Proponents of offshore oil and gas development in B.C. went back to the future last week during a meeting with counterparts from Canada’s East Coast energy sector.

About 150 people took part in BC Offshore, a conference in Nanaimo that brought together company representatives, government and other stakeholders from across the province with veterans who have survived development of the offshore industry in Atlantic Canada.

Delegates were treated to war stories from old hands who fought the early battles on the East Coast, and were given strategies to prepare them for opportunities in the first years of offshore development – though no one was prepared to predict exactly when that will begin.

“We want significant activity by 2010,” said Richard Neufeld, B.C. energy and mines minister. “If it can happen safely in Newfoundland, Nova Scotia and the Beaufort Sea, why can it not safely happen off the coast of B.C.? We’re not reinventing the wheel here.”

Glenn Olsen, for Business Edge
Terry Knight of Inuktun Services displays his firm’s mobile camera technology.

Existing provincial and federal moratoriums are in place until reports are completed by two federal panels reviewing scientific and socio-economic issues. The bans on offshore energy development on the West Coast will be lifted simultaneously, Neufeld said.

It is estimated there is potential for $110 billion in offshore oil and gas and development, which is projected to contribute more than $1 billion to B.C.’s economy. But “if we can’t do it scientifically, soundly and environmentally safely, we won’t go ahead,” Neufeld said.

But before then, issues over ownership and revenue sharing have to be hammered out, public concerns addressed and a regulatory system implemented, he added.

Conference speakers were confident the moratoriums will be lifted – some believe in as little as three years – because worldwide demand is growing and likely to keep prices elevated.

Industrialization in India and China is forecast to push world oil demand to 120 million barrels per day from the current 83 million, said John Gunton, chair of the Pacific Offshore Energy Association (POEA), a Nanaimo, B.C.-based non-profit industry group. He said there will be increased demand for all forms of energy – oil and gas, electricity, wind, wave and tidal.

And B.C. – with its safe deep-water ports, skilled labour force with international experience and connections to North American gas pipeline and electrical grids – is in an ideal position to help meet that demand, he said.

It’s estimated it will take up to 17 years after the moratoriums are lifted for an offshore industry to become fully operational, and speakers at the conference advised West Coast businesses and communities to use the remaining moratorium time to prepare for the hectic first five years of development.

“We will not see roughnecks and roustabouts in the first five years,” said POEA member Ron Bell, an offshore drilling and management consultant.

Over a 13- to 15-year time period, activity will move from community liaison, scientific survey and seismic and exploratory work, through the lucrative design and construction phase, into the more steady revenues from crewing, production and maintenance.

Terry Knight, of Nanaimo-based Inuktun Services, attended the conference to learn from the experiences of pioneers from the East Coast.

“As a businessman, I need to be as informed as possible of opportunities,” said Knight, co-founder of the company that designs and manufactures robotic systems and components for use in hazardous areas, underwater and confined spaces. “I need to learn about the industry and what it takes to get involved. Are there special issues I need to be prepared for?”

The first opportunities will open for “softer services,” said Leslie Galway, president of the Newfoundland Ocean Industries Association, which organized the conference with Ocean Industries B.C.

These include scientists to do audits and impact assessments, lawyers and negotiators to hammer out agreements, and communicators to inform and educate the public.

When seismic surveys begin, facilities will be needed to provide vessels with water, fuel and maintenance as well as providing for the needs of the crews. The construction and production phases will require larger docks and facilities with fast, heavy-load capacity.

A long list of services will ultimately be needed, said Galway: A customs and brokerage, immigration, weather forecasting, transportation (helicopters, trucks and service vessels), fuel and water supplies and facilities, crew services (food, clothing and health and safety needs), garbage disposal, cleaning services, instrumentation, electrical services, mechanical servicing, fabrication, stevedoring, hospitality services, employment services, training facilities and services, and data transmission.

Galway recommended companies use networking and involvement in industry associations to “market yourself well in advance – you have to be known to the companies you respond to.”

But while some at the conference urged businesses to quickly take advantage of opportunities, others also warned to plan for quick downturns.

“We have a history of limping from one gold rush to another,” noted POEA’s Bell.

Offshore oil development is “a long, complicated, roller-coaster, yo-yo voyage,” agreed Rob Strong, vice-president of Davis Engineering & Associates, based in Port Blandford, Nfld.

Strong’s 25 years of offshore experience have been marked by many ups and downs. They include the busy 1979-1985 period, when oil prices were $33 a barrel, the federal government’s Petroleum Incentive Program (PIP) was in full swing and there were “thousands of jobs for hundreds of companies.” Later came the glut, as prices dropped to $9 a barrel and the PIP program was disbanded.

“It’s a long road and risky business,” he said, “but it can (also) be a profitable and fun business.” His advice was for businesses to “know where you fit in; you can’t be all things to all people.”

Conference participants were also told that small businesses should be ready for rapid expansion while still protecting themselves against a downturn through a variety of means – including outsourcing, strategic alliances, joint ventures, diversification and planned, slow growth. Examples include:

* Contracting-in is one way for a small player to offer experience immediately while slowly gaining expertise, said Kathy Penney, a vice-president at Jacques Whitford, a Dartmouth, N.S.-based environmental and geotechnical consulting firm with 25 years of oil and gas experience.

“In the mid-’80s we were importing talent,” she said. “Twenty years later, we’re now the go-to people.”

* Strategic alliances help competitors stabilize pricing and rationalize bidding. “In the early days companies competed against each other for the whole pie and the end result was prices were driven down until it was almost not worth competing,” said Pip Rudkin, manager of environmental services for Provincial Airlines Ltd., an airborne Maritime surveillance operation in St. John’s, Nfld. The company started in the ’80s doing ice surveillance, then moved into integrated monitoring programs. Teaming allows competitors to bid on different parts of the job. It also allows companies to develop core capabilities.

* Expanding on core services allowed Canning Pitt Associates, which prepares socio-economic and environmental studies, to grow. After reporting on the impact on fish and fishers of the seismic streamers – an eight-kilometre array of hydrophones and sound reflectors towed behind survey vessels – the St. John’s, Nfld.-based company was subsequently asked to develop a compensation package for fishing boats or gear damaged by the array.

* Diversification and slow growth allowed A. Harvey and Co. to transform its simple dock into a state-of-the-art oilfield logistics service, said Geoff Cunningham, manager of offshore operations. The company, based in St. John’s, Nfld., grew as it could, first leasing, then buying cranes and loaders; replacing the wooden structures with concrete facilities; investing in high-pressure water and fuel loaders; subcontracting a trucking service; and negotiating with unions for more flexible service.

* Several companies banded together to offer synergistic one-stop shopping. Ozark Services has seen “500-per-cent growth” due to offshore business, said Ron Edmunds, operations manager. The Newfoundland company grew slowly from its roots offering marine electrical service in 1958, to servicing fishing fleets, then offshore support vessels, and finally, oil rigs. Ozark and a number of complementary service companies share a large site facility where a client can send equipment for a series of services, thus cutting transportation and waiting time.

Meanwhile, many businesses will learn more through the second phase of the conference, which will take place in Newfoundland in November.

Initially leery of the time and expense of a trip east, Inuktun’s Knight was persuaded to participate because a number of East Coast businesses talked with him about exploring strategic alliances and partnerships.

“We’re not going to be able to meet the international standards overnight,” he said, or form alliances or find new opportunities.

“But this is a start.”

(Sharon Adams can be reached at sharon@businessedge.ca)