PoS October 2014

Power ofScotland

Tuesday October 28 2014

The face of the futureOPITO takes on the recruitment challenge

Deep endDeep endXodus Subsea is driving

innovation to a new level

Tuesday October 28 2014 | the times

Power of Scotland2

New finds encourage, old doubts remain

Welcome

Securing the safety per-formance of upstream assets is vital to the North Sea’s continued produc-tion success. The supply chain’s capability to deliver increasingly complex, technological solutions is absolutely key to ensuring the sustained life of fields

in the basin as it continues to mature and to providing exportable expertise to emerging prospects worldwide.

Capex and opex investment in existing and newly-fabricated platforms, pipelines and equipment is rising as enhanced recovery techniques extend field life, and new discoveries move closer to production.

Continued, high-profile financial investment in these areas is delivering major opportunities for specialist service providers across the sector. There has been a significant increase in the number of multi-disciplinary providers coming to market to meet demand, and that trend can be expected to continue.

While there is investment, there is also a continued focus for operators on driv-ing home cost savings as they work to maximise recovery.

The capability of small, niche technical companies and larger

SME contractors to deliver expertise within strict procurement guidelines which seek to secure cost reductions, without compromising safety perfor-mance has reinforced the North Sea sup-ply chain’s position as the world leader in the development of bespoke solutions to the sector.

Service companies able to deliver inte-grated, complementary services are in the strongest position seen in the indus-try for many years — providing related technical services from under one roof is now clearly seen as a value to an opera-tor’s bottom line.

Glacier Energy Services has been built on that model: the group was founded in 2011, and has grown through a buy-and-build strategy to now encompass six firms with industry-leading expertise and suc-cessful track records. Its turnover for 2014 is expected to break £30 million, with a team of 225 operating internationally.

The group supports operators and service companies on projects from the commissioning phase through the full lifecycle of oil and gas platforms and ves-sels, windfarms and infrastructure in the energy and petrochemical industries.

It has developed into a significant

partner for operators and major service companies worldwide, a business model which is increasingly important for the sector, where the requirement for exper-tise developed in the North Sea is truly global.

Onsite machining is delivered by Roberts Pipeline Machining and Site Machining Services; non-destructive testing (NDT), provided by Professional Testing Services; heat transfer repair and refurbishment services through Ross Off-shore and MSL Heat Transfer, the latter acquired in September; and weld overlay for pressure control equipment from Wellclad.

What is clear from Glacier’s contin-ued growth is that service providers of all scales need to prove themselves to be agile and able to produce bespoke rather than simply generic solutions to clients’ issues as they arise.

Operators and their dutyholders flag a problem and it is down to teams of spe-cialist engineers across the supply chain to meet that challenge, often on a very short lead time. The capability to provide that expertise onsite, as well as in the workshop, to ensure the fix is delivered quickly and effectively is also important — firms need to be able to provide the people to complete the job. In fact the strength of the team remains every bit as important as the quality of the equip-ment and that is the driving principle behind our work.

If service companies can continue to evolve and innovate to support operators it is absolutely clear that the export of skills from specialist groups born out of the North Sea, has a crucial role to play in the global energy sector — as has been the case for more than 20 years.

Inside ...Use your imaginationWhy innovation is key to the future of subsea Page 5

Cover storyCompanies take on the recruitment challenge Page 10

The generation gameCollaboration is key to introducing fresh talent Page 12

Distance no objectSeeking skills beyond the traditional heartland Page 16

Innovative service companies have a crucial role to play in the global energy sector and are in a strong position, argues Scott Martin

Links in supply chain add up to solid results

Welcome to the October issue of Power of Scotland. It arrives just after BP, which is celebrating 50 years of operations in the North Sea, and GDF Suez announced the discovery of a new field in the UK Central North Sea. It is good news that highlights two of the issues Power of Scotland regularly examines: exploration activity and the value of cooperation and collaboration.

In this issue we also consider some of the chal-lenges the sector must address if this success is to be maintained: attracting and training a new generation of skilled workers and the need for a dynamic wave of innovation to tackle the swift and relentless evolution of the technology required in subsea operations.

Meanwhile, Peter Jones and others here highlight price volatility and rising operating costs as many in the industry hesitate over investment, hoping for radical tax reform on oil and gas. All eyes will be on the Chancellor as he stands up to make his autumn statement on December 3.

Glacier believes in an agile approach that produces bespoke rather than generic solutions

Scott Martin, Executive Chairman, Glacier Energy Services

The strength of the team remains every

bit as important as the quality of the equipment

Power of Scotlandthe times | Tuesday October 28 2014 3

Being in the offshore oil and gas industry just now must be like living in the Caribbean during the hurricane season. You know hurricanes are going to happen

but you don’t know when or where. All you can do is keep an eye on the weather forecasts, prepare to deal with one, and meantime get on with your life.

One such storm was threatened last month, but turned out to be no problem when Scotland voted “no” to independ-ence and worries about the upheaval that might have caused in regulation and taxation evaporated.

But then, out of the blue and pre-dicted by very few forecasters, another big one blew up. From a year high of $115 in June, the price of Brent crude has slipped and slid with a precipitate fall in the last month down to around $85.

It’s a hard wind which has blown away more than a quarter of the value of the industry’s product in three months just when more than a few had been lulled into thinking that $100-$110 was a stable price after four years in that range.

Is this a deepening depression that will

push the price lower still? Or a passing squall that will soon see prices bounce back? Or is $80-90 the new and harsher climate everyone will have to get used to?

When you survey the causes of the downhill slide — supply side factors such as resuming Libyan production, receding threat of Islamic State interruption of Iraqi pumping, increased Saudi Arabian production, robust growth in US shale oil output and demand side factors of feared economic slowdowns in Europe and China — you realise that oil price forecasting is a lot chancier than predict-ing the weather.

On the preparing for the worst but getting on with life meantime rule, what does this renewed price volatility mean for the North Sea? For existing produc-tion, it means having to exert even more pressure to drive costs down.

Simple arithmetic says that the problem is even more intense than the lay observer may think. Dividing the rising annual total operating costs by annual production of barrels of oil equivalent (boe) shows that the operat-ing cost per barrel has nearly tripled

since 2008 to close to $30/barrel. (see chart).

Add in the costs of capital, which can range up to $30/barrel, and in broad terms companies can be looking at projects where the costs can be $50/barrel. At prices over the last four years of $110/barrel that leaves a decent profit margin, even after tax at 62 per cent.

But at $80/barrel, the margin is much slimmer, and slimmer still after tax. When you factor in that, thanks to recent high prices, there has been an explora-

Peter JonesForecasting weather is simple compared to this volatile market

tion spurt right round the world identify-ing prospects with better profit margins, then you understand that the North Sea is less attractive a place to invest.

This doesn’t mean, says Jon Clark, an EY partner and head of oil and gas transactions, that investment in new North Sea fields will stop: “Where these can be tied into existing infrastructure with a reasonable life, development costs will be lower.”

But, he says, there has been a marked shift in company focus: “Companies are less interested in production growth; the new religion is controlling the return on capital.”

He reckons this will put pressure on the supply chain to cut prices which may have an impact on jobs.

Others are dubious that supply firms, many of whom sell globally, will comply, but do agree with his emphasis that companies need to concentrate on the controllable. Two big factors, however, can only be influenced because they are in the hands of the government.

One is the Wood review’s recommen-dations which the government needs to implement speedily if its cost-cutting implications are to have an effect soon. The other is to cut the tax rate, where industry hopes are that it might come down to 50 per cent.

That makes December 3 and George Osborne’s autumn statement extremely important. Is he the man to cause a break in the dark clouds scudding over the North Sea? The industry hopes so.

A deepening depression that will push the price lower still or a passing squall?

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The largest, independent provider of fully integrated subsea equipment solutions including rental, sales, calibration, repair and maintenance, offshore personnel and custom engineering.

www.ashtead-technology.com

This week, Ashtead Tech-nology launched a state of the art subsea technology training academy in the world-renowned subsea centre of excellence at

Westhill in Aberdeenshire. Representing an investment of almost £500,000, the Ashtead Subsea Technology Training Academy has been created to meet global demand for improved competency in the confi guration, operation and maintenance of the increasingly sophisticated equip-ment required in more complex subsea oil and gas projects in deeper waters and hostile locations around the world.

A market leader in the sale and rental of subsea equipment and associated engineering services, Ashtead Technol-ogy has a global market reach with bases in Aberdeen, London, Houston and Singapore as well as agents in Abu Dhabi and Perth in Australia.

With 30 years experience in the subsea sector, Ashtead Technology is well-placed to deliver training to delegates from around the world to ensure they are competent in dealing with the ever-evolving complexities of sophisticated electronic marine equipment.

Tim Sheehan, commercial director of Ashtead Technology said: “As the subsea industry continues to grow and leading-edge technology matures to deliver systems to meet more complex challenges in deeper waters, subsea survey, construc-tion and maintenance companies must have the skills and competency to ensure these systems are properly confi gured, operated and maintained.

“We recognise that our customers’ focus is on delivering operational excel-lence to their clients and we are well positioned and resourced to fi ll the gap in the market for high-quality, focused training that will meet the competences required and help our clients to deliver that level of excellence.”

The subsea technology training academy is the result of considerable investment in the best facilities, train-ers and training materials by Ashtead Technology. The courses available at the purpose-built facilities will cover the basics and the more complex functioning of offshore survey equipment, acoustic positioning and motion sensing systems, hydrographic and geophysical survey equipment, cable and pipe detection and

tracking systems and ROV sensors and multiplexors.

Mr Sheehan added: “Our strong heritage in working with specialist subsea technology has enabled us to develop a range of courses which will give delegates the confi dence and competence to work with the latest systems available in the marketplace.”

In a pilot scheme run prior to the launch, Ashtead Technology train-ing academy successfully delivered several courses to a number of leading subsea companies, including a three-day acoustics course and a one-day introduc-tion to offshore survey equipment course. The courses, for support engineers and new recruits from the subsea construction sector, achieved tangible results and excellent customer feedback.

Donald Campbell, senior survey support engineer at Subsea 7, said: “We have been pleased to support Ashtead Technology in the development of this ground-breaking training academy. Our

delegates have been more than satisfi ed with the professionalism and knowledge of the training team. Also, the level of training delivered has met our needs and that of our staff comfortably.”

In addition to regular standard training, the Ashtead Subsea Technol-ogy Training Academy is able to design tailor-made courses to meet specifi c needs of individual customers. While the training academy has been established to provide a dedicated delivery centre, Ashtead Technology can also offer an off-site service in the customer’s own premises if required.

“Due to the broad nature of our indus-try, many of our customers have niche training requirements and we are able to deliver bespoke courses,” said Mr Shee-han. “Whether that is providing training to personnel who are new to subsea survey and construction or supporting those

A new technology training academy will help meet the global demand for expertise in increasingly sophisticated subsea projects, writes Neil Clark

looking to add to their skill set through more advanced user and maintenance courses, we can meet the needs of our clients as and when they arise.”

At the helm of the training academy is Steve Cullen, who joined Ashtead Technology to take up the newly-created position of training manager. Mr Cullen spent several years in vocational and public sector education and training roles focusing on science and technology subjects with particular experience in innovative instructional design methodologies.

Mr Cullen is an electrical and electronic engineer by trade with more than 20 years offshore experience in subsea construction, hydrographic

survey, fi bre optics, remote interven-tion and drilling operations support. Before joining Ashtead Technology, he was ROV Technical & Engineering Training Superintendent with Subsea 7 with responsibility for the management, delivery and coordination of training the company’s ROV personnel and facilities.

“The position of training manager is central to the success of the academy and appointing the right person was crucial to our vision of creating a world-class facility,” said Mr Sheehan.

“Steve brings with him a strong engineering background as well as practi-cal experience in education and learning innovation.”

COMMERCIAL REPORT: ASHTEAD TECHNOLOGY

We are well positioned to � ll the gap for high-quality, focused training

A deeper level of competency

Steve Cullen is training manager at the newly-established academy


Subsea engineering has become one of the most critical elements of oil and gas exploration, develop-ment and production glob-ally. Its skills and products are in increasing demand to inspect, repair and maintain ageing underwa-ter assets; to provide lower

cost production and processing solutions to develop new fields; and to take oil and gas into deeper, colder and remoter waters around the world.

The United Kingdom’s subsea industry is an unqualified success story, with much of the innovation and logistics coming from Scotland, and from Aberdeen and environs in particular. These capabilities are recognised everywhere as a world class supply chain.

“The subsea industry was worth almost £9 billion to the UK in 2013, and almost half of that was in exports” said Neil Gordon, chief executive of the industry body and focal point Subsea UK, based at Westhill near Aberdeen.

Subsea technology vendors were not immune from the global financial crisis in 2009 and the Gulf of Mexico oil spill in 2010-201. These and other factors limited growth in subsea hardware spend in the 2009-2013 period, according to analysts Douglas-Westwood (DW).

The market is bouncing back though. DW recently forecast strong growth for the global subsea hardware market. It

projects that capital expenditure will total $117 billion (£189 billion) between 2014 and 2018. This would represent growth of more than 80 per cent compared with the preceding five-year period.

These are big numbers to light up the eyes of subsea technology innovators. They are hoping that current trends within the sector will pull through mar-kets for technology.

As Xodus Group’s Steve Swindell notes on page 6, the industry’s appetite for inno-vation to confront new challenges may be increasing, at least in some aspects of its operations.

Even so, there have been — and still are — significant barriers to new technol-ogy finding viable markets in the oil and gas industry in general, and subsea has been no exception.

“There is a dearth of fundamental innovation in subsea,” said Ian Phillips, chief executive of the Aberdeen based Oil and Gas Innovation Centre (OGIC), a state-financed, advisory organisation that acts as a match maker between companies and Scottish university R&D capabilities.

“There is a lot of innovation going on, but it is not what I would call game-changing,” he added.

A second barrier is purchaser caution. “Lots would like to buy the second- or third-installation of a technology or a capability, but are not as excited by the first one,” Phillips said.

Aberdeen based OGIC is focused on

the first of these barriers. “One aspect of our work is to talk to people and encour-age small companies to seriously consider growing a technology or capability that they have,” Phillips explained. “The other is to more sensibly leverage the capabili-ties of the Scottish universities,”

Historically, Phillips said, companies had shown a reluctance to approach universi-ties for technology development because they had expected academics to respond slowly and to think in “units of three-years”, the typical length of a PhD study.

“Universities have changed big time,” he stressed. “The framework for evalu-ation of their research makes economic impact a big part of their score, a direct incentive to respond in a much more business-friendly way.”

This includes working on shorter-term projects and engaging in work with a higher proprietary content from the com-pany’s standpoint, he said.

During the establishment in Scotland

of Innovation Centres, including OGIC, industry was asked what it really wanted, he added.

“The oil and gas industry said it wanted a one-stop front door to all this R&D stuff. Also, I and others involved in OGIC come from the industry, so we know our way around the demand side of things.”

Phillips has more than 30 years’ expe-rience in the industry, including 19 years with oil and gas operators, six years in the service sector, and seven years in the carbon capture and storage business. He has also worked with the higher education sector, the Society of Petroleum Engineers, and in managing technology projects. He was appointed by OGIC in August.

The oil companies have been good at doing “big ticket R&D” through chan-nels such as ITF (see panel on page 8), he said. “OGIC is focused on a series of modest innovations that are likely to save relatively modest amounts of money per job or oil well. But when you multiply it by 50 to 100 wells, it is a lot of money.”

Some Scottish universities have had a longstanding focus on aspects of oil and gas and have genuinely world class capa-bilities in a number of areas.

OGIC is also keen to ferret out R&D from other disciplines that currently have no focus on oil and gas.

Examples include drug delivery and medical imaging technologies, and graphic rendering in computer gaming for visualising the large quantity of data

Subsea

Time to ignite the flame of innovation

The UK’s subsea industry is a huge success story but it will increasingly rely on dynamic new approaches, says Neil Clark

Neil Gordon points to a multi-billion market

There is a lot of innovation going on but it is not what I would call game-changing

ACE STOCK LIMITED / ALAMY


Power of Scotland6

Feature

Xodus Subsea heralds a wider stage for innovation

Subsea technology vendors can look forward to a new big player in the market for their products and know-how after international energy consultancy Xodus

Group launched Xodus Subsea, a global company with aspirations to challenge Tier 1 contractors such as J P Kenny, Genesis Oil & Gas and INTECSEA.

The Xodus Subsea partnership announced in October is with major oil and gas contractor Saipem, Italy, and the mid- and downstream oil and gas giant Chiyoda Corporation, Japan.

Xodus Group brings strong front-end engineering capability to the table — the conceptual side. Saipem has an innova-tive portfolio of technologies within its turnkey capability in engineering, procurement, construction and instal-lation. Chiyoda manages large scale, international projects. Xodus Subsea will have access to more than 1,000 multidis-cipline engineers.

“We hope that this combination will add new approaches to the market,” said Steve Swindell, chief operating offi cer, Xodus Group. “Our job is to fi nd new and better ways for oil companies to make subsea developments more attrac-tive. The deeper the water, the more expensive they are going to be, so it is about delivering a more cost effective way of working.”

This extends to accessing hydro-carbons in less familiar forms, such as methane hydrates in very deep waters. “We will be working hard to fi nd new technologies to do that as well,” Swindell said.

Xodus Subsea does not itself design new technologies; but it maintains expert knowledge of what is out there, liaising with inventors and developers to understand what equipment is available, how it works, and what it can do for oil and gas operators.

Swindell said innovation in subsea has been “quite rapid” in the context of oil and gas traditionally being slow to adopt new technology.

“Deepwater development is driving it. This and subsea processing are the two key things that the industry needs to get right. For example, we are seeing compa-nies such as GE and FMC Technologies pushing subsea processing.”

Saipem displays advanced thinking on subsea processing, he added. “It is trying to come up with ‘open’ systems that would allow anyone to plug in bits of equipment from various manufacturers and get it working, a bit like open source software.”

In the past, issues with interoperability have meant that a given subsea process-ing systems has tended to be dominated by a particular vendor’s equipment.

Swindell points also to the evolution of complex systems of risers, pipelines for moving material from seabed to surface or other subsea equipment. “That’s where there has been an acceleration in development over the past two years.”

Chiyoda, which is looking to develop its expertise as an offshore EPCI integra-tor, brings fi nancial backing and access to major global clients. “We can leverage off that,” Swindell said.

“The other aspect of their involvement is that Japan is looking to develop a home-grown, offshore energy capability and Chiyoda are investing in Xodus Subsea to achieve some of that. It will allow them to support their country’s goal to develop large hydrocarbon reserves, mainly methane hydrates, offshore Japan.”

Asked about the areas into which Xodus Subsea would be taking its expertise, Swindell said: “There are large, signifi cant subsea projects in the pipeline in East and West Africa, and in South America. Those are the areas in which we hope to achieve our fi rst wins.”

While Xodus Subsea will be headquar-tered in London, it will have a presence in cities across Europe, Africa, the Americas, Middle East and Asia Pacifi c, including eight dedicated engineering centres in priority energy locations.

A large part of the company’s subsea capability is based in Aberdeen. “We are going to grow that,” Swindell said.

“The expertise in Aberdeen is very strong and they will have a great oppor-tunity to apply that knowledge to much larger and more international-scale projects. We expect the Aberdeen team will be servicing our international offi ces with their expertise from the North Sea.”

Xodus is working with major contractors as

deepwater development drives new technologies

that the oil and gas industry gathers.OGIC’s ‘venture capital’, so to speak,

comes from the state through the Scot-tish Funding Council putting up £10.6 million over fi ve years, with roughly half of that available to disperse in grants for part funding projects.

While its formal launch looms in November, OGIC’s doors are already open to companies.

“Projects that we have had through our door so far show that applying these funds as seed corn to have a technology idea checked out is likely to spawn a

much larger project, which OGIC may or may not be part of funding,” Phillips said.

“For me, part of the defi nition of ‘suc-cess’ fi ve years on will be that OGIC has had a decent collection of failures. If we don’t have a few failures, we will not have been trying hard enough. For some things, the answer will be that it does not work.”

Phillips’ own expertise is predomi-nantly in wells and sub-surface. OGIC had appointed search consultants to recruit a technical director as Power of Scotland went to the printer.

At a desk close to him sits the director

of the National Subsea Research Initia-tive (NSRI), an arrangement that is not coincidental.

“NRSI has the in-depth knowledge and understanding of the sector to sit along-side our funding mechanism and easy access to the universities,” Phillips said.

Neil Gordon points out that Norway, the US and Brazil give signifi cant gov-ernment support to industry to help it develop subsea technology.

He added: “This has been realised in the UK. Our relaunch of the NSRI will see it become the conduit for subsea industry intelligence and for disseminat-ing its technology needs to academia, government, SMEs, Tier-2 manufactur-ers and other operators.”

Gordon is also encouraged by the growing signs he sees of joined-up think-ing between organisations such as OGIC, NSRI, ITF, Innovate UK (formerly the

How OGIC worksSince opening its doors in earlier this year, the Oil and Gas Innovation Centre (OGIC) in Aberdeen has received almost 50 approaches from businesses interested in using its services.

Acting as a single front door for the oil and gas industry to approach the research and development knowledge and capability of Scottish universities, OGIC also co-finances projects. It aims to deliver and part-fund more than 100 projects with the industry over the next five years.

It has already signed a deal with one company and two others are in the off ing.

“It is generally the mid-sized com-panies that are knocking on our door,” said Ian Phillips, OGIC’s chief executive. Companies typically approach the organisation after exhausting in-house or industry capabilities to solve issues.

OGIC’s experts – each with wide experience in the industry – scope out the nature of the challenge and how academic expertise might be able to help. They also advise on how to get the best from the support from range of state agencies.

In one recent project, for example, an undisclosed company turned up with a project that turned out to range from fundamen-tal research to prove that a technology concept would work, right through to building a factory.

Ian Phillips generally deals with mid-sized companies

a project that turned out to range from fundamen-tal research to prove that a technology concept would work, right through to building a factory.

Steve Swindell is looking for wins in areas such as Africa and South America

Many companies work with Scottish universities that have world-class capabilities

PETROFAC


Power of Scotland8

UK Technology Strategy Board), the Neptune National Centre for Subsea and Offshore Engineering in Newcastle, ‘cata-pult’ and innovation centres, and various government agencies. In November, he will address Innovate UK on the subsea challenges and opportunties.

With its emphasis on funding truly fundamental rather than incremental innovation, one project being backed by OGIC is what Phillips describes as “a very clever piece of materials science that could transform one segment of the sub-sea sector”. Watch this space.

While sales and export performance are positives for the industry, Gordon cautions against thinking that everything in the garden is rosy.

With one eye on the UK Chancellor of the Exchequer’s autumn statement loom-ing, he said: “We need to look ahead to what happens in 2015. Also, the oil price has taken a bit of a dip of late, and costs have been rising significantly in the UK Continental Shelf (UKCS), which is a real challenge for the whole oil and gas industry.”

Some international opportunities for subsea in deepwater developments off-shore Australia, Brazil, Africa and Gulf of Mexico are starting to cool off “just a little bit”, Gordon he added.

“There is a boom in shale oil produc-tion in the US, and OPEC oil producing nations are still, I would say, overproduc-ing. Quite a lot of bigger oil and gas oper-ators are looking at their larger projects and taking slightly longer before deciding where to invest.”

As a mature oil and gas producing

basin, the UKCS faces stiff challenges in the global competition for such invest-ment, he continued.

“So it is critical that the autumn state-ment looks at the fiscal situation for UK oil and gas. It is long overdue an over-haul. We have heard positive noises from government, but that really does need to happen to stimulate investment in explo-ration and drilling in the North Sea for the long-term. Incentives could be intro-

duced to boost research, development and deployment of technologies that improve the rate of recovery of oil and gas from the UK’s aging fields, Gordon recommended. We are still leaving more hydrocarbons in reservoirs than we take. We recover certainly under 50 per cent, and probably less than 40 per cent, of what there is available.”

There is a window of opportunity, Gordon suggested. “If the right tax and

incentives regime is put in place, it will give companies the confidence to invest, and the technology will be developed to make things happen.”

He pointed out that, fundamentally, the tax regime on oil and gas is decades old. “It has been adjusted many times, but we are looking for a much simpler and clearer system, so that operators taking the decision whether to develop a field know exactly what they will be dealing with.”

He suggested that tax relief for meeting target for specified rates of hydrocarbon recovery from certain aging fields that still contain abundant oil and gas would incentivise investment.

“Some reservoirs are depleted in terms of recovery methods that are being applied to them, but that is not to say that more could not be extracted by new technologies, including subsea, if the eco-nomics were right.

“We could get a much quicker response on recovery rates and potentially increase production in the UK.”

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Study could boost subsea separationProposals for a study related to subsea systems for separating the mixture of oil, gas and water in oil well fluids are being analysed by an organisation channelling research and development funding from major global oil and gas operators and services companies.

The Industry Technology Facilitator (ITF) represents these members to bring forward collaborative funding for research and development initiatives addressing shared technology challenges.

The subsea separation study will cover technical specifications and market potential for use in shallow water, mature hydrocarbon basins. Its results could spark technical developments, possibly including low cost, standardised systems.

“Uptake of subsea processing technologies has been relatively limited,” said Dr Patrick O’Brien, CEO of ITF. “This is despite the attractiveness of the perceived benefits, as viewed by oil and gas operators, and despite vendors’ investments in technology development.”

Subsea separation in particular has achieved limited implementations beyond a few pilot projects and a further small number of green field projects, he added.

“A study is needed to better understand technical needs of operators and compare them with available

and planned technologies. There is an appetite among our operator members to see it happen.”

The goal is to clarify common industry needs, define solutions and estimate demand for an attractive solu-tion. The study could lead to a further call for proposals in 2015.

ITF has launched more than 200 joint industry projects and is involved in the new Technology Leader-ship Board launched recently by the UK government-industry forum PILOT.

Dr Patrick O’Brien calls for a study to understand operators’ technical needs

It is critical that the autumn statement looks at the fiscal situation for UK oil and gas – it is long overdue


solutions and are so involved in the eco-nomics of any project with our custom-ers, we are getting more into a facilitating mode in terms of introducing investors, banks and other avenues of capital to them.”

Costain’s big-name reputation doubt-less helps in this regard. “We know availability of capital is out there in the marketplace,” notes executive vice presi-dent Keith Wallace, “but the smaller oil companies still have many difficulties getting access to it — for various rea-sons — which is why we now promote ourselves more as working in partnership with them.

“As part of Costain, the capital provid-ers know that we can ensure the focus of group-wide resources to transform customers’ upstream opportunities into commercially successful projects. They also know we can be as flexible as the asset demands, and deliver exactly what the customer wants when they want it.”

Costain Upstream provides integrated services across the life-cycle of upstream oil and gas assets — from design con-sultancy at the start of a project to brownfield improvements and eventual

decommissioning. This approach is reck-oned to be highly cost-effective and gives clients a smooth transition between pro-jects as well as a higher quality of project delivery.

Kirsty Gunn, the VP directly respon-sible for marketing, points out that the company’s reputational clout is further strengthened by its heritage. Costain Upstream combines the capabilities of oil and gas project management ser-vices company EPC Offshore, which was acquired by Costain in 2013, and oil and gas engineering support services com-pany Clerk Maxwell, which was acquired by Costain in 2011.

She explains that the business is struc-tured in two sections: asset development and asset improvement. “Under asset development we focus on full develop-ment, planning and project management; and under asset improvement, when assets are in operational phase, we get involved in brownfield modifications and upgrades and help to improve their integ-rity and performance.”

But in general terms, what can Cos-tain Upstream offer that can be seen as

superior to its competitors’ offerings? Peter Kirkbride says: “I think what dif-ferentiates us is that, coming from a project management background, we are very focused on project delivery. We like to make sure that all our engineering effort is very focused on delivery goals and is not just engineering for the sake of engineering.

“We feel that some of our competitors, being more purist as engineers, will just keep churning out the numbers until someone tells them to stop.

“Also, a key feature of that focus is the fact that we are independent and not allied to any particular technologies, providers, or to a vertical service stream. Costain Upstream does not have assets to service or sell so you can rest assured of painstaking scrutiny, honest analysis and expert counsel.”

All of that said, the original tenets of the company’s raison d’être as expressed by Keith Wallace at its inception less than a year ago, remain firmly in place. He said then: “Our focus is on building relation-ships with existing customers while grow-ing the business.

“We currently employ around 180 people and we are aiming to grow sig-nificantly, mainly organically, but we will bring other businesses into the fold through acquisition if the opportunity looks right. And although we are cur-rently UK-focused, we will also be look-ing for projects further afield.”

Costain Upstream has its sights set on growth domestically and internationally it is already doing “some work” for a firm that runs its West African operation out of Aberdeen. Tough times or not, there is still, it seems, a world of opportunity out there.

Industry Spotlight: Costain Upstream

Staying upbeat upstream

With the energy industry focused on trying to get moving again, Costain Upstream is looking at cost-effective solutions

New office means businessAs an expression of its faith in the future, Costain Upstream has just opened a London office, right in the City, near St Paul’s Cathedral.

“London is an exciting new chapter for Costain Upstream,” says SVP Gerry Miller. “We have a specific business strategy and detailed plans in place to develop and grow the London business.

“Many of our existing clients, both large and small, have a base there. Our presence there will allow us to invest further in those relationships while also giving us an essential platform to grow inter-nationally and bring the global business community closer together.

To that end, he adds, “we have aggressive plans for the future.”

The start of a new company, or even a division of a well-established one, calls for a certain degree of optimism, especially at the tail-end of a long-term worldwide recession. And when Costain Upstream

dived into the turning tide of recovery in February this year, its top brass had reasons to be cheerful — as its project management, engineering and support services found themselves in immediate demand.

So much so that by mid-year, with no fewer than ten UK projects generated from its Aberdeen headquarters, the fledgling was already confident enough to spread its wings by opening a London office (see panel, right) with prospects of raising new international business.

That seemed, at the time, a reasonable expectation to develop on a straight-forward upward trajectory based on the known talents of its team and the underpinning of access to the expanse of skills and expertise offered by the wider Costain Group, one of the UK’s leading providers of engineering solutions across a number of market sectors.

What they, and the wider oil and gas industry as a whole, did not expect was a slump in oil prices in the past three

months, thanks to a sharp slowdown in demand and signals from Saudi Arabia that it will not cut production to stabilise the market. So what does that mean at the front line?

“We are very aware of the challenges now facing our industry,” says Peter Kirk-bride, senior vice-president directing the company’s asset development business. “As well as the immediate collapsing oil price situation, which is very concerning, the cost base has risen incredibly over the last few years so that some companies are finding it difficult to make projects economic. Consequently, the focus of the industry now is trying to get projects moving again; and, generally, we’re look-ing at more cost effective solutions.”

Being nothing if not nimble on their feet, what this oil-price impact has meant for Costain Upstream’s executives is a rethink of strategy and approach to clients, which tend to be smaller oil com-panies relatively unequipped for project management and its related engineering.

Indeed, perhaps “client” might not be the correct word to use these days when talking about its business relation-ships. “Where we see ourselves now, and increasingly so in the future, is more as a business partner rather than a contract-ing entity,” says Gerry Miller, senior vice president in charge of business develop-ment and sales and marketing.

“Because we provide development

Costain’s newest division is quickly adapting to rapidly changing market conditions and is spreading its wings, writes James Cameron

Peter Kirkbride highlights engineering effort that is focused on delivery goals


Power of Scotland10

Cover Story

It has been two years since PwC’s Northern Lights report suggested Aberdeen needed to attract sig-nifi cant numbers of new recruits by 2022 or the shortage of skilled workers could threaten the city’s status as an international oil and gas centre of excellence. Today, recruitment remains one of the biggest challenges for the oil and

gas sector, as companies compete to plug the skills gap, while keeping pace with developments in practice and technology, and face up to the challenges posed by a change in workforce demographics in a mature North Sea industry.

OPITO, the skills organisation for the oil and gas industry, is at the forefront of developing policies, initiatives and pro-grammes to address these issues while recognising one key aspect of fi nding the necessary numbers of high quality recruits also involves investing in the next generation.

As the organisation prepares to host the fi rst ever National Oil and Gas Skills Week, the spotlight will fall on the huge success of the Upstream Oil & Gas Tech-nician Training Modern Apprenticeships (MA) Scheme. It’s the 15th anniversary of the creation of the MA scheme, which OPITO runs on behalf of the industry in partnership with the Engineering Construction Industry Training Board (ECITB). Operators and major contrac-tors are reaping the benefi ts of investing more than £120 million into the pro-

gramme over that period, and it’s now backed by more than 15 companies, mak-ing it one of the biggest industry-led MA programmes of its kind in the UK.

More than 1400 young people have entered the industry since the MA scheme was established, with the programme hit-ting one of the highest achievement rates at 93 per cent, compared to the national average of around 65 per cent. The MA scheme offers a range of technical dis-ciplines including process operations, electrical, instrument and control main-tenance, and it’s split into two phases, with the programme taking students through a 21-month full-time course at one of the industry-appointed colleges in Aberdeen, Forth Valley or Edinburgh, before then undertaking a two-year on-site work placement.

John McDonald, UK managing director of OPITO, explains how the organisation now receives thousands of applications each year from young people who are keen to secure a place on the MA scheme. The qualifi cations successful applicants go on to gain are recognised internationally so the apprentices have the skills required to work anywhere in the world, which makes them highly sought after by employers.

“The Upstream Oil & Gas Technician Training Modern Apprenticeship Scheme was set up in order to address the growing skills gap,” says McDonald. “From the early beginnings of the scheme 15 years ago, we now have around 400 going through the MA currently. The scheme is seen as gold standard, here and wherever we are work-ing across 39 countries. Wherever I travel with OPITO, people will say to me: ‘We want the same technician training scheme you have in the North Sea’.

“The reason the MA has been so successful is that the content has been designed by and for the industry, and it’s a passport to success both here and abroad. There is huge competition for places on the scheme, with around 3500 applicants for just 120 slots annually.

“Apprenticeships are not a second-

Recruitment remains one of the most signifi cant challenges for the energy sector but, as Ginny Clark discovers, it is focusing seriously on the future

class career, and we want to make sure we have the right people. It’s not just about great work skills, applicants are also tested concerning their personality and mental approach, such as how well they work with others. It’s not like other tra-ditional trades, for those going through the technician training scheme, the likelihood is they will be going offshore, living in diffi cult conditions, so we need to make sure trainees don’t just gain the right technical skills, but also the right social skills and have a good understand-ing of the constraints of working offshore. In return, they are offered the chance of job progression in a well-paid industry, with lots of benefi ts working for compa-nies in the North Sea and internationally.

“We administer the scheme on behalf of industry, so the young people are trained at colleges in Aberdeen, Forth Valley and Edinburgh, where they have state of the art physical resources, and staff with recent industry experience and expertise so the young people can really benefi t from being trained by them.

“One of the colleges has a scaled-down offshore platform model with equivalent controls that virtually creates an envi-ronment for processing hydrocarbons, and this exposes the young people to

some of the offshore experience, allowing them to be trained in a realistic working environment.

“After college they will have gained an HNC, a vocational qualifi cation within the apprenticeship, but there is also a competency aspect of the job, and they can’t be competent until working in an offshore environment, where it’s still con-trolled but they are on a rig and there are 20 things going around them and people know you are a safe colleague to work with. It is this depth of training which makes it such a fantastic scheme.”

One young man who clearly agrees is Owen Buchan, who now works for Apache North Sea, while also studying to complete a degree in Electrical Engineering at the Robert Gordon University in Aberdeen.

Buchan was so keen to work in the offshore oil and gas industry, he relo-cated from Middlesbrough to the north-east of Scotland to enrol in an electrical engineering course, and he was just was just 16 when he was accepted onto the OPITO MA scheme. After 21 months of training, and two years working in the North Sea, Buchan was ready to embark on the career he’d been planning since his schooldays.

“I always knew I wanted to work in the

Skills set to freshen face of an industry

John McDonald, UK managing director of OPITO

OPITO’s MA scheme has seen more than 1400 young people enter the industry since it was established

Showcase event has clear goalsOPITO’s upcoming National Oil and Gas Skills Week will be rolled out across the UK from November 11-14, with events focused on promoting industry opportunities and highlighting advances in technology together with future prospects.

The aim is to showcase oil and gas as an attractive long-term career choice through seminars and activities held in collaboration with universities, industry employ-ers, science centres and other industry bodies.

The success and 15th anniversary of the Upstream Oil & Gas Technician Training Modern Apprenticeships will be celebrated during this special week that off ers a chance to challenge perceptions and show the wide range of skills required for diff erent roles onshore and

off shore. There are a number of specific goals for the National Oil and Gas Skills Week, including the attraction and retention of women, and the encouragement and inspiration of young people.

The skills week also helps to educate teachers and graduates, by demonstrating how dynamic and diverse the industry is, and there will also be a series of targeted recruitment events to bring employers closer to the people they are looking for.

This month will also see the launch of the first ever industry skills portal – a one-stop shop focused on the oil and gas industry.

Find out more at nationaloilandgasskillsweek.com


[email protected]

@skillsweek /skillsweek/skillsweek

Get involved.National Oil & Gas Skills Week is set to explore the skills and career pathways within the oil & gas industry, across the UK. Targeting a variety of audiences, this event is dedicated to showcasing opportunities and highlighting all this innovative industry has to offer.

Get involved. Showcase your facilities on the industry’s first ever ‘Doors Open Day’, host an event for local schools, engage with the military, become a sponsor… the opportunities are endless.

Proudly Sponsored by

Email:

Web:

OPITO_NSW_ADVERT.indd 6 13/08/2014 09:18

oil and gas industry,” he said. “However, I wanted to fi nd a practical way to train for a job as I knew going to university straight after school wasn’t for me. I had to fi nd another way to get a job offshore.

“Working in oil and gas is even better than I thought it would be. I like being able to come home at the end of a two weeks shift and knowing I’ve achieved a lot in the time I’ve been away.

“I wouldn’t be where I would be where I am now without OPITO. I now work in an industry where I know what I’m doing and have had the right training to be able to stand on my own two feet. An appren-ticeship gives you a foot in the door in a competitive industry and helps you meet the right people. I can’t think of any bet-ter way to get ahead.”

This type of story is not unusual, and McDonald stresses that the value of this MA scheme is not only that it helps maintain a steady stream of high quality recruits for the industry, but that it is yet another effective strand in a multi-level approach to meeting the personnel needs of such a dynamic sector.

“During Skills Week we want to cel-ebrate the success of the MA scheme and on November 13, there will be a special celebration lunch, where OPITO and the ECITB will bring together around 200 of our apprentices, and among the speak-ers will be the fi rst young woman to go through the MA scheme.

“As an industry generally, we’re very keen to encourage more young women to explore the career opportunities on offer, adult returners are a focus for recruit-ment too, and throughout Skills Week we

I’m in an industry where I know what I’m doing and have the training to stand on my own two feet

have activities linked to the charity Help For Heroes, with another major aspect of recruitment from former armed forces personnel. During the week we’ll not only be honouring our young apprentice of the year, but there will also be other awards, including best military transi-tioner, and the top employer.

“It’s important to note that while the apprenticeship is geared to oil and gas it also gives young participants train-ing, not just in leadership, but also in team work. We can’t all be leaders, and sometimes there are changing demands upon the workforce, and the many jobs they do. Within the number of strands of the supply pool, we need people at dif-ferent levels within different schemes, such as graduates and apprentices. This only applies to one part of the industry, in terms of engineers and technicians, but there are so many other areas too, such as accounting or catering.

“As a skills body we’re working with the industry, and with schools, to come up with some other ideas about attract-ing young people to oil and gas, such as encouraging more girls to follow through on STEM subjects, and providing targeted work experience for both boys and girls.

“Most young people have an image of the oil and gas, and it’s all about offshore working. Yet there is a great breadth within this industry, and what it can offer to young people. Is it going to last? The nature of the industry is cyclical, and sometimes we need more or fewer people in specifi c areas, but there will continue to be places available going forward and the MA scheme is central to that.”


Power of Scotland12

Feature

The next generation is vital to driving on the success of a maturing oil and gas industry, and many compa-nies are increasingly responding to the need for high-qual-ity recruits with a range of approaches,

including apprenticeships. A leading provider of services to the industry, Petrofac runs a number of future talent programmes, with a particular focus on Modern Apprenticeships (MAs), deliv-ered in partnership with industry bod-ies Oil & Gas UK and OCA, as well as OPITO, the skills organisation for the oil and gas industry, and the Engineering Construction Industry Training Board (ECITB).

Forward-thinking organisations are collaborating to make sure that the next wave to work in the sector are professional and proficient, writes Ginny Clark

“The skills issue has never gone away,” says Paul Matthews, Human Resources director at Petrofac Offshore Projects and Operations, who has more than 20 years experience in the industry. “There is an ageing workforce both onshore and offshore, and it’s essential for us to recruit new ‘Future Talent’.

“Now, there is a genuine commit-ment across the industry to address this issue, and we’re working in a collabora-tive manner with Oil & Gas UK and the Offshore Contractors’ Association, along with ECITB and OPITO, to do so.

“One of several areas Petrofac is focus-ing on is apprenticeships, and in Sep-tember, we took on another ten young people, covering mechanical, electrical and instrument and control disciplines. The first challenge for them is 21 months at college, while our challenge is to get

the apprentices into offshore positions for the next two years, as it is critical to get them the practical experience they need, so we can be confident they are fully competent technicians.

“We’ve also taken the lead in helping to develop the ECITB Modern Appren-ticeship in Design and Draughting, and we currently have 15 people going through our onshore trainee designer programme. Once again, at the end of the four years, they don’t just receive a genuine qualification, but they also have a job, so these are tangible opportunities for young people.

“We’ve launched an Armed Forces transition programme to help grow the talent pool, and we had an overwhelming response. We were looking for instrument technician trainees, and former military employees often have very transferable

More than qualified answer to the generation challenge

Petrofac aims to get its apprentices critical offshore experience to

ensure their competence


skills —– with these particular trainees having previously maintained things like Tornado jets — but the biggest shift is the cultural mindset concerning working off-shore. Their work ethic is very impressive, however, and having now placed eight people we’re looking at taking another eight at the start of next year. We also have a biannual programme with Clyde Marine, taking on ex-marine cadets.

“We also have a flourishing graduate development programme, with 93 peo-ple at various stages of working towards professional qualifications, making a total approaching 150 across all our future tal-ent initiatives. And these aren’t all engi-neers — often the focus is on engineering in discussions about skills shortages, but we’re well aware we need support in other functions as well.

“It’s important not to restrict your-self to any particular group when you are looking to develop new talent. The industry can sometimes be rather insular: on the one hand recognising that new entrants to the industry can have a lot to offer, but then reverting to that age-old expectation that everyone should have five years’ offshore experience. So one of the biggest challenges is always to pro-vide that experience for people coming in. However, unless we get fresh talent in then the resource challenge will be exac-erbated, and I think most people within the industry are now recognising that. Hopefully, we will see this reflected into increasing commitment, and expanding programmes such as MAs. It’s the right thing to do morally, but it also makes total business sense. The only fear is cost

pressure, as one of the first areas affected by cutting back can often be training.

“The frustration is that when activ-ity levels are high, the platforms are crammed with minimal bed space, and when activity levels drop there can be perceived cost disincentives to send-ing trainees offshore. However, it would be very short termist of the industry to cut back on training, and I believe most forward-thinking companies realise that now, and appreciate that apprentices are a vital part of the future talent spectrum.”

Rory Gregor, 23, demonstrates the kind of symmetry Matthews refers to,

Discover the difference

[email protected] www.petrofac.com/europe

Petrofac is a safety-focused, flexible and customer-orientated oilfield services business.

We always look for ways to meet our customers’ needs – by aligning our performance with their goals.

To do this we draw on the breadth of our capabilities across the asset life cycle but adapt our approach to delivery.

It’s not just what we do, it’s what we can do that makes us different.

Discover what Petrofac can do for you.

ScotGrad gets to the right places

ScotGrad is an award winning Scotland-wide programme aimed at stimulating business growth and increasing graduate employment. It supports the unlock-ing and acceleration of growth projects

by adding graduate talent, enabling projects to happen faster, bigger and better; and enhances graduate employability prospects by providing recent graduates with paid, project-based busi-ness experience.

The Winner of the Association of Graduate Recruiters “Work Experience Programme” Award 2014, ScotGrad has placed 830 gradu-ates in over 650, mostly Small to Medium sized Enterprises across Scotland since 2010.

ScotGrad facilitate 3-12 month long place-ments in key sectors, including energy, with placements in areas such as oil and gas and low

carbon renewables. To date, a total of 49 com-panies operating in this sector have worked with ScotGrad, with 55 placements between them. The programme has worked with companies including Outreach Ltd, Coretrax Technology Ltd, and Torishima Service Solutions (Europe).

ScotGrad also run a Summer Placement Programme, which allows companies based in the Highlands & Islands of Scotland to take on a talented student for a valuable 8 -12 week project during June to September. Highland Wood Energy Ltd, an independent company providing biomass heating services, took on two students through ScotGrad this summer, both working as design Engineers in their head office in Fort William.

With Energy placements taking place across Scotland, from Moray, Orkney and Inverness to

Glasgow, Edinburgh and Forth Valley, ScotGrad is able to provide a valuable service to a dynamic, high-growth sector.

“As a graduate, Grant brought up to date technical knowledge into the company and is instrumental in finding innovative solutions. Not only is the fresh approach beneficial, but his enthusiasm has a positive impact in other areas of the business.” – Campbell MacLennan, AES Solar Ltd.

To find out more about taking on a graduate through the programme, visit www.scotgrad.co.uk.ScotGrad is a multi-partner programme, operation-ally delivered by Scottish Enterprise, Highlands and Islands Enterprise, Association of Graduate Careers Advisory Services and supported by Scottish Govern-ment, Skills Development Scotland, Scottish Funding Council and European Regional Development Fund.

about providing real opportunities for young people that also make business sense. Gregor started out at Petrofac through the MA programme in 2008, and six years on he’s now senior struc-tural designer, having completed both a part-time HNC in Mechanical Engineer-ing and SVQ Level Three in Design and Draughting alongside his ‘day job’.

As part of Petrofac’s onshore-based team in Aberdeen, he has worked on behalf of major North Sea oil and gas operators, and has got to grips with multi-million pound operations and subsea tie-back projects, for which he

has produced fabrication and offshore installation drawings relating to modifi-cations for these assets. For Gregor, the MA was the right route to take to achieve the career he wanted. “I was accepted for university, but the idea of on-the-job working appealed more to me,” he says.

“It has meant that I have been offshore many times, and I’m able to use this practical experience, combined with the design expertise I have developed during the last six years, to help extend the life of assets. I have received structured on and off-the-job training, as well as being assigned a mentor, which has been great.”


Power of Scotland14

Aker opens doors for ambitious apprentice

IN a competitive jobs market many young people look to practical training and hands-on skills that modern apprentice-

ships offer to give them an advantage in the workforce.

David Wright 22 (pictured) is in his fourth and final year of his subsea electronic technician apprentice-ship with Aker Solutions and has recently started studying for a degree in electrical and electronic engineer-ing. Throughout his school career he knew he wanted to work in the oil and gas industry, but admits finding the right path seemed difficult, until he discovered the apprenticeship programme.

David said: “I always knew I wanted to be an engineer in oil and gas, but found it difficult to find a university course that incorporated practical training elements. No one at school had spoken to me about doing an apprenticeship, they just seemed to expect me to go to uni-versity. I looked into it myself and realised this was definitely the right path for me to go along to begin my journey into oil and gas.”

Throughout his apprenticeship

David has worked to receive several qualifications, including an SVQ Level 2 and NC in electronics and HNC in electronic engineering. He said: “Physically building and testing projects gave me a far better understanding of what I was learning about, rather than if I had just been reading from a book. While I was studying for my HNC in electronic engineering I was also working in the Aker Solutions’ Subsea workshop. I think I have had the best of both worlds by being successful academi-cally and building on my practical engineering skills every day.”

Many engineering apprentices go on to further study at university and work toward a degree in their chosen subject. David attends classes at Rob-ert Gordon University in Aberdeen, where he is studying for a degree in electrical and electronic engineering. He said: “I’m interested in a career in field service, which would allow me to travel and experience lots of different environments and work challenges on or offshore. By getting my degree I know even more doors will open up for me and lead to exciting lifelong career prospects.”

Last year Gregor clinched Skills Devel-opment Scotland’s Apprentice Champion of the Year award, an acknowledgement of him having achieved his qualifications successfully and ahead of time along with championing apprenticeships through-out Petrofac and the industry. He’s now concentrating on being a mentor himself, and is the Future Talent Representative for Petrofac’s trainees.

“Now I have completed my appren-ticeship, I want to be a positive example to others,” adds Gregor. “I hold regular coaching meetings with the trainees and so I see helping others to develop as a perk of the job. My next goal is to become Principal Structural Designer then in the future hopefully to continue to work my way up through the company while help-ing to develop and retain the talent we have at Petrofac, and my apprenticeship has set me up well to achieve this.”

For Jack Douglas, Head of Design at Petrofac, and the man who played an essential role in developing the cur-riculum for the trainee programme, the ECITB Modern Apprenticeship in Design and Draughting, Gregor’s story is a huge validation for this kind of training programme.

“We were asked by the ECITB to look at how we could address the skill short-age with regards to designers, and I was more than happy to join the working group,” he says.

“With a blank page, we had a great opportunity to shape the Engineer-ing Design and Draughting Modern Apprenticeship.

“One of the areas we’ve really made a difference was in defining the content of ‘awareness courses’ — for example, weld-ing awareness — so that trainees now complete their apprenticeship having gained not just the technical design skills but also an appreciation of the broader context within which their role sits. This combination of exposure and experience is essential to becoming a successful designer.

“A lot of our existing design workforce had come through shipbuilding appren-ticeships many years ago, and the kind

of experiences they had then, we wanted our apprentices to experience now, essentially, learning on the job. It goes back to other industries too where people learned their trade, and we’re not looking to change that but to build on it, with a more structured approach.”

However, since developing this MA, the ECITB working group have not sat on their laurels, as Douglas explains.

“We continually review the pro-gramme, using feedback from those attending and also via the companies,” he says. “It’s been going six years now, and it’s been a process of making sure we get those experiences right.

“Previously, every company had some kind of scheme, and perhaps we’ve taken the best bits from each of them to make sure we went down the right route, so we know have the backing for a substantial programme that we feel addresses the need for a diploma for a work-based qualification.

“We take young people on straight from school, in which case it’s a four-year programme where they also gain an HNC, or they come with an HNC in a related subject and complete a three year programme. At Petrofac, 24 have joined this MA scheme over the past six years, and we’ve had nine young people com-plete the programme with 15 still work-ing through it. Of those nine, one [Rory] has already been promoted into a Senior Designer position.”

Douglas believes this training pro-gramme demonstrates the way forward for many areas within the industry, and is passionate about the potential, not just for the companies involved, but for our young people.

“I look at what we’ve done as a huge success,” he says. “If you looked at the design workforce six years ago, it was very much an older age group. Now we can see we have a lot of younger faces, and these young people have already made a significant contribution, and will be the backbone for Petrofac for years ahead.

“It just shows what a success it can be to address a specific gap, which will be different across the whole industry. We are now working with schools and the ECITB, getting the message out that university is not the only way into this industry — you can progress from school or college and have an equally successful career. One of our apprentices has gone on to do a degree on the engineering side, but the point is you don’t have to.”

Youth are key to the futureDeck machinery specialist ACE Winches is the first organisation to achieve the Investors in Young People (IIYP) accreditation, the only people management standard that focuses on an employer’s recruit-ment and retention of young people, launched over the summer in partner-ship with the Scottish government.

The company, with offices in Aber-deen and Norway, employs more than 373 staff including 58 apprentices, 16 trainees and 15 graduates, and the ACE Winch Academy provides train-ing for all aspects of winch and spe-cialist lifting operations.

“ACE Winches is committed to engaging and developing young people through schools, work experience, apprenticeships, trainee and graduate schemes,” said Alfie Cheyne, ACE Winches CEO, right. “We are delighted to be the first organisation to achieve Investors in Young People accreditation glob-ally. It will allow us to gain feedback against our business priorities of sustained global growth, profit-ability and innovation and also aid in securing the long-term future of our workforce and their families.

“Investing in young jobseekers has never been more important as the Wood Commission highlights that fewer that one third of employ-ers offer work experience. We look forward to working with IIYP to continue bringing in a fresh talent pool and diversity in our business. For ACE, this is an opportunity not only for those early in their career but for the organisation as a whole.

For Rory Gregor, the Petrofac MA route was the best one to achieve his career objectives

Jack Douglas says feedback

is used to continually review the

programme


Industry Spotlight: MDT International

Drew Leitch is a man on a two-sided mission. As a well-travelled one-time trainer himself, he is tightly focused — on one side of his brain at least — on empowering, through imparted know-how,

the indigenous people he sees as the rightful owners of any country’s mineral resources.

It’s a matter that often comes into particularly sharp perspective when his Aberdeen-headquartered training com-pany, MDT International, is called upon to train potential industry specialists whose land or sea has just yielded new oil and/or gas possibilities.

Having been active in over 70 coun-tries since its beginnings in 1992, MDT — which stands for management, devel-opment and training — is acutely aware of cultural issues wherever any of its team of trainers might land, and as a conse-quence managing director Leitch stands well back from political sensitivities.

That said, the Aberdeen-born 51-year-old father of two holds a strong convic-tion that local oil industry people should be armed with adequate knowledge to assert themselves professionally. “It’s about giving them confidence,” he says. Is it a personal philosophy?

“It’s personal in that I can ensure that our organisation lives and breathes that philosophy, because there is no doubt to me that the hydrocarbon wealth of

a country belongs to its people. Ideally, governments should carefully manage and harness the power of oil and gas resources for the benefit of current and future generations.

“But that’s not always the case. And while it’s not for us to get involved, it seems only fair that we share our knowl-edge with the people — those attending our courses anyway — so they can build confidence in their grasp of the business and equipped with that they have greater willingness to challenge. And you can extrapolate from that a new readiness to hold those responsible to account.

“To give overseas communities the best chance of gaining employment and benefiting from their countries’ new-found wealth they must have information and knowledge. Without knowledge it becomes difficult to exploit the benefits, and so know-how becomes as valuable as dollars.”

But lest he be seen purely as a knight on a white horse riding to the people’s aid through the black-gold waves, the man who became MDT’s boss in 2006 and bought it in 2011 is at pains to point out that, despite such laudable altruism, the other side of his brain remains in full busi-nesslike mode. “I’m not trying to be Bob Geldof,” he stresses. “I’m a businessman running a business and the commercial considerations of that are as important to me as any other businessman.”

That business is very much in demand these days, particularly in East Africa, where Uganda, Kenya, Mozambique and

Tanzania are showing promising oil and gas growth; indeed, last year a Deloitte report said more hydrocarbon reserves had been discovered in East Africa than in any other part of the world in the last two years. In addition to the national oil companies, key international companies active in the region include BG, Tullow, Statoil, Ophir, ENI, and Anadarko.

There are also good guys in that frater-nity, it seems. “It’s heartening to encoun-ter an international oil company that truly understands and is dedicated to its role in national development,” says Mr Leitch, speaking from his relatively mod-est granite-walled office in the heart of Scotland’s oil capital.

There, “when everyone is around”, about ten staffers deal with the manage-ment and administration of what is a seri-ously global enterprise. Contrary to many people’s expectations, the company has no international network of offices; but its far-reaching tentacles are represented by similar number of trainers on the go at any one time, who must surely be the personification of peripatetic.

“Oh, incredibly so,” says Mr Leitch. “They’re so well-travelled, anyone on earth would want to have their air miles accounts! And all of them have the human factor. As seasoned travellers, they understand that, no matter where they visit around the world, people are

more alike than they are different.”So how do they connect? “In Tanza-

nia this year we advertised our ‘open’ or ‘public’ courses — and the responding firms sent their people along to us. Our courses are quite short, from two to five days, but very concentrated — we use industry knowledge and realistic industry examples and can equip nationals with the intellectual know-how and skills to build a strong, local workforce.

“It’s all face-to-face, delivered in class-room style in a client’s office or a hotel with meeting room facilities. The face-to-face factor is quite big with us. Our train-ers have some 20 to 30 years’ industry experience and can read the signals in the room. We connect with our audience so they engage with us for a genuine and worthwhile experience.”

Completion certificates are issued at the end, which are accredited by the UK-based CPD (continuing professional development) Certification Service.

Mr Leitch clearly recalls his own train-ership with some affection. “My career was unlocked when I became willing to share my knowledge and realised that watching people grow and progress gives me great satisfaction. With MDT today I find the work similarly rewarding, par-ticularly in an environment where people are hungry to learn.

“A recent trade mission saw me visit-ing my 16th African country. There is a buzz and a beat there, and in a training room environment a palpable desire to learn; never a stony silence when you ask for questions. This is where an audience gets the best from our trainers. Questions lead to more questions and debate. Such a highly-charged learning atmosphere is often created in Africa — and it’s not only valuable but fun.”

While working for the involvement of qualified national professionals in the long-term complex of oil and gas projects in East Africa, he accepts that interna-tional experts will always be required too. “The monetary implication of expatri-ates in foreign oil and gas provinces is not one to be taken lightly and there is a compelling financial argument to reduce dependency on this. But it is about strik-ing a balance.

“In this industry you need to be able to adapt to different cultures to build your knowledge and experience. I believe it will always have expats but they will not necessarily be British or American expats working for American companies. It will become about people from all nationali-ties being tested and delivering in a vari-ety of cultures and oil and gas provinces.”

Drew Leitch graduated with a degree in business studies from Aberdeen’s Rob-ert Gordon Institute in 1984. After stints as an accountant with Atlantic Power and Gas he joined Hess and began an inter-national odyssey, from Gabon through Denmark and Norway to Brazil, where he became country manager in Rio before realising his passion for mentoring people. After a coaching course, he joined MDT International in 2004 — and the rest, as they say, is history.

“At MDT International we see that we can genuinely play a part in helping the frontier areas in oil and gas to shift the power balance in their favour,” he concludes. “We must think of the world’s reserves as one collective resource, work-ing together in new provinces to prolong its legacy of success.”

Personal rewards out of Africa

Local people can be trained to exploit and enjoy their own mineral wealth, the managing director of MDT International, Drew Leitch, explains to Rick Wilson

Tanzanian delegates at MDT’s ‘open’ courses have short but concentrated face-to-face sessions

Drew Leitch emphasises that ‘know-

how is as important as dollars’


Power of Scotland16

Feature

Lately much has been written about the poten-tial future for Scotland’s oil and gas industry, with wildly differing arithme-tic, some extraordinary myths and, often, politi-cal muddying of the waters.

It pays, therefore, first to look at the story so far. The equiva-lent of more than 40 billion barrels of oil (Bboe) have been delivered from the UK’s Continental Shelf (UKCS) over the past four decades, often in incredibly chal-lenging conditions. Based on Department of Energy and Climate Change (DECC) figures, in the North Sea and west of Shetland and on the UKCS, future recoverable oil reserves are estimated to amount to between 14 and 24 billion barrels.

It should also be noted that techni-cal advances in the way oil and gas can be extracted now offer the potential to greatly extend the life of North Sea fields well into the 2040s, with the added pos-sibility of reaching ever deeper and more remote reserves.

Meanwhile, the oil and gas sector is already the largest industrial investor across the UK, with investment in new projects reaching to more than £11 billion in 2012 alone. It is currently responsible for the employment of around 200,000 people in Scotland — but there is always room for more. A report by account-ants PricewaterhouseCoopers (PwC) has highlighted that, to fulfil its potential and maximise operations, the oil and gas sec-tor must first attract 120,000 new recruits by the year 2022.

Whether another major oil boom lies ahead or it’s simply going to be (big) busi-ness as usual, what’s beyond question is there is a bona fide bonanza for compa-nies who want to become involved in this vibrant sector — and the opportunities for firms are not limited to the traditional business epicentres. Aberdeen may well wear the crown of the UK’s energy hub, but there are positive signs that a much wider skills base can be harnessed far beyond the Granite City.

Indeed, many large operators are look-ing to the Highlands and Islands to meet what is being perceived as overcapacity in Aberdeen. Representatives from major organisations, including Chevron, Dana Petroleum, Talisman Sinopec, Wood Group PSN, Petrofac, Amec and Aker have held already meetings with compa-nies located in the north.

Such emphasis on a widening of the skills base and the need to attract even more businesses into the sector is at the forefront of minds in the Oil and Gas Task Force, whose mission is to explore ways to spread the benefits of Scotland’s energy industry beyond its more tradi-tional heartland.

The group, in whose formation the

trade body Energy North played a key role, comprises industry leaders and rep-resentatives from Highlands and Islands Enterprise (HIE), Scottish Development International, Scottish Enterprise and Skills Development Scotland.

Its key aims are to promote the High-lands and Islands as a recognised centre for oil and gas. This involves development of the region’s infrastructure — including its harbours and airports — as well as growing the local skilled workforce and expanding the supply chain.

Ken Grant, head of oil and gas at HIE, says: “The oil and gas sector has been undergoing a major transition in the past 18 months. Wells are more difficult to reach, costs continue to rise and it is more difficult to maximise profits.

“To address this, government has closely engaged with industry leaders. There have been various reports, experts have been commissioned, and to help implement the necessary changes, a major regulatory body, the Oil and gas Authority, is being set up in Aberdeen.

“All of these developments, however,

give us the chance to cooperate more effectively on every level. This is a sec-tor that is greatly important to the nation and so we must learn how we can bring businesses to do more in this area.”

While this transition period has seen greater co-operation, Scotland’s oil and gas industry has also been attracting new investments in projects.

RMEC, an oil and gas services firm that is based on the outskirts of Forfar, Angus, won investment from one of the private equity businesses eyeing the sec-tor for deals amid booming activity in the North Sea.

Meanwhile. Ben van Beurden, chief executive of Royal Dutch Shell, has said the company will invest billions of dollars in the North Sea in coming years.

Such announcements show inves-tor confidence is returning, with capi-tal investment growing. HIE has been instrumental in this area.

“HIE has been going for more than 40 years,” says Grant, “and we already have a strong legacy in this sector.”

However, the new task force, he says, brings fresh impetus and concentrates on three primary areas.

“Our first is ensuring an effective supply chain. The second looks at infra-structure, taking in unique facilities such as the region’s vital ports and harbours –

and, of course, its people. The third focus concentrates on nurturing and harness-ing skills.”

This ability to grow skills is no doubt also boosted by the presence of no fewer than six Scottish universities in the area, including University of the Highlands and Islands (UHI), actually a network of 14 colleges and research institutions, with 50 outreach learning centres, all providing local access to more than 7500 students.

Special mention must also be made of the Nigg Skills Academy, which has been established at the Nigg Energy Park to deliver training for thousands of key workers in the oil, gas and renewables sectors.

“The academy, which is industry-led, has been incredibly successful in meet-ing the urgent needs of the sector to get people qualified to the highest level,” says Grant.

He also points to the successful estab-lishment of the Oil and Gas Innovation Centre, based in Aberdeen. Funded by the Scottish Funding Council and sup-

Skills net cast wider to ensure energy bonanzaThere are huge emerging opportunities for firms involved in the vibrant oil and gas sector – especially for those who lie beyond its traditional Aberdeen base, says Dominic Ryan

Hydrasun shows confidence in a new Highland home

Hydrasun’s manufacturing plant in Aviemore highlights the ability of companies in the Highlands and Islands to meet industry demands

Ken Grant points to a major transition in the past 18 months

Established in 1976 to service the oil and gas industry, Aberdeen-based Hydrasun is now one of the world’s leading specialist provid-ers of integrated fluid transfer, power and control solutions to the energy, petrochemical, marine and utilities industries.

The business expanded follow-ing a management buy-in in 2002. Today, its turnover has grown from £20 million to £120 million, with a future forecast of £200 million before the end of this decade.

The business has transformed itself from a supplier of flexible hoses and instrumentation to the oil and gas industry into a full service provider offering asset inspection and preventative maintenance to clients based around the world.

“At the time of our management

buy-in we recognised the strong requirement from our custom-ers for risk mitigation to reduce unplanned downtime, and we saw the best way to achieve this was through developing a full service offering,” says company chief operating officer Bob McAlpine.

“We now have more than 650 staff across the globe, and through this network of operational bases and partnerships we are able to ensure the availability, quality and consistency of our products and services that our customers require,” McAlpine says.

Hydrasun’s Aberdeen HQ, com-pleted in 2011, incorporates state-of-the-art engineering, production, manufacturing, training and warehousing facilities. This capa-bility has now been significantly augmented by the expansion of


Skills net cast wider to ensure energy bonanza

ported by Scottish Enterprise and HIE, this brings together more than 2300 oil and gas operators and service companies with 12 Scottish universities with more than 450 academic staff and researchers working primarily on oil and gas specific technologies.

Grant says: “With significant govern-ment investment, this facility links the real needs of the industry with relevant businesses and institutions all across Scotland.”

While the skill base grows and busi-nesses turn their attention to investment and engagement, it’s vital to have the necessary infrastructure in place.

Thankfully, the Highlands and Islands region boasts huge potential for oil and gas developments based around its ports, development land, and the supply chain. Sites at Nigg, Invergordon, Arnish, Evan-ton, Scrabster and Lerwick are all play-ing an active role in the industry, and there are many more ports in the region with the potential to support the sector, including Ardersier and Kishorn where some of the largest North Sea structures have been fabricated.

The Highlands and Islands have played a key role in the development of the Scottish oil and gas sector, from the initial boom 40 years ago (with sites such as Ardersier, Arnish, Nigg and Kishorn manufacturing major offshore compo-nents), to today with an internationally renowned supply chain and the continu-ing revival of quay side facilities.

A proposed £37 million development, meanwhile, has seen the Global Energy Group place a formal planning application with the Highland Council and Marine Scotland for permission to develop the South Quay at Nigg Energy Park.

When complete, the development could significantly increase opportuni-ties, offering more than 1000 metres of available quayside for customers in the offshore oil and gas sector, providing essential deep-water access, as well as supporting the demand for large laydown areas and fabrication facilities for the renewables industry.

Such confidence in Scotland also comes from fresh ways of thinking and doing things as a driving force for the sec-tor. Ken Grant points out: “Innovation is

huge factor for the future success of the industry. We are constantly exploring for oil and gas in new areas, deeper waters, higher pressures and extreme tem-peratures, much trickier conditions: this calls for new metals and alloys that can withstand more extreme conditions, new designs and deployment methods. Even innovation in healthcare and chemicals is required. There are, no doubt, appli-cations that could be brought to the oil and gas sector from all areas and other industrial sectors.”

He points to the pioneering work being carried out by many Scottish companies: “Take Scottish welding expertise, for example. On the face of it, that might sound less than exciting but it is hugely important to the industry. Similarly, with electronics, currently working to the highest standards.”

He adds: “We constantly ask: ‘What more can we do?’ It’s about all the ele-ments coming together, not just locally: the Global Scot network means we have far reaching capabilities for bringing busi-nesses together.”

“There is a lot of work going on with Energy North and their Aberdeen mem-bers. There are learning journeys, compa-nies coming along to regional showcase events; whereby companies come up and see at first hand what’s on offer.

“We also offer intensive support to businesses, providing expert help, men-toring, by accessing people who know the industry, all helping our businesses meet the highest standards necessary.”

As an economic development agency, HIE is aiming to help capture as much of this activity as possible for the High-lands and Islands, through developing and strengthening local supply chains, encouraging inward investment and pro-moting international trade.

Grant says: “I’ve been out recently with an SDI colleague from Houston, visiting companies that have strong American interests. But we can do even better by introducing more and new companies to the international opportunities that exist in this sector.

“There are huge opportunities but also huge challenges and I am realistic about managing expectations. It’s about having a cohesive and coherent approach.”

Hydrasun shows confidence in a new Highland home Hydrasun’s Manufacturing Division in Aviemore. In April the firm announced it would invest more than £3 million in upgrading its existing 1400m2 facility in the Highland town, supported by a £500,000 development grant from Highlands and Islands Enterprise and a training package created in conjunc-tion with Skills Development Scotland.

“For Hydrasun, we had a straight-forward choice – to invest in Brasil or Aviemore,” Bob says. “What tipped the decision in Aviemore’s favour was the moral and financial support we received from Highlands and Island Enterprise,” Bob says.

“HIE’s oil and gas team gave us the confidence that they would be

there to support our future needs as well as our current requirements. Contrary to some perceptions, Aviemore is not a remote location; the key constraints we face are the lack of a supply chain cluster, and not enough skilled staff.”

This skills challenge is being met by Skills Development Scotland, which has worked with Hydrasun to develop a short-term training plan to help bridge the skills gap. Through this programme Skills Development Scot-land will support school leavers from Kingussie High School through their first year at Inverness College before they join Hydrasun as apprentices in their second year.

Already, the investment has allowed improvements to the existing building and the purchase of special-ist manufacturing equipment, with the creation of 20 skilled new jobs.

Bob McAlpine says investment choice was between Aviemore and Brazil – and Aviemore won

Fast facts�� HIE works with energy sector busi-nesses that employ 15,347 throughout the Highlands and Islands, though the real number of energy sector jobs is much higher.�� In 2012, investment in new projects rose to over £11 billion.�� Although decommissioning will not be extensively active in the UKCS in the coming 5-10 years, it will become increasingly prevalent. It is forecast that decommissioning North Sea oil and gas facilities will cost between £30 billion and £35 billion in the period to 2040.�� Over £52 billion of capital is forecast to be invested in the UKCS from 2013 to 2017. New discoveries over the past decade are typically of 30 million Bboe or smaller, and tax changes will

allow more of this type of project to be developed, which will be crucial for the longevity of the UKCS.�� At the end of October last year, the UK government responded to its heavily oversubscribed 27th Offshore Licensing Round, for which it received a record 224 applications for licenses on 418 UKCS blocks, by awarding 167 production licenses to dozens of companies, with most offers being made within the central North Sea.�� More than £140 million of public and private sector investment in Highlands and Islands ports and harbours since 2010 to support the energy sector.�� In Scotland as a whole the industry provides employment for around 200,000 people.

RAY SMITH

RAY SMITH


Power of Scotland18

Knowing what’s ahead offshore is vital for safety and operational efficiency

Contact our Aberdeen-based expert forecasters and marine scientists01224 629831 | [email protected] | www.metoffice.gov.uk/marine

14/0672

Foresight

BUSINESS FOCUS

The oil and gas industry is of signifi cant national importance. It is UK’s larg-est corporate tax payer; and has invested well over £300 billion the UK Continen-

tal Shelf (UKCS) reaching a record £14.4 billion last year. No other industrial sector in the UK matches that – we have been the one of the largest industrial investor in the UK for four decades.

It’s important to note that the success of our industry supports more that oil and gas operators in the North Sea. Our sector also boasts a supply chain worth £35 bil-lion supply chain, according to research from EY, and the UK is now a globally recognised centre of engineering and manufacturing excellence and exports its products throughout the world.

Just last month, Oil & Gas UK released its Economic Report 2014, the defi nitive guide to the current status and future prospects of the offshore oil and gas sector in the UK. This report provided commen-tary on an industry fi nding it increasingly diffi cult to compete for fresh investment in a global market.

What’s our recommendation to turn this around? How can we give our industry, and the people it employs, a real chance for prosperity in the future and to maximise the recovery of our indigenous resources? We believe that radical fi scal and regulatory reforms are urgently needed. On top of this, our industry must also act immediately to address its unsustainably high, and rising, costs and increase overall effi ciency. All three of

these elements are of equal importance – and we believe that it is crucial to the future of the industry that all three are delivered effectively and as soon as possible.

To drill into this further, full imple-mentation of Sir Ian Wood’s recom-mendations for regulatory reform, and far-sighted changes to the fi scal regime, are needed in the next 12 to 18 months to stimulate new investment in explora-tion and production.

We strongly welcomed Sir Ian Wood’s fi nal report earlier this year, setting out his recommendations and strategies for maximising the economic recovery of the country’s remaining oil and gas resource, in particular the creation of a new independent government regulator with additional powers and resources, the Oil and Gas Authority, and we look forward to the head of that organisation being announced this Autumn.

In addition, we need a lighter tax burden, a more predictable and simpler system of fi scal support for exploration and fi eld allowances. We expect the Treasury’s ongoing Fiscal Review to be announced in December this year at it is our hope that the recommendations in its conclusion are robust.

This sector must also improve its effi ciency and reduce its costs as a real matter of urgency, which is why we are introducing a Step Change in Effi ciency programme throughout the industry to bring a renewed focus to our cost base. With unit operating costs now some 60 per cent higher than they were as recently as 2011, we must avoid inertia, otherwise the UKCS will cease to provide a healthy return on investment.

On a pressing note, of recent weeks the oil and gas community has become increasingly aware of the fall in oil price which makes it much harder to attract new investment into the basin or to sustain much of the mature infrastructure on the UKCS.

There are three critical challenges the industry must address if it is to secure investment and maintain its global standard of excellence, writes Mike Tholen

This situation is in essence a big wake up call for the industry. A short term period of prices below the $100 - $110 per barrel of oil equivalent range will cause companies to look carefully at their businesses but might prove more of a stimulus for improvement rather than anything more detrimental, however, even in the $100 per barrel world, we were seeing companies reining invest-ment programmes in to conserve capital

and improve capital effi ciency. A signifi cant period of lower prices may have a much more severe impact. Under these circumstances, capital

competition will be fi erce and the UKCS will struggle to attract funds unless things change.

Oil and gas currently provides about 70 per cent of the UK’s total primary energy supply, which according to the Depart-ment of Energy, will still be the case in 2030 and beyond. Signifi cant oil and gas resources still lie offshore – possibly up to 24 billion barrels – and we must all now play our part to ensure that as much of that indigenous resource is extracted as economically possible.Mike Tholen is economics and commercial director, Oil & Gas UK

How can we give a world class sector a fi rst class future? The UK offshore oil and gas

industry is the country’s largest industrial investor, and pays more tax into the Exchequer than any

other corporate sector

£ UK’s

lar

gest industrial investor

The UK Continental Shelf saw record capital investment

of £14.4 billion in 2013 and investment is expected to

remain high at £13 billion in 2014

£13billion

70%

Oil and gas provides some 70 per cent of the

UK’s total primary energy, half of which comes from the UK Continental Shelf

450,000

JOBSare supported by the industry

The UK upstream oil and gas supply chain is

a £35 billion industry

£35billion

the amount of production taxes

paid to date

billion£300+ 480+

Oil & Gas UK is the UK’s largest trade body for the offshore oil and gas industry,

with over 480 members

members across the whole of the UK

80% to 60%b

Production efficiency has fallen from 80 per cent in 2004 to 60 per cent today

Only 15 exploration wells were drilled in 2013,

compared with 2008 when 44 exploration wells were drilled

15Capital efficiency has declined

to such an extent that each pound of investment now yields only a fifth of what it did a decade ago

Unit operating costs are now 62 per cent higher than they were in 2011

62%

Sir Ian Wood’s report provides the blueprint for

maximising economic recovery from the UK Continental Shelf. This can only be brought about

through collaboration

Colla

bora

te to

maximise econom

ic recovery

70%

In 2030, 70 per cent of the UK’s total primary

energy will still come from oil and gas

Up to 24 billion barrels of oil equivalent

may remain to be extracted from the UK Continental Shelf

24billion

barrels of oil equivalent

NOW >

CHALLENGES >

IN THE FUTURE >

Economic Report 2014

Source: Oil and Gas UK Economic Report 2014

We need a lighter tax burden, a more predictable and simpler system

effi ciency and reduce its costs as a real matter of urgency, which is why we are introducing a Step Change in Effi ciency programme throughout the industry to bring a renewed focus to our cost base. With unit operating costs now some 60 per cent higher than they were as recently as 2011, we must avoid inertia, otherwise the UKCS will cease to provide a healthy

On a pressing note, of recent weeks the oil and gas community has become increasingly aware of the fall in oil price which makes it much harder to attract new investment into

This situation is in essence a big wake up call for the industry. A short term period of prices below the $100 - $110 per barrel of oil equivalent range will cause companies to look carefully at their businesses but might prove more of a stimulus for improvement rather than anything more detrimental, however, even in the $100 per barrel world, we were seeing companies reining invest-ment programmes in to conserve capital

and improve capital effi ciency. A


The energy industry will soon benefit from a host of new technologies which will revolutionise oil and gas recovery while maximising the productivity of infrastructure.

Improved oil recov-ery is one of the biggest challenges facing the oil industry today, according to Sir Ian Wood’s report, Maximising Recovery. It states that new, cost-effective technolo-gies will have to be developed to maxim-ise economic recovery from UKCS.

New tools will change the way oil and gas reserves are identified, developed and produced and allow industry to find deeper, harder-to-reach pockets of energy.

Now, an innovative perforation system is poised to enter the oil and gas market, with its developers’ technical program demonstrating it will reduce the need for onshore and offshore fracking, as well as enhancing recovery from mature wells and those previously considered unviable.

Aberdeen-based Delphian Ballistics has created a ‘plug and play’ perforat-ing gun system called ‘TriStim’ which is proven to significantly reduce fracking initiation pressures and increase produc-

tion levels by up to 50 per cent. Follow-ing a £5 million investment program, the firm’s managing director, Stuart McLeod, and technical director Simon Allison are looking forward to piloting the technol-ogy on a number of conventional and unconventional wells early next year.

“The perforating gun we have devel-oped is an elegant solution to reduce the fracking operation which can be costly and a concern for many environmental-ists”, Mr McLeod explained.

“Our TriStim perforating gun system offers a smarter way to perforate because it sets out to do something unique based on the physics of ballistics. By applying precision ballistics engineering to the age-old process of perforating, TriStim is able to offer significant improvements to well enhancement simply by harnessing the power of shockwaves.

“It is a unique and patented design that adopts a charge configuration whereby each collection of three shaped charges is angled to intersect at a pre-determined distance within the reservoir — basically you get a bigger, cleaner and deeper hole.”

However, he also claimed that it is dif-ficult for innovations to enter the market as the oil and gas industry can be reluc-tant to adopt new technologies.

He said: “There is often reluctance within the industry to apply new tech-

nology due to associated risks. But there is no risk or downside to running this system compared to a conventional per-forating gun.

“The North Sea is a declining market and this is a cost-effective way of signifi-cantly enhancing well productivity with no additional risk or downside – essen-tially it provides a much bigger return for a marginal investment.”

The firm has now signed a global manufacturing and distribution partner-ship with leading ballistics specialist, Dyna Energetics, and is ready to provide perforating guns through manufacturing, distribution and loading facilities around the world.

Mr McLeod added: “Our agreement with Dyna Energetics cements our focus to distribute this new technology on a global scale. We have made a slight adap-tation to the conventional perforating gun set up but this gains a much larger return when it is deployed in wells.

“Whether it is for conventional pro-duction or for stimulation, this product delivers cleaner and simpler perforations resulting in increased well productivity, or enhanced fracture dynamics.

“Ultimately, we are hoping to see this put into practice on a global scale by operators, as it will increase productivity and asset life. I would urge the industry to embrace advances like these to maximise ageing infrastructure.”

The use of innovative technology will also encourage the UK to become a ‘global centre of expertise’ for mature hydrocarbon basin exploitation, accord-ing to the Wood Review.

One growing energy company that

Dramatic new assault on the frontiers of technology

is already exploring the development of onshore unconventional gas assets is North-east based Warrego Energy PTY.

The firm, founded in 2007 by entre-preneurs Dennis Donald and Duncan MacNiven, secured a £21 million con-tract with businesses Dyas and Mazarine Energy earlier this year to develop the West Erregulla tight gas field in Western Australia. They are on schedule to pro-duce first gas from the field in the North Perth Basin in 2016.

“Onshore gas has yet to be fully devel-oped in Western Australia and Warrego is, uniquely, bringing North-east expertise to unlock this potential,” explained Mr Donald, managing director of Warrego.

“We target the exploration and produc-tion of onshore stranded conventional and unconventional gas. It is crucially important that we actively pioneer unconventional energy sources in West-ern Australia and beyond.

“By using innovative technology and methods we can deliver gas in less time, cost effectively and with less environ-mental impact.

“Previously, Western Australia has focused on offshore energy. With the advent of the large offshore fields taking longer to come on-stream — or indeed being cancelled — onshore local gas is increasingly being sought. Many of the significant resource players are being forced to address their use of diesel and coal from a cost and environmental perspective.

“Along with our partners, we are looking to expand our footprint and, through working with local pioneers, aim to be at the forefront of Western Australia’s tight gas boom.”

As well as tapping into unconventional assets onshore, new technology within the subsea sector is of critical importance if it is to maintain its standing in the global energy market.

Paddy Collins, CEO of North-east materials technology and engineer-ing specialist, Aubin, believes the smart development of new technology should be at the forefront of the sector to max-imise returns.

He said: “The oil and gas industry has been forced to search in deeper water for hydrocarbons, and companies, scientists and engineers are continually pioneer-ing new possibilities to keep up with the world’s demands for energy.

“However, one of my concerns is that the sector can be overly bureaucratic by creating barriers to new technology which ultimately could harm the industry financially.”

One of the firm’s products currently in the pilot stages and set to transform sub-sea lifting is the DeepBuoy system. The system is engineered around innovative low-density, liquid material which instan-taneously provides controllable buoyancy when pumped into void spaces or tank bags attached to structures.

“For subsea applications, DeepBuoy can offer precise control when lifting objects, offering a safer and more efficient way of placing, moving and recovering structures on the seabed. We believe each challenge the industry faces provides the opportunity to discover something new, maximise production and minimise risk,” Mr Collins explained.

“As an industry we cannot be averse to change as a whole. Our hope is that the sector will sit up and take notice and consider how they can use any new technologies in their existing and future projects.”

Whether in the North Sea, downhole or in a gas field on the other side of the world, new technology drives our inter-connected industry forward.

Enhanced methods of recovery are about to revolutionise the way oil and gas reserves are identified and developed, says Ian Wright

Industry Spotlight: Deep sea technology

Aubin’s operational subsea trials at Fort William highlight the

fact that the industry is having to search in deeper waters

Sir Ian Wood’s report emphasised need for cost-effective technology

Innovation will encourage the UK to become a global centre of expertise

Subsea engineering without limits There is a new choice for subsea projects around the world. Xodus

Subsea – a company without geographical or technological limits. Where true integration leads to real-world, accurately costed designs that smooth the path to maximising recovery and realising value.

› Multidisciplined field development› Deepwater engineering› Pipelines, trunklines/export systems› Subsea processing› Riser systems

www.xodussubsea.com/nolimits

PoS October 2014

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