The growth of the oilfield services sector is very much a story of innovation and finding solutions to technological and cost challenges faced by operators.
Historically, the world’s biggest oil producers closely guarded their role as operator of their own fields - convinced they alone could deliver the engineering necessary to extract their oil on time and on budget. Increasingly, however, over recent decades those producers have been ceding that role -opting in many cases to manage their assets at arm’s length, and allowing the world’s increasingly sophisticated oilfield services companies to deliver cost-efficient production and, crucially, the oil-field innovation that Big Oil has long assumed it alone could deliver.
The critical support service companies offer to operations and their handle on technological solutions have enabled national oil companies, integrated majors and independents to manage much more complex operations than they would have otherwise. Despite today’s sharp retrenchment and consolidation among the world’s service companies - driven by the stubbornly low oil price - these companies, from US giants Schlumberger, Halliburton, Weatherford and Transocean to major international players such as Technip, Wood, Aker and Petrofac, continue to offer technological solutions for operations.
As oilfield services companies grow into this space, they handle more risk. The current low oil price environment may accelerate that trend, leading them and oil company operators into new partnerships through which risk can be shared and project delivery optimised.
The growth of the oilfield services sector is very much a story of innovation and finding solutions to technological and cost challenges faced by operators. “It is a solutions-driven industry,” explains Alan Kennedy of KPMG. Companies grow by developing proprietary technologies and know-how that can be applied across particular projects which then become an accepted industry service and way of operating. Their specialisation and repeat use of services allow them to achieve economies of scale on technology development - something oil companies cannot do to the same degree.