How will Coronovirus affect the Offshore Industry?

Will the oil and gas sector recover from the coronavirus? As the world moves towards a new normal, the impact of the pandemic is being felt in the global economy. But there are signs that offshore industries are fighting back, even though short term changes brought about by the public health response continue to have an impact.

Social distancing 

The need for social distancing is having an impact on industry worldwide, including offshore. From the issues posed by relatively confined living and recreation quarters to helicopter flights, the need to stay 1-2m apart at all times is affecting everything from maintenance to isolating and evacuating sick crew members.

OGUK have promised changes to the way that crew infected by COVID-19 are airlifted from a rig, and are working with Health Protection Scotland on protocols for rigs where virus infections have occurred. Rigs are currently operating as normal insofar as possible. To protect the industry, the Oil & Gas Authority has requested priority testing for workers in critical offshore infrastructure.

Maintenance delays

However, delayed helicopter flights aren’t the only issue affecting the offshore industry. With the UK’s Forties pipeline system due to shut for essential maintenance in June, fragile supply chains are impacting on equipment arriving from the most badly hit European countries.

Although the situation should ease as borders reopen, some of the vital work may have to be postponed until 2021. The Forties pipeline is a critical oil transport artery. Worldwide, a series of maintenance projects have also been cancelled or suspended as a result of the pandemic.

Oil price plunge

For the first time ever, oil prices plunged below zero in April 2020. Exacerbated by price wars raging between Russia and Saudi Arabia, demand has dropped as a result of restrictions on air travel. The International Energy Agency predicts that the fall in demand will continue with Saudi Arabia reportedly anxious to cash out from its reliance on fossil fuels and transition to green energy.

The shift to renewables

Although fossil fuel companies may be simply too big to fail, industry analysts now believe that the coronavirus pandemic has made the shift to green energy inevitable. Despite the US handing out $60bn to bail out fossil fuel and airlines with no strings attached, Europe has seized the initiative to align emergency measures with their Green Deal. France’s offer to their state airline, for example, is conditional on Air France working to cut emissions and become the greenest airline in the world.

Oil and gas still play a vital part in the energy mix in the UK with 75% of energy generated from fossil fuels. But the switch to green energy could protect jobs put at risk in traditional offshore industries as workers transfer their skills to the burgeoning renewable energy sector.

Donating to fight the virus

Offshore industries have also donated millions in food, fuel and resources to protect frontline workers and support those who are at highest risk from the virus. Austria’s OMV donated €1m in fuel cards to the Austrian Red Cross while US company Chevron has donated $7m in food, educational resources and health services, matching employees’ donations on a 2 to 1 ratio. Valero has donated $1.8m to fight the virus in the communities where it operates.

There’s a clear understanding that the focus needs to be on the health and safety of employees and their families plus supporting front line workers worldwide. As Valero’s CEO Joe Gorder told a press conference “We are blessed to be able to continue supporting our community partners as we all work together to overcome this extraordinary situation.”

Using knowledge wisely

The offshore industry is also putting its knowledge and expertise to good use, introducing new safety protocols to protect workers including teleworking and social distancing measures. BP has closed its Indonesian LNG facility because of the difficulties of ensuring safe working at the remote and closely confined workspace. In Brazil, BP’s sugar cane ethanol project has been diverted from providing fuel to disinfectant which is being distributed to local health services.

In the US, ExxonMobil has a reusable protective mask in the pipeline that could address the shortage of PPE. Designed to use disposable cartridges and withstand sterilisation, the mask is intended to cover the nose and mouth better than the existing N95 standard masks.

Despite the downturn, the offshore industry has proved that it’s better placed than most to help fight the spread of the coronavirus with investment and practical help.

Advertisements

Author: Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles of partners on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to editor.webposts@gmail.com.