Tayvis Dunnahoe
Exploration Editor
"The first annual Offshore Technology Conference held in Houston drew a surprising 4,500-plus industry members who heard both optimistic and pessimistic appraisals of the offshore outlook at the opening general session."
That was the opening to Oil & Gas Journal's special report published May 26, 1969. Not many publications can boast being present at the inaugural OTC, but OGJ was there and has followed the innovation, growth, and setbacks of the offshore industry every year since.
At that first OTC, OGJ described the scene as a "vast exhibit area in Houston's Albert Thomas Center jammed with 385 exhibit booths." By comparison in 2015, OTC Chairman Ed Stokes said the show now encompasses 2,600 exhibitors across 700,000 sq ft (16 acres) in NRG Center.
Roughly speaking, an editor wanting to spend 15 min visiting each exhibitor booth would need 81 days to do so. This is before you add the more than 1,300 papers submitted for this year's technical sessions, up from 125 papers presented in 1969, according to OGJ.
Themes, past and present
The size and breadth of this year's OTC indicate how the offshore industry has changed, but several themes presented at the event show that in some ways it has not changed. Then and now, problems associated with cost inflation in deeper water, public perception, and environmental sustainability ring true in current market conditions.
In his keynote at the inaugural OTC, Shell Oil Co. Chief Executive Officer R.C. McCurdy warned that development of future reserves presented a tougher problem as the search moved steadily into deeper water, where extraction costs rise sharply. Since 2010, deepwater plays have been opened in 10 new basins (OGJ Online, May 5, 2015).
Public approval has remained a constant theme through the last 50 years. "The unfortunate incident at Santa Barbara, Calif., is still fresh in everyone's mind," Chairman M.A. Wright of Humble Oil & Refining Co. told attendees at OTC in 1969, referring to the oil spill that occurred in January of that year in the Santa Barbara Channel. "We should not underrate the seriousness of public concern, nor take lightly the powerful currents of public opinion which are thus generated."
Addressing the 2015 OTC attendees at a panel discussion on federal and state cooperation, North Carolina Gov. Pat McCrory said, "We often find ourselves in a reactive mode when discussing energy vs. the environment." It is important to provide a picture of the positive outcomes over time, he said, as opposed to only responding to negative results.
North Carolina is advocating for access to its offshore reserves on the Atlantic Margin and will be acquiring new seismic this fall. One major roadblock to offshore development is the 50-mile offshore drilling buffer zone (OGJ Online, May 4, 2015).
Not unlike today, access to offshore areas was debatable in 1969. At that time, The Marine Science Commission proposed that an international agreement assign coastal nations with resource jurisdiction in 200 m of water or 50 miles offshore. An intermediate zone would encompass water 2,500 m deep or 100 miles offshore with control maintained by sovereign nations, but with royalties paid out to an international organization.
Northcutt Ely, chairman of the American branch of the International Law Association, accused the commission of "trading the doughnut for the hole" in its proposal to renegotiate the Continental Shelf Convention of 1958 (the Geneva Convention) on rights to adjacent submarine areas.
Today, the US exclusive economic zone is established as 200 nautical miles from the coastline. Although this was not the case until US President Ronald Reagan enacted Proclamation 5030 on Mar. 10, 1983, potentially many of the deepwater projects in the Gulf of Mexico could be in pseudointernational waters under the proposed plan from 1969.
While the offshore industry is nearly impossible to predict, if the last 50 years are a guide, innovation and resource development will continue to expand. The themes of high costs, limited access, and public perception will likely be repeated.
With continued effort and a little luck, OGJ will be there reporting as this prediction unfolds.