‘When Oil Comes Back…’

This is the frequently quoted prelude I hear to yet another theory about how things will be in the valve industry once ‘things return to normal’ in the oil and gas sector.

I’m beginning to wonder what ‘normal’ is. Or was. Or indeed might be.

Some who have been in the industry far longer than me are apt to quote the number of times they’ve seen significant fluctuations in the market, the intimation being that basically you have to hunker down and wait for the storm to pass. As a recent guest to a BVAA exhibition stand recently said, ‘Rob this isn’t a storm, this is a hurricane.’ So what to do?

Well hunkering down isn’t really a great survival strategy. Not long ago I was planning a trip to Pompeii and hunkering down didn’t do the residents there much good when Vesuvius eventually let go. They became fossils. And quite dead. New people settled of course when the area eventually became re-habitable, but the previous occupants of that space were deeply buried and largely forgotten.

Certainly the last decade has been good for the valve industry and particularly so in the oil and gas space. It’s not been without its challenges lately though. But it does appear to be moving into a new phase.

There is definitely an eye now towards significant cost-reduction and efficiency, and I’m pleased to report BVAA is doing its bit in this initiative – I hope to report more fully on that in a future issue.

There is also a sea-change (no pun intended) in the way in which some offshore production will take place in future. Driving to yet greater depths, with its associated issues, and in more remote places at a time of improving designs, is leading to more subsea production systems.

Niche markets are where quality British valve and actuator companies excel of course, but such companies are able to use that superior knowledge and design capability in other sectors too.

And there are many other spaces. A lower oil price leads to cheaper energy and feedstocks making other areas of industry attractive again. For example, a surge in USA industry investment has been reported to be linked to shale gas - a global market reportedly growing to $200b+ by 2022. The American Chemistry Council reported investment in their industry linked to shale recently topped $164b. Still oil and gas of course, but different, and a potential catalyst to improved valve markets elsewhere.

Indeed later in this issue there is an excellent article on how two BVAA members received record orders from another alternative sector. I’m pleased to say from a lead passed on by the BVAA to its members!

So what’s the answer? If I knew that, a lucrative career in lecture tours of business schools beckons! But I certainly think it is wise to substitute ‘If’ for ‘When’ in this article’s title, and have alternative strategies in place.

Published: 13th May 2016