This year’s Offshore Technology Conference (OTC) has added a new feature aimed at bringing in new ideas and new thinking from outside the industry.

Named “d5” with a subtitle of “The Next Big Thing,” the fifth day is intended to create a “connect the dots” atmosphere and to “creatively destruct” our industry. To be held on the Friday after OTC, it will include speakers from a wide range of disciplines to suggest new ways of approaching all aspects of the business, technology and people of our industry.

The timing couldn’t have been better. The offshore industry is entering an era of new challenges as a result of a growing imbalance between supply and demand—essentially an era of oversupply that could last longer than today’s forecasters are predicting, according to a leading energy analyst.

“We are leaving an era of energy shortage and entering an age of energy abundance,” industry analyst J.P. Chevriere, CEO of Transmar Consult, said. “The main reason oil and gas prices are in severe decline is the imbalance between supply and demand.”

On the demand side, Chevriere said that global economies are either stagnant or in recession. “Japan, Brazil and Russia are in recession. European countries are either in a condition of slow growth or recession. China is growing at a rate of less than 4%, and the U.S. is growing at less than 2%,” he said.

On the supply side, Chevriere said, North American shale development has increased U.S. production to almost 15 MMbbl/d. “This means a global surplus of almost 3 million barrels per day,” Chevriere said, “and this size of an imbalance between supply and demand can’t be managed by the Saudis.”

So how much will prices drop and for how long?

“Shale and tight oil plays can produce liquids at a very competitive cost of about $27 to $48 per barrel,” Chevriere said. “I expect prices to stay between $40 and $60 a barrel for the foreseeable future, with occasional fluctuations up or down in response to some unusual economic event.”

Similar economics apply to natural gas. “The U.S. may soon have as much as 40 billion cubic feet a day [1.1 Bcm/d] available for export as LNG,” Chevriere said, “which would have a major price impact on the global LNG market. The U.S. can supply LNG from shale developments today at extremely competitive prices.

“The surplus will reshape all aspects of the energy industry, including geopolitics,” Chevriere said.

“When you couple these conditions with the amount and frequency of cost overruns for megaprojects, you can see that there are going to have to be drastic changes and that there will be fewer megaprojects in the future. Prices just won’t justify them.”