Oil hovering around the $50 mark could last ten to fifteen years, according to industry veteran Philippe Guys.
Total’s UK managing director, who exclusively revealed his November 12 departure to Energy Voice, said this latest downcycle was reminiscent of the 1985 dip.
He said: “There have been a lot of downturns and the first one that I remember was back in 1985, which was five years after I started my career. At the time I saw a lot of redundancies and people leaving their positions. So there’s two things we need to realise.
“First, this downturn is not the one that we saw in 2008 or any of the small fluctuations, which had a sudden price decrease and then an increase a few months later.
“Second, this one is more like the ‘85 crisis , which is effectively a strong decrease and a long-term low price.
“If you look at the commodities I think it’s a cycle of not two or three years but a cycle of 10 to 15 years.”
Guys said the price would fluctuate around the $50 to $65 mark for more than a next decade.
He added: “The thing is it might not be 10 to 15 years at $40. It’s going to climb up, but before we reach another very high level it will take a few more years than two or three.”
The company leader said the North Sea’s mature basin means the sector must to be “more intelligent, more knowledgeable and use more technology to get the remaining billions of barrels stranded in the UKCS.”
However, he stressed there was still ample opportunity for the North Sea in this new oil price climate, especially around decommissioning.
“There is a lot of potential for developing technology to address the future.
“The future is also decommissioning and this has to be taken into consideration by the industry in the UK.
“The UKCS is one of the first mature basins in the world and we may be the first place where massive decommissioning will happen in the next few years so there is potential here for developing the new technology to cope with that.”
Guys echoed the Oil and Gas Authority’s industry-wide call to bring the stranded resources onshore.
He said: “There are still quite a lot of stranded reserves and we all need to take the responsibility to develop them.
“They should not be kept underground, but we should be showing enough diligence to develop without spending uneconomic money.”
Spending smart money includes recognising when the sector got it wrong, according to Guys.
“I think the way the industry was working was not acceptable anymore,” he said.
“There was no reason to spend that money just because of the high price per barrel.
“We weren’t reasonable or realistic when we were employing people and paying £1500 a day. There is nothing that justifies that.”
The industry can’t afford to relapse into bad habits. There’s too much to play for, according to Guys.
“I would like to see the North Sea recognise that there is still a future – a future in terms of being a pioneer in a new era of decommissioning and developing stranded reserves.
“If we are able to do that in the North Sea at an economic cost it will open a lot of possibilities everywhere in the world. So there is a future, but we need to ask for it.”
Guys has spent his 36-year career watching the North Sea develop.
At times he found himself in the middle of its crises – crises he said brought out the best in those around him.
Guys was just a few months into his new post as managing director when news of the Elgin platform leak broke.
“I was in Paris and I will always remember that,” he said.
“I was eating with my wife at home and we were finishing lunch when I got call from the duty engineer telling me that there had been a gas release. I just jumped up and took the first flight to Aberdeen. I reached Aberdeen in the evening alongside the crisis team.”
Guys found himself in the middle of a media storm. He admitted to sleeping on a canopy bed in his office and getting “very little sleep”.
But he was supported by a specialist Total taskforce, which pulled in experts from all over the world to respond to the incident.
“The work by the team here was just incredible and outstanding,” he said.
“Everybody just did the maximum to solve the problem and this gave me, as the responsible managing director, a great relief and a great motivation to withstand those very hard 51 days.”
He again found himself relying on his team, when the firm’s West of Shetland development, the mammoth Laggan-Tormore scheme, was hit by repeated delays and overspend.
“Everybody knows that Shetland is quite hard in terms of weather but I think we realised there was some lack of anticipation in terms of the amount of work that had to be done,” he said.
“Shetland is really a masterpiece of engineering. It’s the first deep offshore development West of Shetland in very harsh environments.”
He added: “It’s very difficult to work there but the good thing is that it’s now within weeks of completion, and this a great pleasure for me to see, because I know that it is a reality – it has been done.”
The last major project in the area was carried out 35 years ago when BP built its Sullom Voe Terminal.
If he were to do it again, Guys said he would reconsider the project’s scale.
“It’s difficult to say, but yes we would probably do things differently right now in the sense of maybe not building the plant as big. It could have been probably sized a little bit differently, but don’t forget this is a hub that we’re creating so it’s open now for additional development.”
The project will support the company’s third hub in the UK. By the end of the year, Total is expected to become the largest producing oil and gas company in the country.
The firm’s scale in the area has been significantly magnified since Guys first came to Aberdeen in 1991.
And Aberdeen has potential still to expand its infrastructure beyond oil and gas, according to Guys.
“Aberdeen city has expanded into the surrounding area but it hasn’t changed a lot downtown,” he said.
“I think if I come back in 25 years I’ll probably be able to find my way through the streets again.
“It has a lot of potential to attract tourism, to attract people but we need to do something.”
He added: “Aberdeen was a lovely experience 25 years ago and it has been again, difficult sometimes, but always pleasant. I’m very pleased to be finishing my career in Aberdeen.”
It is a career he could not have started without the support of his wife and two sons, he says.
“I’m looking forward to spending more time now with her, because these last seven years have been different, because she was not always with me,” he said.
“But without her and the family – well I think life is like that. You have the professional and the family life and one is not going to work without the other one.”
Guys’ first trip will be to South Korea to visit his two grandsons, aged two and four. It’s where his son is based, working for Total.
But as he approaches his official leaving date he has some departing advice for those who come after him.
“There is one thing I would say to anybody in the oil and gas industry and that’s what I learned, probably, because I’ve been exposed to a lot of difficult things,” he said.
“You need to be always very humble and honest in front of Mother Nature. She has the last word all the time so we need to be humble, and honest, and preserve it, because that’s so important.
He added: “I don’t know if I realise yet that I’m going, because this is a very busy moment for any oil and gas industry since it’s budget time.
“Whether I will be crying or not I don’t know, but I am looking forward to my work in the future and keeping up my relationship with the oil and gas industry.”
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