Offshore woes take toll on OTC crowd
Energy sector’s troubles weigh on attendance
Crude oil prices are rising, but the crowds at Houston’s Offshore Technology Conference fell for the fourth consecutive year, dipping to the lowest level in more than a decade as the deep-water energy sector continues to wait for a recovery.
The annual conference, which marked its 50th showing this week, opened with a sense of optimism as oil prices climbed toward $70 a barrel and activity seemed to be picking up in the Gulf of Mexico and other offshore oil fields around the world. But the good feelings didn’t translate to bigger crowds at NRG Park.
Attendance fell 5 percent from last year to 61,300, the lowest since
2006. Attendance has plunged more than 40 percent from the record 108,300 reached in 2014, when oil prices hovered around $100 a barrel.
Joe Griffin, who offers shoeshines at OTC each year, counted singles and $5 bills as he sat next to his workstation Thursday in the NRG Center.
“Four years ago, you didn’t have to ask, people would just jump up there,” Griffin said, signaling to the shoe-shine stand behind him. “Now you have to almost beg them to get on the chair.”
OTC remains one of the world’s biggest energy expositions and symbols of the importance of the offshore sector to Houston’s energy driven economy. Houston is home to hundreds of companies that do the engineering, construction, equipment manufacturing, drilling, exploration and production, and employ thousands of people working in the Gulf of Mexico, the North Sea and waters around the world .
U.S. oil prices now are hovering above $68 a barrel, up more than $20 per barrel from a year ago and more $40 from the bottom of the oil bust in early 2016. That rebound has revved up shale drilling in the West Texas and other U.S. oil and gas fields, but the offshore sector, where projects are costlier and take longer to develop, is just beginning to figure out ways to profit in a lower price environment. Analysts estimate that offshore energy is at least a year away from a noticeable recovery, but even then, some analysts say, the sector faces a diminished future.
For example, DNV GL, a a Norwegian research and consulting firm that works with energy companies, estimates that by 2050, the offshore drilling industry will produce only about half the oil it did in 2010, in part because of a projected global decline in crude oil consumption.
Shale drilling exhibits
OTC attendance is considered an indicator of the offshore sector’s health, but it tends to lag industry trends by about a year, since OTC exhibit and travel decisions are typically made many months in advance. And certainly, activity has increased offshore. The world’s biggest companies are exploring for new offshore fields and some have authorized new projects, including Royal Dutch Shell, which recently approved the multibillion-dollar Vito project in the deep Gulf
But the offshore industry’s difficulties were clearly on display. Many exhibitors. for example, focused on promoting products and services for onshore shale drilling.
Meryl Lee, a 22-year OTC attendee and vice president of California’s Kepner Plastic Fabricators, said she still loves the annual show, but ranked this year among slowest in her experience. She noticed a lot less foot traffic as companies sent fewer people or decided not to send anyone at all.“There’s just not extra money to throw at sending your people to something you either can’t afford or maybe isn’t relevant,” said Lee said.,
On the other hand, many exhibitors remained positive. David Moseley, a vice president with Houston’s Bishop Lifting Products, said from the vantage point of his company’s booth, it seemed that attendance might be higher than last year’s. Certainly, he said, the outlook seemed brighter.
“There’s been a sense this week that things are improving offshore,” Moseley said. “It slowed way down in the Gulf, but we’re a part of the offshore community, and we feel like we need to be here.”
Joeny Holdings, a Nigerian energy engineering and construcFreeman, tion firm, also had that sense. The company hadn’t sent people to OTC the last two years, but executives saw signs that the worst was over, said Moses Unuavboroh, Joeny’s group technical director. Case in point: the Joeny contingent will stay in Houston into next week to meet potential customers and equipment suppliers.
“The attendance volume is still a bit low,” said Moses, “but it looks like things are picking up and we wanted to make our international presence known.”
Equipment weight down
Not only was attendance down, so was another measure of the conference’s scale — the weight of the equipment and exhibits hauled to the conference. The weight slipped to just under 8 million pounds, down about 4 percent from last year down and 25 percent from the 2015 record of 10.7 million pounds, said Kevin O'Brien, general manager of the event production company that leads the setup and breakdown of OTC.
Some companies have switched from displaying heavy equipment to digital and software showcases that don’t weigh as much. Also, mergers have cut the number exhibitors. GE Oil & Gas, which was one of the biggest exhibitors, merged with Baker Hughes, while another one, Houston’s FMC Technologies, combined with the French company Technip.
After a bad two years, the OTC shoeshiners said this year’s attendees were at least cheerier than in 2016 and 2017. They just wished that their customers tipped like they did in 2014.
“The last couple of years we almost had to rope them and tie them down,” said Wilbert Fleming, of Joe’s Shoe Shine Services. “They’re at least getting in the chair easier this year.”