The industry must do more than just “grin and bear” its latest slump, according to Lloyd’s Register Energy’s Tim Walsh.
The chief operation officer, who heads up assurance operations, said the sector must do more than just batten down the hatches to ensure recovery.
“There is a perspective that if we just get through this it will all be okay and I don’t know if I subscribe to that view,” he said.
“I think the idea that we just need to tide ourselves over is not particularly helpful. What is more helpful is to realise that this is the new normal.
“This industry is cyclical. I think the fact that we’ve been through this before has led people to think that if we can grin and bear it we’ll be okay.”
While he warned there was no “single magic bullet”, Walsh insisted companies must learn to make the right cost cuts – safeguarding funds for talent.
“We have very short-term memory in this industry,” he said.
“I can remember not too long ago sitting in a room close to here and lamenting the talent war in the industry and telling ourselves in the next downturn we must remember this.
“We need to cut costs absolutely but we need to do it in a way that’s sustainable.
“I would challenge most oil companies to say they couldn’t afford to spend the money on the right kind of staff development including attracting the next generation.”
Instead, the sector should look to revamp its “cost plus” commercial structure, according to Walsh.
“It’s at best removed the incentive to try to mitigate their costs and at worst it’s effectively stoked the fire,” he said.
Even with the sector learning to work at $50 oil, there’s still great business to be had, Walsh added.
“I would be personally very happily surprised if the oil price got north of $60 in the near future,” he said.
“It’s not that long ago that $50 to $60 oil was considered absolutely fine. It sort of demonstrates the extent that we allowed things to get out of control.
“If you assume that this is the way things are going to be you can adapt and there’s still a good industry to be had there.
“Many other industries have come out difficult economical times stronger and more sustainable because they had to.”
Walsh echoed sentiment shared by Professor Paul de Leeuw at this year’s show.
The director of RGU’s Oil and Gas Institute said: “I think this week has been really important to restore both confidence and take in the reality of the sector.
“I think what we heard with the OGUK report about production moving up, costs coming down and production efficiency improving were all very helpful in reinforcing confidence levels.
“I think the reality is that there’s still more to be done. It does take time and I think we have seen the first couple of phases of what’s to come.”
The first two phases include the sector recognising overspend and identifying savings.
Despite the deep dip of the downturn, de Leeuw stressed the industry would bounce back.
He added: “We are getting very good at it. This is our fourth downturn and each time as an industry we are able to get everyone together to come out the other side successful.
“That is an incredible skill to have.”
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