Is it the end of an era for offshore working? With oil prices plummeting and the Covid-19 pandemic causing global shutdowns, offshore working could be about to undergo a radical change.
Billions are currently being made available in rescue packages to keep global economies afloat. And while it’s unlikely that fossil fuels will be allowed to fail, renewed calls to green the economy on the back of the pandemic could give a welcome boost to offshore wind and wave power. According to a spokesperson for the International Association of Oil and Gas Producers “the oil and gas industry has a history of successfully responding to difficult situations and we anticipate that it will adapt as it has before.”
Changing demand
At the time or writing Brent Crude oil stands at around $22 USD a barrel, but last week the price dropped into negative territory for the first time ever due to storage issues and unprecedented low demand. With the USA reporting a 96% drop in air travel, some experts are predicting a long term shift in the way we meet our energy needs. A report released in April by Goldman Sachs predicted coronavirus could “permanently alter the energy industry and its geopolitics, restrict demand as economic activity normalises and shift the debate around climate change”.
That could result in a major reskilling of the offshore workforce, with exciting new opportunities in green energy. However, while the economy rebalances, workers in traditional energy sectors could find themselves the victims of falling demand and a fierce price war between Saudi Arabia and Russia which has seen the price of oil per barrel go negative in what the industry is already dubbing ‘Black April.’
Travel bans and social distancing
So how is the offshore industry in the UK dealing with the Covid-19 crisis? One of the toughest restrictions facing companies in the short term will be working around travel restrictions, with some helicopter providers refusing to carry Covid-19 infected passengers forcing them to be evacuated from their rigs by boat.
Trade body Oil & Gas UK (OGUK) has convened a pandemic steering group to create industry guidance on the Covid-19 crisis. Protocols include a ban on workers from countries on the Category 1 and Category 2 list travelling offshore for 14 days. This will affect anyone who regularly works in Europe or Asia. Workers showing signs of infection must also self isolate for the same period. OGUK is also asking for priority testing for those working in critical offshore infrastructure. Cases have already been suspected at the Mariner A and Martin Linge facilities.
Where possible, staff have been told to observe social distancing rules and work from home, with companies being encouraged to make use of the government’s furlough scheme to support worker’s wages. OGUK insists that current Health Protection Scotland guidance including temperature checks is effective in reducing the risk for those travelling offshore. But the result of these measures has been huge staff cuts and project cancellations with knock-on effects across the sector.
Maintenance delays
Trevor Stapleton, health and safety director of OGUK insists “The crews that would be offshore at the time would carry on working. Installations would still be able to continue to operate,” if a rig remains unaffected by the virus. However, he was forced to concede that there would be delays to vital maintenance as a result of disruption to key supply chains through Italy. The proposed shutdown of the UK’s Forties pipeline system for critical maintenance may now be delayed.
The picture is no less challenging when it comes to maintenance of green energy turbines. Travel bans, supply chain restrictions and the globalised spread of the virus mean that what might have taken a month to accomplish could now lead to downtime of six months or more.
Fighting back
With the offshore industry in lockdown, companies in the sector are looking to ways in which they can repurpose their expertise and have already donated over $675m to the World Health Organisation’s (WHO) Covid-19 Solidarity Response Fund.
In France, Total is donating fuel vouchers to hospitals while Exxon Mobil in the US has turned its expertise to the manufacture of protective masks for frontline workers. The offshore industry has successfully adapted and responded to previous crises although nothing of the magnitude of the Covid-19 pandemic.
Most importantly, as a spokesperson for industry body the International Association of Oil and Gas Producers points out “the industry has been a key engine of prosperity and a driver of innovation for many decades. It has the experience, skills, knowledge and resources needed to realise a low-emissions energy future – a transition that would be more difficult and more expensive without it.”
With so much uncertainty over Covid-19 and the duration and nature of continuing lockdowns, only time will tell if they’re right.
