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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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The Subsea Factory

It's tempting to think that all big oil companies are the same. They trade more or less in line with crude prices--with little to differentiate one from another for investors.

But in fact, each has its own distinct personality. That makes a huge difference to value creation. Oxy, for instance, is one of the best exploiters in the business. They can wring value from a mature field that few other firms would see.

Companies like Shell tend to lead through innovation. Ditto Statoil. And we got a good example of that DIY spirit this month.

Statoil announced that it wants to revolutionize power supply for offshore oil production. The major has signed a JV with power and automation provider ABB to develop a concept called "the subsea factory".

This basically involves building industrial complexes on the ocean floor. Pumps, motors and compressors all located below the water, to make them more stable and cost-efficient in servicing production platforms.

The new JV is aimed at solving one major piece of this puzzle: power supply. Statoil and ABB will jointly work on a solution where a single power cable can be run to a subsea site, and then split off to power individual pumps and other machines. Currently, each unit requires its own dedicated line--which adds a lot of cost.

Statoil has said it believes this technology is critical to economically developing remote, deepwater fields in places like the Arctic.

This is the kind of thinking that differentiates big companies. Some are sitting and waiting for the next big find. Others are trying to manufacture it--making known fields more attractive by changing the game in terms of exploration or production technology.

It's too early to tell if the subsea factory will be a success. But it's the right kind of thinking.

Here's to moving forward,

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Dave Forest


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