floor of the Offshore Technology Conference. “It was about how many people they needed to get rid of. Now they need to hire.”
But the offshore industry, which typically needs higher prices to operate profitably, has only just begun to recover, several oil professionals said. Frank Pierri, president of Wisconsin crane supplier Appleton Marine, said his company just recently picked up its first major offshore project in about four years. But foot traffic at his display booth at OTC appeared the same as last year.
Marty Goutierrez, an executive at Jamestown Metal Marine Sales in Florida, said oil companies are signaling they plan to start new offshore projects again in about a year, but that it could take a long time before those projects really get underway, largely because of lengthy engineering and design work that comes before projects really go forward.
For some offshore oil field service companies, that means it could take years to get back to work, Goutierrez said.
“With the shale out in Odessa, things have been picking up a lot,” said Courtney Smith, a marketing specialist at Varel International Energy Services, a Carrollton firm that makes drill bits. “But it’s going to be another year and a half before offshore gets back to where it was before.”
Odessa is near the Permian Basin, a prolific shale formation that has recently attracted a rush of drilling rigs and billions of dollars in investment.
OTC will release its final attendance numbers at the end of the conference this week. Last year, the crowd shrank to roughly 68,000, down from an all-time record of 108,000 in 2014. On just the first day of the conference, it’s difficult to gauge the size of the throng of energy professionals wandering halls larger than 10 football fields, but attendees said it appeared foot traffic was flat or only marginally improved over last year.
In the days of the oil boom just a few years ago, when crude prices exceeded $100 a barrel, people sat on the floor and on window sills in the giant NRG Center as they ate lunch because no seats were available. Sections designated as overflow seating for technical sessions were packed.
Plenty of seats, no waiting
On Monday, lunch tables were open. Overflow sections were nearly empty. Parking spaces seemed easy to get. Some vendors complained they were getting more sales pitches from other service providers than prospective customers.
They also had less competition for prominent spots along the exposition halls. But they said the industry’s increased optimism had yet to translate into more foot traffic — and business — at OTC.
“Hopefully, it’ll pick up,” said Ron Holliday, business development director at Houston offshore equipment maker Control Flow. “We’ve had this spot for years and if we gave it up we’d never get it back again so we’re trudging through the show.”
Ahmed M. Al Hammad, general manager of Clariant-Tamimi in Saudi Arabia, said that in past years, it took him a half-hour to get far beyond the Kirby exit off Loop 610, and another half-hour to get into the parking lot. But this year, he and his colleagues breezed right into NRG Park.
“Usually we park a mile away,” he said. “Now we’re right next to the gates.”