OTC: Small companies are the industry’s lifeblood

I spent the day surfing the economic ripple effect across 641,000 square feet. I didn’t actually cover every inch of the exhibits at the Offshore Technology Center, but I found myself wandering around the main exhibit hall to the satellite displays at the Reliant Arena.

You see the well-known names, such as BP and Halliburton; the names known to those in the industry, such as FMC Technologies (what had a two-story booth), Cameron International and Baker Hughes; and foreign companies such as Statoil (Norway), Petrobras (Brazil) and Petreoleos de Mexicanos (Mexico). I even spent some time in an area of the arena dominated by Chinese energy firms.

Those are, after all, the sorts of things you’d expect at the energy industry’s premiere trade show. But wandering the floor provides a deeper perspective. Thousands of small and mid-size companies turn out to peddle everything from speciality tools to software.

In an industry dominated by some of the biggest and most profitable companies on earth, OTC is a reminder of how the economic benefits flow outward, creating layer upon layer of companies that each provide specific pieces of the global quest for oil and natural gas.

Rising energy demand is pushing the energy industry into ever more challenging and complex drilling conditions. With the complexity comes the need for more specialization, more tools, more data and more monitoring.

When I spoke earlier with IPT Global, for example, founder Mark Franklin told me he formed the company because he saw a need to make the testing of blowout preventers simpler and more accurate. Franklin launched his company in March 2010, one month before the Deepwater Horizon disaster. Since then, companies have been clamoring to improve their BOP testing processes.

IPT didn’t have its own booth this year. When Franklin demonstrated the technology, he was borrowing a corner of the booth used by PetroDAQ, a company from The Woodlands that provides data services to the offshore industry.

But OTC attracts companies that are even more removed actual drilling activity, yet benefit from it nonetheless. L&M Radiator, from Hibbing, Minn., doesn’t make drilling equipment, but its cooling systems are used in the diesel engines that power offshore rigs. L&M’s display hasn’t changed much since it first came to OTC in the mid-1980s — one 30-ton radiator that shows off the company’s unique design. (I’ll have more on L&M’s story on Wednesday.)

I also dropped by the corner booth of Houston’s Brown Book Shop, which every year comes to OTC to sell its inventory of technical books to the engineers, geologists and other experts who want to keep current with new procedures. Demand for young engineers to replace an aging workforce is fueling demand for its books, Melissa Prince, the store’s buyer, told me.

I found myself thinking of a comment Shell executive Martin Vos mentioned during a luncheon speech on how the company has beefed up training since the Deepwater Horizon disaster. At Shell, newly hired well engineers have to study nine volumes of books on their own time, do homework and pass exams, he said.

As with most economies, it’s the small companies that are the key drivers. The big companies may get the most attention, but the real economic impact of the energy industry is found among OTC’s smaller booths and miles of exhibits from companies that thrive in obscurity.