HOUSTON – In an effort to cut the high costs of offshore projects, big oil companies are signing up for standardized designs in subsea production equipment as investors push for financial discipline, FMC Technologies’ chief executive said Wednesday.
The next generation of tools designed to help energy companies process oil and gas deep under the oceans could follow uniform industry designs under agreements like Houston-based FMC’s pact with BP, ConocoPhillips and others in July to develop new high pressure, high temperature subsea technologies.
“For conventional technology, the industry recognizes the success of standardization for operators with the lowest development costs and the shortest lead times to first oil,” FMC CEO John Gremp said in a conference call with investors early Wednesday.
On Tuesday, FMC had reported that profits rose 46 percent in the third quarter on higher subsea technology sales and an increase in its North American high-pressure fluid control segment, which has drawn more business as oil companies boost hydraulic fracturing in U.S. shale plays. In North America, FMC’s high-pressure fluid control business has grown as oil companies have boosted “overall frac activity and intensity,” Gremp said.
In the world of offshore drilling, daily rates for rigs have fallen more than 30 percent in recent months as activity has moderately declined, but Gremp said he expects companies to carry out development plans for their deep-water portfolios in the coming year despite sliding oil prices.
“Our conversations with customers remain pretty much the same as they’ve been all year, and that is that they’re clearly focused on capital discipline,” Gremp told analysts and investors. “It’s not driven as much by commodity prices.”
Offshore, new project builds are shifting from the United Kingdom North Sea to West Africa and the Gulf of Mexico, he said.
FMC had reported $169.8 million in profit, compared to $117 million in the same period last year. Revenue increased from $1.72 billion to $1.98 billion. The company’s subsea technology business jumped 69 percent in pre-tax earnings, while its surface technology business saw a 47 percent climb in income.
Offshore oil companies, Gremp said, are buying fewer subsea trees, which control pressure deep underwater, but as the companies like FMC develop more complex trees that can handle higher pressures and higher temperatures, the income for every tree will rise. Oil companies bought just 200 units this year, but climbing service revenue has offset the decline, he said.
“As you look into 2015, the list of subsea projects remains very healthy,” he said.
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