Subsea Industry Faces Escalating Costs, Subsea 7 Chairman Says

The subsea industry is doing incredibly well, but is facing challenges such as escalating costs. This is the opinion of Kristian Siem, Chairman of Subsea7 and keynote speaker at UTC 2013.

– The cost level in the oil industry has risen rapidly, and is out of step with other sectors. As a result, a number of developments are being postponed or shelved, says Kristian Siem.

Subsea 7 is a leading global supplier of SURF systems and services. The company has over 14000 employees globally, and manages and operates the world’s largest and most advanced fleet of vessels and equipment. It recently announced a record backlog, with orders worth some $4 billion in hand for 2013 only. Equivalent figures for 2014 and 2015 are $3.5 and $2.7 billion respectively. Despite an excellent period of growth for the subsea industry and Subsea7, Siem feels it is time to confront the cost level in the sector.

– We have to focus on bringing costs down, he says.

Increased costs – reduced quality

Another challenge for the sector is a lack of competent personnel. This is also an issue thoroughly covered during this year’s UTC. The Underwater Technology Foundation has commissioned Rystad Energy to prepare a report with an assessment of the actual workforce situation. Siem, however, is no doubt.

– In the subsea industry, we lack access to competent and experienced personnel. This is driving costs up and quality down.

More technology required

The third challenge for the subsea industry is, according to Siem, linked to technology. Oil and gas production expands into ever deeper waters and harsher environments, and it also moves further from the shore and other infrastructure. Moreover, Statoil has its renowned vision of a fully operational subsea factory by 2020.

– In the medium and long term, we will see an increase in subsea developments. Furthermore, new trends such as subsea processing and operations in the Arctic region will come into play. This will require more and improved technology. The sector has to step up its investment in technology development, says Siem.

Well positioned

Siem still predicts a bright future for the Norwegian Continental Shelf and the existing markets, but he also expects growth in areas such as deep-water exploration, Eastern Africa and the Arctic region.

– Most of the world’s unused resources are controlled by national oil companies, and these will be important clients in the future, he says.

He is confident that Subsea7 is well placed for growth and any technological challenges to come. – With our global reach, local presence, strong financial situation and contracts with most of the world’s oil companies, we are in a unique position, says Siem.

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Press Release, June 03, 2013; Image: NCE Subsea