If high attendance levels at the recent Offshore Technology Conference (OTC) in Houston are any indication, activity levels in the oil patch are expected to strengthen over the next few years, said Raymond James in its latest energy "Stat of the Week."
After attending the largest OTC since 1982 (59,000 in attendance), energy analyst J. Marshall Adkins and research associate Collin Gerry said that if the "recent earnings reports didn't convince you, then the large crowds" at the conference would have driven home the point that the "oilfield is healthy." There were only a "few new product unveilings," but this year's OTC highlighted a continued focus on technological efficiencies.
The huge attendance "is evidence of the view from most in the oil patch that activity levels will continue to move higher over the next several years," Adkins wrote. He said, "we walked away from the conference with three main conclusions: 1) The oilfield still has an extremely slow technology adoption rate; 2) Most products presented represented evolutionary products not revolutionary products; and 3) This year had more of a manufacturing focus vs. the technology focus of years past."
The "overall attitude within the oil patch is that most companies are willing to be the second or third to try new products, but no one is willing to be the first. As such, investors should realize that the oil patch is notoriously slow at adopting new technologies." Also, he noted there were "evolutionary" not "revolutionary products," and many of the new concepts and equipment will not be practical for a few years.
"Some of the recurring, potentially 'revolutionary' technologies include electric subsea trees, real-time downhole data transmission, fiber optic sensors, casing while drilling, expandable tubulars, continuous circulating systems, and subsea processing systems, all of which have yet to make a significant impact on the industry, but show remarkable promise."
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