Maria Moraeus Hanssen, a CEO at DEA Group since January 2018, was one of the keynote speakers at this year’s Subsea Valley Conference held in Fornebu, Norway. In a room packed with oil and gas industry players, Hanssen adressed what she said were her four favorite topics, the energy transition, the importance of oil and gas, the role of technology and her passion for it but also digitalization, artificial intelligence, and big data.
“The energy landscape is chanaging and the demand for affordable and reliable energy is growing by the day,” she said.
In her opinion, policy makers, investors, and customers are joining forces and rallying behind the renewables and to a certain extent against the fossil fuel industry. So, while it is recovering from one of the worst downfalls in history, the oil and gas industry needs to learn to justify its activities and prepare itself to compete with a broader range of new energy companies and energy sources.
“Going forward, we believe the whole energy market is going to be electrified and we as an industry and a society will change as a result of that,” Hanssen said.
Quoting DNV GL’s forecast for 2050, she said that 40% of the world’s energy demand will be covered by electricity compared to less than 20% today.
Hanssen noticed that renewable investments are catching up with investments in oil and gas. Further, according to Bloomberg, by 2040 70% investments in energy will be in renewables. “This shows the directions where we’re heading towards,” Hanssen explained.
In today’s energy market, oil is by far the largest energy source and it makes up almost one third of the world’s energy consumption, while gas makes about a quarter.
However, increasing electrification, especially in transportation, will change the competitive landscape for oil. Now, in transportation, oil will have to compete with electricity generated from hydropower, solar, wind, gas, and biofuels. So this is likely to affect both demand and the price. The super profits of oil companies will come to an end, Hanssen claimed. The price of oil and gas and all source of energy consistently will trend downwards going forward, even if we will see these spikes from time to time.
Some oil and gas companies and the company I represent here today, DEA, will remain pure oil and gas companies.
As a consequence of this, Hanssen said that the oil and gas companies must be prepared to compete on price with energy companies to stay relevant in the energy mix going forward.
“And these days we see oil and gas companies positioning themselves very differently. We see the large utility companies phasing out of upstream production of fossil energy and focusing on renewables. They basically stop being oil and gas companies and they position themselves for energy market where decarbonization, decentralization, and digitalization will be the key elements.”
As an example, Hanssen brought up the French oil major Total and its entry into solar as well as downstream retail markets, Statoil’s name change, which was proposed to reflect the company’s strategy and development as a broad energy company, as well as GDF’s transition to Engie and DONG’s switch to Ørsted.
According to Hanssen, the diversification by these companies does not necessarily reflect their belief that the end of the oil and gas industry is imminent, but it does reflect the growing pressure on them and the attractiveness of renewables.
“However, some oil and gas companies and the company I represent here today, DEA, will remain pure oil and gas companies. We stuck to our core competence. We will become better and cleaner and we will develop new technology that has the potential to also fundamentally change our industry because we know what we are doing and we don’t necessarily believe that we have the right capabilities to diversify and of course we also leave it to our investors to diversify their portfolio should they so want.”
I am a technology optimist, I believe the energy transition will come from us finding innovative solutions and developing new technology not from passing global policies.
It is her belief that, for many years ahead, the world will depend on oil and gas.
But the oil and gas companies’ biggest challenge is still not falling demand but how to continue to find more oil and gas to compensate for the annual decline which is normally referred to as 7% per year. “But we as an industry are fully aware of the fact that we need to do this at much lower cost and with much better footprint.”
“Staying competitive is not about cost control, project execution, and management risk; it is in fact closer related to technology and innovation. I am a technology optimist, I believe the energy transition will come from us finding innovative solutions and developing new technology not from passing global policies. As an industry we have used the last years to reduce cost and increase efficiency. We have changed the attitude. Before the downturn we talked about bigger, and further, and deeper, now we talk about value creation, operational performance and improved footprint.”
The oil and gas industry is known to be very conservative and, as a consequence of this, it has been too slow in embracing the opportunities created by advanced digitalization and big data.
“The next step in digitalization of the oil and gas industry will give us the possibility to really manage and use the enormous amount of data and information that we have gathered from seismic surveys, drilling and daily operations.”
“Further digitalization will also lead to new culture of data and information sharing,” Hanssen added.
“A culture of tailor-made privatized solutions will not survive this advanced digitalization.”
Hanssen explained that, what we need to see next is how further digitalization can improve safe operations and reduce CO2 emissions and thereby strengthen its license to operate within societies.
In conclusion, Hanssen said that companies that embrace technology and digitalization will be the winners in a more competitive energy market where oil and gas will play an important role for many more years.
Speaking to Hanssen after her keynote address, Offshore Energy Today found out more about her role as the CEO at DEA and what the merger with Wintershall might mean to that very same role.
When asked about her main objectives as the CEO, Hanssen, who started at this position in January, said: “When I joined DEA I had this plan of what you typically do in your first hundred days and then with the merger I had to change that a bit and think differently. So, right now, I’m still in the process of getting to know the employees, getting to know the business, and understanding the motivations and the drivers. Giving that we are in a merger process, it doesn’t make a lot of sense to workout the new strategy so the focus is really on execution and performance and motivating the employees.“
As a reminder, the owners of Wintershall and DEA, BASF and LetterOne, last December signed a letter of intent to merge their oil and gas businesses in a joint venture whereby 67% of the shares of the new company would be held by BASF and 33% by LetterOne.
Speaking about the progress in this merger process, Hanssen told Offshore Energy Today that there are different things that need to be in place before a firm merger agreement is signed, including the shareholder agreement, but the regulatory approvals will come afterwards.
As it is too early in the process to talk about solutions should there be an overlap in operations if and when the new company is established, Offshore Energy Today asked DEA CEO about her role in the new company after the merger.
“One of the few things that has been agreed and announced is that BASF will nominate the CEO so this is obviously not going to be me,” Hanssen pointed out alluding to the fact that the agreement was for Wintershall’s owner to nominate the CEO of the new company while LetterOne will be in charge of naming the deputy CEO.
“So I guess I am in a good position to become the deputy CEO for this company,” Hanssen said, adding that, if asked, she would be accepting the position.
We also touched upon Dvalin, DEA’s first operated project in Norway. When it comes to the project’s progress, Aker Solutions recently delivered the subsea template for the project, which its first major hardware milestone.
Speaking about further milestones, Hanssen revealed that the subsea template will be installed at the seabed during April and May by TechnipFMC and the smallest of the two Heidrun modules will be installed on the platform. In June, gas export pipes will be installed. In parallel the largest module is being produced. The wells will be drilled next year.
Talking about DEA’s plans for Mexican acreage, which includes onshore Ogarrio field and interesr in offshore Block 2, Hanssen said the company is currently staffing and familiarizing itself with the facilities and the Ogarrio field. After that, DEA plans to work over the wells and the first new well is planned for next year.
When it comes to its offshore acreage in the Block 2, the plan is to drill an exploration well in 2020 and then look at other opportunities in Mexico with the main one being the new concession round coming up.
Offshore Energy Today Staff