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'Nervous' energy industry conventioneers flock to OTC

Many people flocked to NRG Park for the Offshore Technology Conference.
Many people flocked to NRG for the Offshore Technology Conference.

HOUSTON - Amid the thousands of conventioneers walking around the exhibits inside the cavernous hall at NRG Park, John Ryan smiles and gladhands visitors from around the world.

"We did the first OTC," he brags, gesturing to the display deployed by his company, Alexander/Ryan Marine & Safety.

Ryan has personally worked the crowds at 41 of these massive annual trade shows – through the booms and busts that have come to characterize his industry -- so he's an experienced judge of the mood here.

"You get nervous for Houston. Houston's an oil driven, oilfield driven economy."

The Offshore Technology Conference has long been one of the barometers of Houston's economy, an indicator of the health of the city's most important industry.

Legends abound about the boozy behavior and often illegal exuberance surrounding OTC during the boom years of the 1970's and early 1980's.

Last year's attendance set an all-time record befitting the unprecedented high price of a barrel of West Texas Intermediate crude oil. Although conventioneers still seem impressed with this year's turnout, they recognize the landscape has changed dramatically.

"Nervous," is how Ryan described it. "Cautious optimism. A lot of companies have laid a lot of people off. A lot of rigs are stacked, a lot of contracts being cut short or cancelled."

Trouble like that trips problems throughout the industry and, eventually, throughout Houston's economy.

If ships that usually service the offshore oil and gas industry sit idle, work slows at shipyards that employ everyone from welders to secretaries working along the Houston Ship Channel

"There's a certain amount of uncertainty," said David Lee, a vice-president at Rigzone, which operates a sort of job bank for the energy industry.

"We just don't know how long this down cycle's going to last. Those of us who've been in the industry for a while know that it goes through cycles. We just don't know when it's going to pick back up."

Still, there's a strain of counter intuitive optimism flowing around the OTC this year.

Everybody with a lick of sense knew oil prices couldn't stay in the stratosphere forever, some old timers say. Now, at least, the industry knows how to handle the inevitable downturn.

"Look at this as another down cycle," said Bob Fryklund, a strategist with IHS.

"I was here starting in the '80's, went through one that was actually even more severe than this. When you look at 2030 and beyond, we've got to replace 50-million barrels a day of production."

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