The Times Power of Scotland

Power of Scotland

Thinking big

Dana’s five-year plan for growth

The X Factor Search for talent to fill top jobs in the energy sector

Tuesday October 2 2012

the times | Tuesday October 2 2012

3

Power of Scotland

Welcome

In search of a new generation The Times Power of Scotland reports this month on major changes in Scotland’s crucial oil and gas industry. Far from the general decline predicted at one stage, the North Sea is embarking on a new phase in its development. Innovative companies are moving in to open up new fields and exploit old ones, bringing technical skills to bear on deep sea projects.

Shetland, always in the vanguard of the industry, is already embarking on a new era.

Marcus Richards, group CEO of Dana Petroleum describes the potential that lies ahead, and how his company is tackling it.

But if Scotland is to take advantage of the opportunities, it has to identify and train a new generation of technologists. We look at how the challenge of recruiting and training them might be met.

Inside ...

Commentary

Peter Jones on Canada’s stampede to alternative oil and gas Page 4

The skills shortfall

North Sea reserves have a long future, but where are the engineers? Page 5

Cover story

Partnership is key to Dana’s strategy for growth Page 10

Special report

Westhill underlined as key location for subsea Page 12

Special report

How energy has become the poster child for export Page 16

One of the biggest challenges is deepwater, where operating depths can exceed 500 metres

Innovation key as technology confronts changing dynamics The law of nature dictates that most things in life are cyclical. The North Sea oil and gas industry is no exception, writes Neil McMillan

T

echnological innovation has always driven progress in the North Sea. Forty years ago oil and gas was produced from what were at that time the deepest oceans in the coldest, stormiest climes. However, as the North Sea industry has matured and other frontiers have opened up in even deeper waters and more extreme weather conditions, the technology has followed.

It’s interesting to see some of this coming full circle; after going to places like Brazil and Australia it is used in the latest deepwater developments in the Atlantic frontier west of Shetland.

Over the years, the mix of companies working in the area has also changed.

Ten to 15 years ago the major operators dominated North Sea exploration, development and production. While the majors still maintain a significant presence in the North Sea, recent years have seen a rise in smaller, independent operators and more specialised companies.

Many of the larger operators are relinquishing mature assets as they go on to invest billions on big new finds elsewhere.

This opens up opportunities for the independents who don’t have the resources to overcome the huge overheads associated with frontier exploration. They are keen to invest in solutions to extend the production life of mature assets including using new techniques to drill new wells, adding subsea tie-ins or bringing in equipment to enhance oil recovery.

Indeed, there are now a number of mature fields in the North Sea produc-

We can tap into the resource of 40,000 people in our global business

ing beyond their original forecasted life-spans due to a variety of Enhanced Oil Recovery (EOR) technologies. For instance, it was reported recently that BP has developed an EOR scheme for the Clair Ridge project west of Shetland, while the Apache Corporation is looking to install a satellite platform to extend the Forties Alpha’s production life by nearly 20 years as well as installing another platform to the east flank of the Beryl field, now in its 36th year of production.

Alongside developments to extend the life of North Sea fields, are two areas which are very important for the industry over the coming decade: decommissioning and subsea.

Decommissioning Although decommissioning is a growth area it is challenging as operators want to delay decommissioning so they can keep their assets for longer. This involves bringing in End of Field Life skills to maintain the integrity of the assets, enhancing oil recovery and if necessary decommissioning some bits of the plant in situ to reduce operating costs. This allows the income stream to trickle on for as long as possible. There is also a huge push to make sure the UK harvests all potentially recoverable reserves by keeping the infrastructure alive. The pipelines that gather hydrocarbons and take them ashore must keep running, ensuring that resources from the smaller reserves nearby will be able to reach the market.

Subsea Meanwhile, subsea innovation is advancing at pace as the industry moves into the deeper waters. Worth almost £6 billion in services and products and with over 800 companies and some 40,000 employees now specialising in this area, the UK now leads the world when it comes to subsea experience, innovation and technology.

We work closely with our INTECSEA group, which is an integral part of our global WorleyParsons organisation and which has a team in our Aberdeen offices.

It provides subsea consultancy expertise

and we can bring to the North Sea our experience of new technology that has been used successfully in the Gulf of Mexico, West Africa and Brazil.

One of the biggest technical challenges at the moment is deepwater. Developments west of Shetland are currently at water depths of 500m plus. The greater the depths the bigger the risks, and the best way of mitigating those is to have a machine do the work, for instance Remote Controlled Vehicles (ROVs).

At these depths, sea and weather conditions are more challenging which affects the design of the structures. The distance from shore is also an influencing factor as resupply by helicopters and supply vessels to the west of Shetland takes longer and is more influenced by weather.

Whatever conditions and challenges operators may face, we are fortunate that we can tap into the resource of the 40,000 people in our global business to augment our topside and subsea expertise.

WorleyParsons has 13 global service agreements including BP, Shell and Chevron, 15 dedicated offshore maintenance and modifications contracts and has designed the biggest offshore decks in the world. As a technology-driven company we are prepared to seek out technological solutions to apply them in the best way possible for the benefit of the customers we work with.

In most cases we can benefit from known solutions but we know that even a 10 per cent change to a technology already in existence can make a big difference to outcomes, so we constantly seek innovation.

Any development in this industry is the result of a combination of disciplines to bring an idea to a real project. While the frontier days of the past might have been about brawn and bravura, the present is very much focused on using our intellectual horsepower to produce cutting edge technology to meet the challenges of this dynamic and fast-changing industry.

Neil McMillan is Location Manager for WorleyParsons’ and INTECSEA’s Aberdeen operations.

Tuesday October 2 2012 | the times

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4

Insight PowerBusiness of Scotland

PROFESSIONAL BRIEF

Challenge Evoke IT of turning expandbig with ideas into Oil and Gas reality is key

SharePoint Fprojects E

or many years, Scotland’s life science sector has been heralded as one of the nation’s rising stars.

We have a tremendous opportunity to leverage our resources including the NHS, our excepvokeour IT, universities SharePoint and specialist for tionalAberdeen’s heritage foroil medical and gasinnovation, sector, has talentmoved and infrastructure to encourage to bigger premises in orderand to attract big business.

So why does isteam. it that accommodate our rapidly growing many of levels our young High of life science companies are struggling to get off the ground? demand and new The challenge contract wins of turning ideas into reality andthe companies of scale still seems have seen to elude all, but a few, and is an issue that company expand, needs to new be urgently addressed. and two Themembers life science industry is truly global team and as others, has identified it haveScotland, already been as a key sector to recruited this drive future wealth year, with a third and prosperity. to join shortly, But aspiration isn’t to deal with Lee Harrison enough and we increasing levels need work to actin now of SharePoint development and to Scotland. fully exploit the around the north-east of opportunity before Certified to silver level

by Microsoft, we get leftasbehind.

Evoke IT is gaining a reputation LackSharePoint of funding north-east Scotland’s leading Neil McInnes looks is a avociferous service provider.

Offering wide range of to pooling resources application lament by those design, development, and adin the ministrative services using thesector.

Microsoft Scotland a vibrant in business angel easy software, has we specialise developing community and Scottish Investment to use portals forthe internal communication Bank’s andWe Venture Funds and effiCo-investment cient file sharing. have also play important role.management However, there builtan a bespoke safety sysis a growing sense of foreboding that tem for the construction industry andthis we money could be redirected at renewables. are currently working on several projects Coupled of a strong active for the oilwith andour gas lack industry.

Venture Capital community, specialisOur steady growth in the oil and gas ing in life in Scotland, growth is sector has sciences been fuelled by securing major inevitably slow. projects from Ferguson Group, SPEX, That said, Group life science is fundamenRolls Wood and Nexen.

Our tally a long high-riskinnovative business. Itand strengths lieterm, in providing is expensive,SharePoint-based for instance, to take drugs customised portals usthrough clinical trials andto into the market ing the latest technology automate and with no guarantee of a return. Buttasks. if Scotstreamline regular administrative land serious about itswe lifedo, science sector, Asiswith everything we have we need to fifind ways get businesses to spent time nding thetoright office space aand point wherethat venture capital money is location will support our growforthcoming. ing needs and give customers the high Whileservice Scotland’s sector quality whichlife is science so important remains up of manyhave diverse small to Evokemade IT. Our clients been imcompanies, may also be an underargupressed withthere our efforts to really ment consolidation. stand for their business andPooling developresources software and to create critical mass that collaboration delivers the tools and information with indigenous location. companies or partfrom other one manageable From the nering with overseas one design of theorganisations interface to the layoutis of route and may well preventissome compathe dashboard, everything tailored to nies from failure in these hard our clients business needs,particularly with simplicity times.

Getting investor ready is another at its core. prerequisite, especially withfrom majorour foreign What makes us different organisations competitors islooking that weon. are completely Scotland has exceptional pooltake of transparent withanour processes and talent ideas. in today’s global time toand work withBut users, content editors competitive not enough and internal economy IT staff sothat thatisthey have without the rightskills incentives and the busithe appropriate and knowledge ness infrastructure to system supportonce them. to maintain the new the Neil McInnes, Head of Technology, project is complete.

We train them and Grant Thornton involve them inScotland the entire project to give them ownership of theassociation system and the in with confidence in their ability to administer it afterwards.

Peter Jones

Calgary stampede highlights the future of new power source

C

algary, where I was visiting relations last month, is an astonishing city, a bit like Aberdeen on steroids. Big three-lane freeways are being widened, new ones constructed, houses, offices and shops are being built all over the place and the effective unemployment rate is zero. Global recession? Not in Calgary.

The cause is not in the surrounding countryside where the nodding donkeys of Alberta’s mature oil industry dot farmland, but hundreds of miles to the north where the province’s tar sands containing huge amounts of unconventional oil and gas are being exploited.

A farmer lamented that his son was uninterested in taking over the farm, having discovered in the last six months that driving low-loader vehicles around Fort McMurray on a two-week on, two-week off rotation looked like earning him about $80,000 (£50,000) and maybe more a year.

Similar stories of black gold rushes abound across North America. In North Dakota, which has nothing else much going for it, the stampede to exploit the Bakken oil shale is estimated to be bringing about $2 billion a month of new money.

Local McDonalds outlets are having to pay $300 signing on fees to attract staff.

And here’s the macro effect this is having. In 2005, US natural gas prices were about $13 per million British thermal units (MMBtu). This year, prices fell below $2/MMBtu, which equates to a $12 barrel of oil cost. This month, while North Sea Brent crude is averaging about $114 per barrel, West Texas Intermediate, the US benchmark equivalent, is hovering around $95/barrel, an 18 per cent discount to European prices. And America, from being the world’s biggest energy importer is moving to be an energy exporter.

Of course, this is all coming from unconventional oil and gas resources, exploited by drilling boreholes into the hard rock containing the hydrocarbons, and then injecting a mixture of water, sand, and chemicals to fracture the rock and cause gas and oil to escape back up the borehole.

Fracking is still controversial. Stories that it causes earthquakes, contaminates water supplies to such an extent that you can set fire to water coming out of a tap, are legion. And it increases the world’s supply of combustible hydrocarbons, adding carbon dioxide and even more troublesome methane to the atmosphere, contributing to global warming.

Experience and research suggest that the problems are either minimal or can be minimised. Fracking has been going

on for 50 years and there are only two proven incidences of minor earthquakes being caused: the one that shook Blackpool and another in the US. Companies are coming up with fracking fluids that gasify on contact with the source rock and can be recovered. Others are devising fluids that meet the noncontaminating standards demanded of food. And fracking costs keep falling.

There are also environmental gains.

Combined cycle gas turbine power stations are cheap to build and emit 50 per cent less CO2 than dirtier coal plans.

Conversion of US trucking and bus fleets to gas power, now beginning to happen, has a similar effect and eliminates the particulates emitted by diesel.

But it is the economic gains that grip American attention. One estimate reckons some 600,000 jobs will have been created by the unconventional industry by 2020. PricewaterhouseCoopers reckons perhaps a million more may be created in US manufacturing through the $11 billion it estimates will be saved on energy costs in the next decade through use of cheap gas. Add in the gain to household budgets from lower energy costs and unsurprisingly, there is talk in the US that the 21st century could be a natural gas golden age equivalent to the

Canada and the US are on the fast track but the UK lags in the shale stakes

One estimate reckons 600,000 jobs will be created by 2020

Tourism Calgary

prosperity brought in the last century by cheap oil and electricity.

Could it happen here? The resource is certainly available. There are believed to be big reserves of shale oil and gas under northern England and central Scotland.

The shale bings in West Lothian testify to James “paraffin” Young’s oil industry of 1860-1950 which extracted an estimated 200 million barrels of oil. Plenty more is still there. Further afield, there are thought to be big reserves under Poland, Germany, France, Ukraine, Romania and under all of Hungary.

So why isn’t it happening? Environmental fears that are much greater than in the US is the main answer. America’s shale fields are mostly in sparsely populated areas, but Europe is much more populous. There are infrastructure costs.

The US has lots of drilling rigs and easy pipeline access, but Europe doesn’t. The geology also looks trickier than on the other side of the Atlantic.

But when you look at the economic rewards that the industry is reaping for the US, consider the job and growth-hungry countries of Europe, then you have to conclude that opinion is likely to turn.

In ten years, unconventional oil and gas could be seen as the saviour of Europe’s struggling economies.

View our interactive edition online

www.times-energy.co.uk

the times | Tuesday October 2 2012

5

Power of Scotland

Training and development

ACE STOCK LIMITED/Alamy

Who will keep the flame alive?

The confidence in the North Sea needs to be sustained by skilled jobs — but finding the candidates remains a major concern, writes Andrew Collier

I

T may seem deeply ironic that, in the middle of one of the deepest recessions we have seen for generations, one major part of the economy — the oil and gas sector — is in almost desperate need of qualified staff.

The hydrocarbons sector does, though, have a tendency to be counter-cyclical, meaning it prospers while the rest of the UK economy stagnates. The high oil price, emergence of new and efficient technologies and the ever-growing status of Scotland’s north east as a global centre of excellence are all helping to fuel an industry that is currently doing admirably well.

Yet despite this — or perhaps because of it — more than half of all companies involved in the oil and gas sector say that their greatest challenge is attracting skilled staff. The situation has now become serious enough to actively hinder the ongoing development of the industry.

It would be wrong to suggest that the entire industry has been immune to the recession: it has impacted upon companies in different ways, with manufacturing fabrication, testing, drilling and subsea areas of activity most adversely affected.

The extent of the problem was confirmed in a report last year by The Centre for International Labour Market Studies at Aberdeen’s Robert Gordon Univer-

sity. It found that there was evidence of serious skills shortages within many areas, meaning that employers faced significant new challenges.

“Add to this the demand for replacement labour and skills and the increasing competition for new entrants,” it continued, “and the need for a more robust and informed sector skills strategy becomes more apparent. More ambitious and comprehensive assessments of potential opportunities ... will enable partners to more accurately plan long term skills investment.”

The trouble with training is that it is long term. The industry is paying the price of a loss of investment in the past 20 years. Recruitment specialist, Greg Mackintosh, who is Director of Hazell Engineering, explains: “The problem is that there is a huge skills gap. Young engineers graduating don’t have the experience and the older ones are in their late fifties — some are working into their seventies — and there is nothing in between.

“You can trace that lack of investment straight back to the dip in the oil price.”

Evidence suggests that this kind of pressure has forced companies to upskill their workforces. Organisations which have recruited new people or who have invested in training appear more likely to believe that they are better positioned for growth than those which have cut staff numbers.

While the demise of the whole sector continues to be prophesied by those who fail to fully understand the industry, the reality is that new technology is enabling drillers to extract reserves from once inaccessible regions of the seabed. As a result, oil and gas continue to be a major economic pillar, with future investment estimated by SDS to reach £100 billion during the next 10 years.

So why, given this golden future, is there such a skills and labour crisis in the sector? David Doig is Group Chief Executive of the energy sector skills agency,

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Tuesday October 2 2012 | the times

6

Power of Scotland

David Cheskin/PA Wire

We’re sleep-walking into disaster here — and the industry itself is partly to blame OPITO. He argues that investment in training has suffered for many years.

“We’re sleep-walking into disaster here,” he says. “The industry itself is partly to blame and needs to take more responsibility.

“The Scottish government also needs to have a real conversation about deciding whether it is genuinely committed to the energy sector, to this national treasure, and prepared to put the investment into training for the long term — at least the next 25 years.”

Part of the problem lies in the way this industry works. A project contract might require 1000 staff on and offshore but the work is time-limited, intensive and has to be competitively priced.

“The kind of ongoing learning environment needed to sustain a talent pool does not sit comfortably in that kind of operating structure.

Doig points out: “It’s only in the past two or three years that we’ve started talking about another 30 or 40 years of activity in oil and gas. The perception of a dying industry has had an impact upon

training and the boom and bust cycle means contractors look for a safe pair of experienced hands.

“I think the industry itself needs to change that dynamic and be willing to move away from the ‘must have experience’ tagline on every advertisement.

The operators shouldn’t leave all of the training to the contractors. The two

elements need to do more together to tackle these problems.”

Doig says there is widespread ignorance about the industry. “I’m in and out of schools in Glasgow and Edinburgh where the kids don’t know we produce oil and gas in Scotland. This is a fantastic sector to work in with global opportunities and pay scales way above the average.

There are calls for the Scottish government to put investment into energy training for at least 25 years

“There’s a negative perception of a sunset industry that is dangerous and dirty.

In fact, the emphasis on health and safety is huge. Safety compliance is mandatory and operators face substantial fines if they fail to meet those regulations so in fact it is a very safe environment.”

One of the leading global search agencies in the energy sector, Maxwell Drummond, issues an annual survey. The 2011 edition reveals that resource gaps remain a priority. The poll of more than 100 senior international energy industry executives found it was expected that resource gaps would be felt throughout all divisions of the energy industry, but that reservoir and petroleum engineering, drilling and completions and field operations would be most affected. It said: “Survey participants listed poor public perception as the highest cause for discouraging people from joining the industry”.

Sean Buchan is Maxwell Drummond’s Vice President Europe, Middle East and Africa. He is based in Aberdeen.

Perception, he agrees, is definitely a factor. “There are those who may see this sector as environmentally threatening and who are more attracted to the IT sector, for example.

“But in fact oil and gas is no more dangerous than any other manufacturing industry. Only the environment is different. There is definitely a mismatch between perception and reality.”

Like David Doig, Sean Buchan sees a need for change within the industry. “It does tend to be a bit of a closed shop, reluctant to recognise the abundance of skills available from other sectors that

Candidates seeking a new opportunity please refer to our website for a full list of current vacancies: www.hazelleng.com

For over 30 years Hazell Engineering have supplied the services of high calibre engineering personnel to the International Oil and Gas industry, both on a contract and permanent basis.

Our highly experienced recruitment team utilises one of the industry’s most comprehensive personnel databases, this enables us to respond rapidly to our client’s individual requirements.

Quality is of primary importance in all of Hazell Engineering’s operations.

Accordingly, we are ISO 9001 : 2008 accredited by DNV, “for the provision of specialised recruitment services to the offshore oil, gas and petrochemical industries”. We are also First Point Assessment Limited registered and a fully accredited member of the Recruitment & Employment Confederation.

Companies looking to discuss recruitment solutions please call: +44 (0) 1224 630 123 or email: administration@hazelleng.com

Hazell Engineering 42 Union Terrace Aberdeen AB10 1NP

the times | Tuesday October 2 2012

7

Power of Scotland

From high street to high seas IT was a chat at a supermarket checkout which paved the way for one recently appointed engineering recruit to move into a new career in the oil and gas industry.

Having graduated with an honours degree in mechanical engineering at the University of Hull, Shaun Falcus had been unable to find anyone wanting to use his newly acquired skills. As a result, he was working for a high street retailer.

It was while in the store that the 23 year old got talking with an offshore worker who told him that there were opportunities for graduates in the north east of Scotland.

Now he is working as a contractor on the Shell engineering and operations support team.

“My role involves writing procedures, mobilising teams to perform maintenance and corrective work,” he explains. He is directly employed

by Sparrows via its head office in Aberdeen.

“I had struggled to get a job locally in Hull,” said Shaun. “The job opportunities I had were not as part of a graduate scheme and were usually looking for people with more relevant experience.”

“It can be hard to know where to look when you come out of university. I was lucky I got talking to the right person who was able to promote the energy industry in the north east of Scotland. I thought it would be worth pursuing the opportunity.”

The appointment process was a rapid one — his talents were quickly recognised and only a month after

aren’t so buoyant — automotive, nuclear, defence forces and civil engineers for example — where people could readily undertake the kinds of conversion courses that some operators are now offering.

“While government can help provide security — and it needs to push the sector up the career choices agenda — it is the industry itself that needs to take

Shell Int Ltd

the initial interview he was on the train north after landing a job as a project engineer based in Aberdeen.

“I make sure the teams are made aware of potential hazards and follow the procedures to complete the work safely,” he explains. “So far it has been an enjoyable experience, allowing me to prove my potential.”

The subsea sector believes that 10,000 jobs could be created in the next 12 months alone

responsibility and decide upon the when, where and who it needs to hire and think ahead to the skills it requires.”

Buchan says that succession planning from boardroom to workshop needs to be a key element in any company’s strategy.

“At the moment, that tends to just look at the top executive posts but it needs to go much further down through the organisation.

“Company managers need to think ahead strategically — to consider what their needs may be say 12 or 24 months ahead. They aren’t doing that. As a result, salaries are driven up and there is a panic draw on the available talent pool.”

Greg Mackintosh says that companies are now looking towards sectors that they would never have considered in the past: “For example, Wood Group-PSN has been looking towards the nuclear industry at Dounreay where the skillsets are not that different. The armed forces have been seeing oil and gas recruitment road shows in various places.

“The skills pool in Aberdeen just isn’t big enough. Some big operators go out to countries like Malaysia, the Philippines and Singapore in search of skills. They may take on 20 or 30 people but probably only one in three will work out.”

One critically important part of the industry, the subsea sector, believes that 10,000 jobs could be created within companies operating in this area in the next 12 months alone. The Chief Executive of its representative body, Subsea UK, is Neil Gordon.

“With the UK economy still fairly fragile,” he says, “it is fantastic that our

Sean Buchan says that succession planning is a key strategic element

industry, which is outperforming other sectors and helping lead the country’s economic recovery, is creating so many new jobs. The challenge for us is finding suitably qualified people to meet immediate demand and attracting new people into the industry to fulfil future demand.”

The subsea sector, he adds, is one of the UK’s brightest economic prospects: it is currently worth about £6 billion a year, with £3.3 billion of that accounted for by exports, and is set to double in value over the next five years.

“The problem is that this is a high-tech, engineering-based industry and we don’t have enough good technicians and engineers coming through.”

In a bid to counter this problem, Subsea UK has developed long, medium and short term strategies to try and match workforce skills with demand. “In the

commErciAl rEPort: DUNDEE coUNcil

Dundee – right place, right time

R

enewables offers Scotland its biggest economic opportunity since the discovery of North Sea oil in the 1970s.

Back then, Aberdeen quickly established itself as the key location for global companies seeking their share of Scotland’s offshore ‘black gold’.

This time, things look very different. It is Dundee that finds itself in the right place at the right time – right on the doorstep of the North Sea’s fastbuilding wave of offshore opportunity.

Port To reap the offshore wind harvest, you need flat land – and you need it in the right place. Dundee has an enviable location for accessing Scotland’s largest offshore wind development sites.

No other port is closer to the action.

The port also has the advantage of deepwater access to support jack-up, construction and O&M activities and has a proven track record in offshore engineering and logistics.

Energy Parks Supply chain companies that don’t need to be located within the port can choose from three strategic development sites, all within easy reach of the quayside. Energy Park East, Energy Park West and Linlathen Park offer a total of 160 hectares available for supply chain operations.

Companies interested in locating in Dundee will find enthusiastic support from local and national planners. The Scottish Government’s National Renewables Infrastructure Plan (NRIP) identifies Dundee as a strategic location for marine renewables.

A £70m National Renewables Infrastructure Fund (N-RIF) supports the development of sites at, and close to, the port for offshore wind turbines and related developments. The Scottish Government recently granted the port enterprise area status for ‘low carbon’ activities.

Scottish Enterprise, the nation’s key economic development agency, can support inward investors with advice and contacts for research, premises, supply chain partners, skilled manpower and, in certain circumstances, grants.

Education and training support To ensure that the best knowledge, training and skills are brought to bear on extracting the full potential from the offshore renewables sector, Tayside’s universities and colleges have combined forces to ensure that world class R&D and training is available for incoming investors.

Called ‘Energy Training East’, the alliance covers everything from technical apprenticeships to post-graduate teaching and research. The alliance also offers partnership opportunities for knowledge transfer, as well as an

innovative and responsive attitude to inward investors.

The five academic institutions are all located within a 22-mile radius of Dundee Port. They comprise: • University of Dundee • University of Abertay Dundee • Dundee College • Angus College • Perth College A connected city Dundee has good links to the rest of Scotland and the UK. The city is only a one-hour drive from Aberdeen, Europe’s oil and gas capital and home to a wide range of marine industrial expertise transferable to the offshore wind sector.

The financial and commercial centres of Edinburgh and Glasgow are within easy reach. The UK Government’s Green Investment Bank is set to open in Edinburgh with £3 billion of public money to help companies finance early-stage renewable schemes.

Located just 5 minutes drive time from the Port of Dundee, the city centre airport has direct daily flights to London City, Birmingham, Belfast and Jersey.

A 21st century city Having made impressive progress on a £1 billion-pound regeneration scheme, Dundee is transforming itself into a very modern, stylish city in which to live, work, study and enjoy yourself.

The regeneration project is already reconnecting the city centre with the nearby Firth of Tay via broad, stylish boulevards. With the V&A at Dundee set to open in 2015, visitor numbers are estimated to surge by up to half a million a year.

Already, the Malmaison hotel group is redeveloping a landmark listed building to meet its high class standards. Quick to spot an opportunity, other major hotel groups, leisure operators and retailers are seeking a share of the action.

Tuesday October 2 2012 | the times

8

Power of Scotland BP PLC

short term, we cannot simply pluck people out of the sky, so we are engaging with, for instance, military people who are coming out of places like Kinloss and Lossiemouth.

“Our members are also running conversion courses for engineers in other disciplines who have many of the core skills we need, including civil engineering and project planning. They already have 80 per cent of the knowledge and can be part of a team in months rather than years.”

The medium-term strategy is to engage with colleges and universities to educate them about opportunities in the sector.

This includes building links at a local level and perhaps encouraging engineers to give presentations to students.

In the long term, the plan is to engage with the younger generation. “We are already working with schools and we need to dispel the impression that this is an industry where people work on dirty oil rigs in boiler suits. Teachers have been co-operative and they want the information we can give them. So there’s a lot going on.”

With oil holding its price at more than $100 a barrel, the offshore and onshore industry in Scotland’s north east continues to enjoy good times. There is no sign of any downturn in the price of crude, so the need for both new recruits and people with appropriate experience is going to intensify rather than decline.

According to the Lloyds Bank Corporate Markets’ recent report on oil and gas, Rising Fortunes, 75 per cent of companies could create new posts by the end of 2013.

More than a quarter of the 100 decision

makers surveyed said they could be seeking to recruit more than 500 staff.

Once again, the barrier to growth is attributed to a sheer lack of an available and highly skilled workforce. Bigger contracts and a growing order book for products and services mean more jobs but the right people are not there to take up those posts.

Sparrows, a global offshore lifting and mechanical engineering services operator, is currently looking to fill some 140 vacancies. With an employment roll of 1,600 people in 19 locations around the world, the company finds itself struggling to get the people it needs. “We are really challenged to find the right people,” says Chief Executive Doug Sedge.

“The demand fluctuates but at the end of August, we were looking for 159 staff, 114 of them here in Scotland. We need engineers, welders, fitters, platers, riggers and hydraulic technicians.

“These are very demanding jobs making a heavy call on a limited pool,” Sedge adds. “People need to be trained in health and safety and they need to be able to offer the competency required of them. I think people are attracted to the industry but with an uplift in activity and an ageing workforce, we aren’t able to fill the gaps to meet the upcoming demands”.

His colleague Richard Wilson, the firm’s Executive Director of Operations, Europe and Africa, reinforces this and believes there has been a culture shift.

“People just don’t want to get their hands dirty. They want nine to five and they don’t want to have to relocate. It’s really very challenging.”

These are demanding jobs, making a heavy call on a limited pool

commercial report: opito

Safeguarding Skills for the Future

W

ITH as many as 15,000 additional workers needed to boost skills provision and thousands more jobs created in the years to come, the UK oil and gas industry is well aware that it needs a larger pool of skilled workers, both now and in the future.

There is much activity ongoing across industry to attract and retain a skilled workforce and the talent pool is widening as a result. The challenge for the sector however is in working collectively to attract the right people with the right skills at the right time.

Industry skills body OPITO is leading the way by developing projects and initiatives which aim to attract and up-skill both new and experienced talent. One of the key areas it is looking at is the role of modern apprentices. A recent research study carried out by OPITO found a clear realisation among oil and gas companies around the need to invest in young talent to secure the future workforce.

Managing director Larraine Boorman said: “Almost one million young people aged 16-24 UK-wide are not in school, work or training according to recent government figures and employment rates for school leavers are continuing to fall making it increasingly difficult for young people to take the first step into a career.

“Apprentices are highly sought after by employers with an estimated 350 young people predicted to join the industry as apprentices or trainees each year, over the next three years.

By identifying the schemes currently available in the industry, OPITO can work with companies, enabling them to grow or launch apprenticeship schemes in the future which directly fulfill the increasing skills demand.”

A lot of activity is ongoing to attract people into oil and gas in the long-term. OPITO has engaged with more than 750,000 school pupils across the UK to date, promoting the diversity of careers, developing joint education strategies which encourage the uptake of STEM subjects.

The lack of up-skills training to capture transferable skills however is the biggest human resources issue for the oil and gas industry.

“The mid-gap of maturity and experience is where the problem lies,” added Mrs Boorman.

“Widening the pool of talent available to the industry is essential if the recruitment difficulties identified by industry employers are to be addressed.”

This need prompted OPITO to create fast-track Transformation Training Programme for up-skilling workers with knowledge and experience in other industries in order to provide the oil and gas industry with a structured mechanism for replenishing the workforce.

“A total of 100 per cent of the 20 midcareer changer trainees, aged between 20 and 50, who completed our pilot TTP courses, transferred into oil and gas, with several gaining two to three job offers.

“Similarly, a group of former Royal Air Force technicians successfully em-

modern apprentices play a vital role in the future of the oil and gas industry barked on new careers in oil and gas collective and cost-effective way.” after being the first in the UK to take OPITO is currently in talks so the part in a new OPITO drilling course TTP pilot courses can be launched, designed to up-skill workers. All this up-scaled and jointly funded by governshows the courses are a successful and ment in colleges as a strategic contribuideal long-term model for bringing tion to meet the oil and gas industry talent into the oil and gas industry in a skills shortage.

the times | Tuesday October 2 2012

9

Power of Scotland

Life in the islands provides unique lifestyle choice

I

t may be among the most remote places in the UK in which to live but the Shetland Islands are also, apparently, among the happiest. In July this year, the first results of David Cameron’s first “Happiness Index” revealed that residents of the islands, along with those of Orkney and the Western Isles, are the most satisfied in the UK. It was perhaps not a surprise, though certainly good news, for Arthur Spence, BP’s Area Operations manager at Sullom Voe on the north of the islands’ mainland. The native of Lerwick returned from a stint for BP in Azerbaijan last year to head up operations at the oil and gas terminal and is keen to stress the many opportunities on the islands.

“Over the years since the first tankers arrived I have seen some major changes here and the industry has been very positive for the islands. It has injected a lot of money into the infrastructure, including great schools and swimming pools plus now major airports — one, Scatsta, which is beside the terminal and brings in

offshore workers from Aberdeen en route to the offshore oilfields.”

Spence’s main responsibility, he says is “Ensuring safe, reliable and compliant operations. It’s a big site and was built to support the Brent and Ninian systems east of Shetland but today we receive increasing amounts of oil from the west of Shetland — and since that has opened up there has been significant investment and exciting projects going on .

The Clair Field, 46 miles west of the islands, began production in 2005, with 40,000 barrels a day piped to Sullom Voe and the Clair Ridge project will more than double that when on-line and could, says Spence, ensure the life of the terminal for another 40 years.

Schiehallion also sends oil to the terminal via shuttle tankers; the field produces around 30,000 barrels per day and also has a long future.

Another key part of Sullom Voe’s strategic importance is its situation between the west and east of Shetland where there is a gas pipeline system that transits gas

BP PLC

via Sullom Voe to Magnus and onwards BP at Sullom Voe is one to the UK gas network. With 200 BP staff of the Shetland Islands’ and up to 400 contractors working on site, largest employers there is a tremendous variety of activity which means that the terminal is a very significant employer on the islands.

“We have a big operations team of about 80, including Operators, Discipline Technicians, ER Technicians, Team Leaders and Engineers and a Projects Team that includes production work and demolition work — so we are removing the old kit and replacing with new,” explains Spence.

“There is a new gas plant being constructed which we hope will come on line at the end of this year and what I find exciting about Sullom Voe is that you have such a wide range of jobs — from

brand new building that is bringing new facilities on line, to the day-to-day operations plus the ships, pipelines and the decommissioning of the LPG plant which will also reduce risk on the site.”

Interest in working for BP on Shetland is both on a national and international scale. “A lot of people came from London and other places in England with an industrial background in the 1980s and stayed but some of the applications we receive are global – I am looking at CVs from people in many locations around the world who would like to come here and we need to let them see Shetland, bring them over and allow them to experience the culture and social life.”

BP on Shetland also sponsors local students to go to university, and there is ongoing training for existing staff. “For example, with emergency response, we send our firemen to West Yorkshire Fire Service, where they learn about the job in a real-life situation.

“We bring in BP Challenge Graduate engineers and increase that number every year because of the variety of what they are going to see — it’s a great training ground for people interested in the design of the new gas plant which they might never see anywhere else in their career.

After a highly enjoyable period in Baku, Spence has other ambitions for widening his team’s horizons: “The culture in Azerbaijan was great and the people very bright and willing to learn. I’m interested in helping some of the guys who we are developing here to gain some experience at the big terminal there.”

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Tuesday October 2 2012 | the times

10

Power of Scotland

Cover story: Dana

Ambition on an intelligent scale Dana Petroleum has aspirations to double in size in just five years. Its CEO explains the strategy to Ginny Clark

F

or Marcus Richards, scale is everything. As the man tasked with overseeing the growth of a leading international oil and gas company, the Group Chief Executive of Dana Petroleum clearly has to be thinking big.

Headquartered in Aberdeen, this $4 billion company operates in the North Sea, which accounts for 70 per cent of its business, Egypt, Norway, the Netherlands and in a number of countries in North and West Africa. Acquired by the Korea National Oil Corporation (KNOC) in 2010, Dana is now embarking on an ambitious five-year plan, fuelled by a determination to double the size of the company, and an investment of around $1 billion in each of those five years.

It’s a complex plan, and the acquisition of the Hess stake in Bittern and operatorship of Triton clearly demostrate that Dana’s strategy involves moving from non-operator to operator. In under 20 years Dana has grown from a company of 30 people to more than 500, and Richards insists that the strategy is to be active at every stage of the upstream value chain to drive success.

Simply put, Dana is a working contradiction: state-owned by KNOC but run by entrepreneurs, ready to invest in growth, but utterly focused on keeping processes and systems — everything — simple. This, explains Richards, provides the time and space to allow the voices of the 500-and-growing workforce to be heard.

Last month Dana’s new base in Aberdeen was officially opened by First Minister Alex Salmond, underlining the company’s commitment to Scotland, and the North Sea. Richards, a one-time Senior Vice President covering BP’s Upstream E&P and Downstream Refining businesses, may be thinking big, but he never stops thinking ‘small company’ either.

“When I joined 18 months ago I recognised what a great track record Dana had, but if the company was to reach its full international potential we needed to fundamentally change the business model to expand. That meant putting the right structures and efficient processes to grow the company,” he said. “As an independent company, but part of KNOC, it’s great to be able to think beyond the conventional five-year time frame, to 30 years ahead. So by focusing on the

long-term we have rethought the overall strategy — and the outcome is our plan to invest $1 billion every year for the next five years, with the aim of doubling the size of the company.

“With our current production operations, and our emerging position in Africa, we already deliver 60,000 barrels of oil or equivalent a day (boepd).

We’re aiming to grow the company to 100,000 a day, using our operating cash flows to invest in the existing businesses and new projects, while using our lending facility to add new assets to the balance sheet, with the right opportunities for acquisitions. It’s a simple principle of ‘living within our means’ underpinned by prudent forecasts for oil and gas prices over the next five years.”

“Part of achieving this goal has meant realigning the role of headquarters and our business units, so we can now operate as a group rather than as individual assets. We’re sharing skills in a cohesive way, and some of the benefits of these changes are reflected in our 2011 performance. We’ve developed a strong partnership with KNOC, and we have a board that allows us to operate independently, with the ability to dip into available funds where necessary. This means we can be entrepreneurial but also punch above our weight.

“We’ve looked at our ability to sustain growth to support Korea and KNOC in achieving their aims of increasing oil production through 300,000 barrels to 1.2 billion by 2030, so are moving beyond our existing operations in a few locations and late life production to the full value chain from exploration through developments and production. That has required a significant change to our business model; hence the five- to 10-year plan.”

With revenue up 80 per cent to $1.7 billion, and production increased by 50 per cent from 41,125 to 61,970 boepd, 2011 was a good year for Dana. Gearing up for expansion, 70 people have been recruited

It’s a simple principle of living within our means, underpinned by prudent price forecasts

in the first six months of this year. Dana has identified five strategic priorities: driving performance in existing locations; securing access to new provinces; becoming the partner of choice; increasing value and efficiency; and developing the best people, processes and technology.

“In driving performance, we’re taking our portfolio and really looking at the exploitation of our existing hubs, where drilling will enhance existing operations.

We’re also shifting from non-operator to operator where we believe we can drive value and efficiency,” says Richards.

“We’ll focus on major projects, such as Western Isles, which involves the development of the oil fields Harris and Barra in the Northern North Sea. We believe flexible mobile export solutions are the way forward, and we’re using an FPSO solution — floating production, storage and Marcus Richards, Group Chief Executive, Dana Petroleum

offloading vessel — to good effect here.

“We’re striving for operational excellence, which means running our assets to the highest operational and safety standards, and using the latest industry techniques to extend production potential. A good example is our activity in Egypt, where we’ve seen production double at a tough time of immense political and social upheaval. All this demonstrates a gradual but deliberate shift to operating our assets and the significant support from KNOC that underpins it.

“We’re securing access to new provinces, both through offshore exploration in frontiers and through careful selection of field redevelopment projects onshore.

We see potential beyond five to 10 years in areas such as Africa, West Shetland and the Barents Sea. We have the secondlargest exploration acreage in the UK continental shelf.

“Access to development projects focuses on excellence in the use of reservoir management in partly depleted fields, will focus on small to mediumscale operations, where the big majors are not interested, that have the potential to grow production, but the added benefit of being able to train and develop local people.

This is also, he says, an aspect of becoming a partner of choice. “In addition to joint ventures and partnerships with

other oil and gas companies and service organisations we’re working with governments and communities to create mutual advantage, providing education and training, creating employment and promoting enterprise. It will be great in 10 years to look around the headquarters here in Aberdeen and see the diverse and inclusive workforce that represents our areas.

Here, too, we’re working with Robert Gordon University, to help ensure we provide the training and skills our industry needs.”

“When it comes to increasing value and efficiency, we’re controlling our operating costs and driving efficiency through good planning and delivery. We’re also putting an emphasis on common business processes, to improve efficiency and consistency. The techniques borrowed from the lean manufacturing sector focus on the links between teams rather than conventional silos will ultimately drive improved business performance. It’s also important where we are hiring people who bring their own ideas and experience.

“In developing our processes and technology, attracting high-calibre people is key, and we’re already demonstrating how using the best technology across the sector is securing operational success. In the Netherlands, an innovative trilateral well has kept the costs of drilling down with one single up-hole section connected to three separate well bores targeting the reservoir section.

“In Egypt, we are using onshore extended reach drilling to reach reservoir targets in the offshore. Of course, each of these developments increases our potential to bring in the right people. For the engineers, geologists and geophysicists, being based in Aberdeen gives them the chance to work across the North Sea, Middle East and sub-Saharan Africa — that’s what is attracting people.”

Attracting the right people is now a priority for Dana. Given the industry’s skills shortage in areas such as engineering and the geosciences, the company is developing strong relationships with Scottish universities, but Dana’s identity and culture as an entrepreneurial, small company, with the strength of KNOC behind it, translates into significant pulling power.

Stuart Payne, Group HR Director for Dana, says the company is offering a unique opportunity.

“We are in the process of describing how we build a truly international oil and gas business,” he said. “As we grow, we need to be consistent and joined up; our values need to be universal, but it’s not about making everything monotone. The diversity of our people and the breadth of talent are fantastic but we’re working to create a flexible and open environment for them to succeed. It’s not a typical corporate structure with complex bureaucracy.

“One reason why people are choosing

In Europe, Africa and the Middle East, Dana says it is using its culture to attract the right people

the times | Tuesday October 2 2012

11

Power of Scotland

Giant vessels sail into deep-water production As the North Sea matures and older fields deplete, infrastructure will likely be removed. This will constrain the ability to develop new discoveries of a size unlikely to justify new infrastructure. Given the flexibility and cost effectiveness of floating, production, storage and offloading units (FPSO) and , Dana believes there will be a considerable role for a new model in the North Sea. Giant floating ship-shaped FPSOs have become a common sight in the North Sea for the development of smaller, deep-water oil and gas fields. This month, Dana became the operator for the Triton FPSO in the Central North Sea — a traditional ship-shaped FPSO. Either shipconversions or new build vessels, these units provide a solution for demanding deep water applications but also require technically complex systems.

As a result of industry demands,

The helicopter pad on the giant Triton FPSO Norwegian engineering group, Sevan Marine ASA, developed a cylindrical shaped FPSO, designed for maximum stability and significant savings in both cost and delivery time. Dana will use this design for the $1.5 billion Western Isles Project, which will develop

two discovered oil fields 160 kilometres east of the Shetlands and 12 kilometres west of Tern field. The Western Isles Project will create 200 new jobs and deliver around 40,000 additional barrels of daily oil production for Dana from 2015.

Dana is our ability to punch above our weight in a competitive marketplace.

Clearly we offer a strong reward package, but it’s the opportunity to work within a team of talented people, on a wide range of projects across the world, that’s helping us stand out from the crowd.

“We’re trying to create a company in which people have the freedom to use their skills and experiences to make a real difference. Right now Dana has a chance to be the template for a new way of working.”

Part of this template, says Richards, is going ‘slow to go fast’, building on Dana’s strong reputation. “With the next five years of growth its important that we take time to take a breath with each success,” he adds. “A critical part of our performance will be engaging and listening to the team as we grow. Attracting capability is a challenge. Part of the solution is to create a future direction people want to be part of.

We also must ensure we are aligned with our other stakeholders — the countries where we will offer our skills and wish to operate, and these discussions take time.”

All of this admits Richards, is hugely exciting, a genuine chance to do some-

Stuart Payne, Group HR Director, Dana Petroleum

thing substantial, and do it differently.

“When I was offered this job I was working on oil and gas projects with various investment banks, and it really intrigued me. It was an opportunity to create real mutual advantage without some of the usual constraints, to build a very different company that would allow us to grow, and create excellent jobs and real opportunities. The success of any company is based on three things: building relationships, and when you get that right you can deliver great results, and great results create a strong reputation.

Getting this right can be hugely powerful, a win-win for everybody involved.”

Tuesday October 2 2012 | the times

12

Power of Scotland

Special report: Westhill

Neil Gordon is looking to a bright future at Westhill

Subsea UK has relocated to an Aberdeenshire business park rapidly gaining a reputation for excellence, writes Rob Stokes

I

F CONFIRMATION was needed that the Aberdeenshire town of Westhill lives up to the road sign welcoming visitors to the ‘global centre of excellence in subsea engineering’, then the recent relocation there of Subsea UK, the industry association with more than 250 member companies throughout the UK, is the clincher.

Its new headquarters at the sought after Arnhall Business Park sets Subsea UK organisation squarely amid some of the world’s largest and fastest growing subsea contractors and a host of smaller companies bristling with innovative engineering solutions and ideas.

“There are around 290 subsea companies in Aberdeen and Aberdeenshire — 40 per cent of the UK’s subsea industry,” said Neil Gordon, Subsea UK’s chief executive. His organisation says the UK industry grew by 40 per cent between 2007 and 2010 and employs some 50,000 people .

More than 6,000 of those are employed in subsea companies at Westhill, some from the town’s 11,220 (in 2011)

New HQ underpins stature of Westhill inhabitants, others commuting the short seven miles from Aberdeen City or from further afield.

The future looks bright too for subsea and for Westhill, where new land is being made available to meet demand for business premises. Quite apart from booming subsea exports — on which we report elsewhere in Power of Scotland — nearly 45 per cent of UK oil and gas production comes from subsea wells and 70 per cent will be similarly exploited for new developments planned on the UK Continental Shelf (UKCS).

“What makes Westhill unique is that a number of companies have put their operational headquarters here. So it’s become a real global hub of subsea engineering and knowledge,” said Gordon.

“That’s what really anchors the supply chain in the UK. Some 70 per cent of the world’s subsea fleet is controlled or managed from operational offices or headquarters in and around Aberdeen & Shire (Aberdeenshire). This gives it a real strength of decision making for the supply chain to feed into.”

This cluster of excellence has earned Westhill the affectionate nickname of Surf City — the first part being an acronym for Subsea Umbilicals, Risers and Flowlines, the staple components of underwater engineering and the bedrock of what is made and sold from the town.

One of its most illustrious companies has watched the Westhill success story blossom over more than two decades.

“We have been based in Westhill for more than 20 years and have seen a huge transformation in the area,” said Bill Morrice, managing director of Technip UK, a subsidiary of France’s Technip, which is a global leader in subsea engineering, construction and inspection, repair and maintenance (IRM) services.

“We are really pleased to see Westhill established as a centre of excellence for the subsea sector and we believe it is extremely important that the industry continues to work as one to ensure the area retains this recognition in the future.”

Technip UK employs more than 800 people and, in a vote of confidence for

Scottish renewables and for the town, its parent chose the Westhill operation as the global headquarters of Technip Offshore Wind to provide subsea services to offshore wind farm clients.

In the past year, Technip UK has undertaken numerous projects on behalf of both new and existing Oil and Gas clients, including work for Nexen, Ithaca, BP and Endeavour Energy.

As if to prove that there is plenty of value left in the North Sea, it will start offshore work next year on its largest ever contract in the UKCS, worth nearly €600 million (nearly £480 million) from BP and its partners to develop subsea infrastructure for the Quad 204 project to maximise oil recovery from the giant Schiehallion field in very deep water some 100 miles west of Shetland. The subsea side is being project managed from Westhill, which will also co-ordinate the vessels involved.

More recent subsea contract wins involving Technip UK have been from: Ithaca Energy (UK) for the Greater Stella Area (GSA) development 175 miles east-

the times | Tuesday October 2 2012

13

Power of Scotland

south-east of Aberdeen; ConocoPhillips (UK) for IRM work on subsea infrastructure in the Central, Southern North Sea and East Irish Sea; and from EnQuest Britain for work on developing the Alma and Galia fields 194 miles southeast of Aberdeen.

“It has been an extremely exciting time for us, resulting in one of our busiest periods in business to date,” said Morrice.

“There is no doubt the UK North Sea is still an exciting place to be, with diverse opportunities in all areas including both traditional and deep water prospects. I believe that being based in Westhill has allowed us to continue to expand our business, while also ensuring we are well placed to attract the very best workforce.

Being close to our clients is extremely important to us and having a large number of oil and gas companies on our doorstep is fantastic.”

Subsea installation contractor Bibby Offshore chose Westhill when it decided it needed more room to cope with current and anticipated growth arising from a pick-up in North Sea activity. It will relocate its headquarters next spring from Aberdeen harbour to a purpose built 52,000 sq ft office building at Prospect Park, Westhill.

It recently chartered another diving support vessel to add to its fleet, formed a Remotely Operated Vehicles (ROV) division, and started a graduate recruitment scheme which had its second intake last month.

Recruitment has also been on the mind of Subsea 7. The seabed-to-surface engineering, construction and services con-

The UK North Sea is still an exciting place to be , with diverse opportunities in all areas, including both traditional and deepwater

The Topaz, a Bibby Offshore vessel operating in the North Sea

tractor to the offshore energy industry worldwide is registered in Luxembourg, headquartered in London, but has an operational base in a 150,600 sq ft development completed four years ago at Arnhall Business Park.

The company has been recruiting engineers for both onshore and offshore work worldwide and adding to its fleet of vessels. It now has more than 40 vessels, 175 ROVs, 2000 engineers and 14,000 employees globally.

Subsea 7 is seeing “strong levels of

tendering and activity” in the North and Norwegian Seas, it said in a presentation last month.

In 2011, around a third of the business for its Westhill base was coming from supporting Subsea 7 operations in locations beyond the UK. At June 30, the group’s continuing projects valued at more than $100 million and between 5 per cent and 95 per cent complete were spread across the UK, Nigeria, Brazil, Angola, Norway, Malaysia and Canada.

Westhill is also home to technology

companies providing specialist equipment for underwater work and who value having major international customers as neighbours.

For instance, Divex, a global designer, supplier and maker of diving and subsea equipment, was one of the first subsea firms in Westhill, where its headquarters include a dive test tank, a breathing laboratory, a magnetometer range, ‘oxygen cleaned’ workshops and a machining centre.

Among its clients are Technip, Subsea 7 and Norway’s DOF Subsea, which has a base in Aberdeen. Divex has expanded from its roots to include sales and support operations in London, Stirling, Germany, South Africa, United Arab Emirates and Australia.

The privately-held company has seen increased demand for its saturation diving systems and says it has been awarded contracts adding up to “an eight figure sum”. It recently made two top level managerial appointments to strengthen

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james glossop for the times

nity that excites me, to see how far we’ve come, and to see how far we can go over the next ten years.

So, is he worried that global economic slowdown might blow those plans off course? “Every company has to be sensitive to the economic environment around it and be sure it is on top of any potential implications. Having said that, I would step back and look at our experience as we went through 2008 and 2009, where there was a significant drop-off in activity impacting on markets. We were very clear in terms of the action we took: we reset the base, looked forward.

“Lots of opportunities come out of these difficult times but it doesn’t take away from the medium- to long-term fundamentals across our markets. Mining, oil and gas resources are finite and there is a growing demand for them. That combination is going to drive further investment.

He believes in taking a positive view: you can’t ignore the short-term environment, but you can look at it in the context of a few years ago and the broader opportunities in the longer term, he says.

Westhill showcases the range of skills, expertise and innovation in north east Scotland development and internationalisation.

UK Forum Subsea Technologies, the regional subsea operational base of America’s Forum Energy Technologies has a wide range of ROVs, tethering systems, simulation software, data acquisition software and geosciences product management.

NCS Survey, owned by Norwich based Acteon Group, is an international market leader in low-logistics autonomous underwater vehicle surveys and real-time 3D subsea visualisation systems. 2012 has seen it appoint an operations manager in Brazil.

The location is good for specialist start-ups and early stage technology firms. ROVOP, which supplies stateof-art ROVs and operators, recently secured £1.6 million from the Scottish Loan Fund (SLF) set up by the Scottish Investment Bank, a division of Scottish Enterprise. ROVOP has an option to borrow £5 million in total from the SLF, and has also received £60,000 in additional public funds to support growth and internationalisation.

In welcoming the support, ROVOP managing director Steven Gray said the firm was seeing “a high level of enquiries” and that it had recently won three longterm contracts for wind farm installation.

Aberdeenshire in general has benefitted greatly from oil and gas. It generated £3.2 billion (3.5 per cent) of Scottish GDP in 2008 according to Inverness based Mackay Consultants. Claimant count unemployment in August was just 1.0 per cent, which many labour market economists would regard as ‘full employment’.

Wages and salaries are high by Scottish and UK standards. Across Aberdeen and Shire, average gross weekly earnings of workplace-based, full-time employees on adult rates, and including overtime, rose 14.2 per cent to nearly £644 in the three years to the start of 2012. This compared with a 7.5 per cent rise to £575 for the whole of Scotland andbusiness an even weaker 5.8 opper it’s such a great that when the cent increase to to £608 within Great Britain. portunity arose become chief executive, Gross disposable household well, you just don’t turn down that income down.

(GHDI) Shiremanwas “There in is aAberdeen great teamand of senior agers and talented people across the organisation, so the opportunities to do something quite special here are very exciting. That’s what gets me: I want to SUBSEA feature realise the companies potential ofwill this business. The prominently in increased state group has come a long way in the past funding support forfocusing innovation decade — now we’re onin the next oil and development stage andgas, being passionate agency about what is

L £17,777 in 2010, the sixth highest among Aberdeen Airport the 37 regions into which the UK is is 15 minutes’ drive carved up for this purpose by statisticians. from Westhill and Between 2000 and 2010, Aberdeen and the focus of major Shire consistently had the highest GHDI investment by BAA per head of the four regions into which Scotland is divided for the survey.

Westhill has shared in this prosperity as a community in a pleasant rural setting with good amenities, easy access to Aberdeen for commuting and only 15 minutes’ drive from the city’s airport which is itself to benefit from £100 million of investment by owner BAA over the next 30 years.

“Westhill encapsulates many of the things that we are very proud of here in Aberdeenshire — it showcases the range of skills, expertise and innovation which exists inanorth eastofScotland’s energy indus- Keith Cochrane believes almost new set challenges. try,“It’s andback combines to thatexcellent passioncareer about oppordoing in investing in talent that tunitiesbetter, with aopening very high of life,” things our quality minds — and will help Weir Group said organisation’s Aberdeenshiremind.

Provost Webster. our WeJill operate in to build a sustainable, huge markets but as a player we’re rela- long-term business tively small.

“Through strategic planning we’ve identified opportunities to broaden our use itour to leverage in more and will be market and product portfolio, and trying to encourage match-ups with geographic footprint, partly through operators, organic growth and partly through ac- contractors and so on.”

He also expressed keenness to do quisition. It’s that real sense of opportu-

More funding pledged for subsea technology

more supplier development work Scottish Enterprise has said. linking smaller companies with the Subsea is defined as ‘a key global larger subsea contractors, hopefully strength for Scotland’ in Scottish with help from Subsea “We work Enterprise’s 2012-2020 Oildemand and Gasfor “fracking” equipmanufacture of pumping equipment for theUK. Clyde North America’s growing with Technip, Subsea7 and such strategy, which is to be reflected shipyards. ment used in extracting oil and gas from shale is key companies on a 13,000 range of issuesin– in R&D the profit agency Today, Weir Group employs around people to Weir grants Group’safter upbeat predictions announced training, skills, in R&D,” Rennie said. issued its ‘Innovation Call’ to more than 70 countries, working the minerals, oil during thefirst summer.

“Even large companies somethe sector. and gas, and power industries.

Rapid growth are continues This half-term report detailed income up 33 per cent times unaware of emerging all the funding is offering from existing to be been driven by expanding into markets to It £1.03 billion, funding orders soaring by 43 per cent to £1.2 sources.

We will be doing a supply Scottish, UK and European govern-by 23 per cent to and providing services globally. billion and pre-tax profits boosted chain marketing exercise in the oil mental and institutional sources to Innovation driven by customer demands is central £178 million. and gas and sector including subsea develop technologies addressing engage company’s success, earlier this year it At the time Keith Cochrane commented David “The Rennie wantstotothe over the next or so.” asset integrity, including subsea withofanother 100 companies announced the investment of £2year million in a dedicated group will continue to invest to grow ahead our Aberdeen office, elements such asand inspection. research facility. The “Out Weir of Advanced Research Centre our end markets we now expect profits for weacurrently workof with about 180 intention to award more will be central plank Strathclyde the“Our full year to beissomewhat aheadtoof our “Over the past three years we companies.recently We wantestablished to engage with awarded about £5 million to oil and the O&G sector,” said David Rennie, University’s previous expectations.” at least 100and more over the next two gas companies. I would like us to the agency Technology Innovation Centre in Founded in director 1871 in responsible for to three Cochrane years, andsaid companies that double that to £10 million over the supporting and gas Glasgow. the partnerGlasgow as the G & oil J Weir, the industry havewould some“continue involvement with the next three years. The funding is and who sits the board of ship to bring company wason responsible subsea sectordevelopments will form a huge limited, but we are confident we can breakthrough industry association to part our for the invention andSubsea UK.

Innovation driven by customer demands

ooking forward, Cochrane stresses, also means investing in talent, and he is almost evangelical about encouraging individual potential.

“It’s our people at whatever level they contribute who make the difference, who enable us to deliver,” he says. “Look at our growth in the past couple of years, both in achieving that and moving ahead needs capability in our people.

“We are investing significant sums in “Undoubtedly, eastoffis aa senior major this, and havethe justnorth kicked player on the global energy stage andIfitwe is management training programme. great to see Westhill’s continuous don’t have the people we will developbe held ment as a hubinvestment of subsea excellence.” back.

While and continued “This a key sector and we focus areisvery much at for theusforefront want do what we canleadership to tie it to role the of mytopriorities, in my area,” said Reid,to anmake industry as CEO it Alistair is also vital suresupwe portbuilding executiveupat the Aberdeenshire Council. are next generation of “While there is still a lot of activity in managers. the“ItNorth Sea, to much of theasubsea activis back building sustainable ity is overseas.

A lot of and long-term business.

If itweis designed only wanted mobilised from north east success for logistically a year or two, we wouldn’t be Scotland though, andwe weare want to focused anchor doing a lot of things very these jobs at Westhill for ever.” on now.”

Another 25that acresunrelenting of land have focus, been Despite designatedagrees, for employment-generating Cochrane having a good life balactivities at Westhill awaiting ance is crucial.

“Whenand I’m are working I’m development.

“Unless this additional land passionate about the business, I do thrive wasit;released, would be Ilooking on I’m quiteWesthill driven. However, have a pretty tightly constrained now,” Reid said. relatively young family, and at weekends “There’s a lot on of interest not just I tend to focus the kidsin—it,although from thewould big guys butalways from the smaller my wife say not exclusively! ones thathard want be aclose to the big “I try to to have different sense guys.”

Aberdeenshire hasabeen as of perspective.

WhenCouncil you have senior supportive of role development as take it canover, be, management it can easily he the added. so ability to step back and have a dose “The campus approach of reality, like taking your favoured daughter by to the on companies thatis have amany sportsofclass a Saturday, good setfor tled at Westhill seems to have been well everyone.” received the Perhapsby theour mostplanners surprisingwithin discovery constraints of their policies.his “They very about Cochrane is despite business much see employment DNA, he’sit as nota key all area aboutforthe numbers. growth andofmany of he thewants jobs are high Ultimately, course, them to valueup, engineering technical add and then toand multiply.

Yetones.” there is A newsense road he — is theaware Aberdeen a strong of his Western responPeripheral Route — will make it sibility as part of(AWPR) something bigger, and even easier quicker for commercial wants to playand his part.

Cochrane, it seems, traffic from Westhill to travel the 32 miles is an architect. to “With Peterhead, fast heritage, emergingthe as Weir, which it’s thatis rich a subsea sector port of choice tremendous track record: I wantfortoNorth build Sea logistics. upon that,” he says. “This is, quite rightly, Approved the Scottish government, a very proud by business, so I want to do my the AWPR been awaiting the results small bit tohas help move it forward, help of a legal challenge It is, sustain it for the next by 100opponents. years. You don’t nevertheless, almoststill. as quick to get to do that by standing Peterhead from Westhill asability it is tototravel “It requires initiative and seek fromopportunities Westhill to Aberdeen in the out and takeharbour advantage of heart opportunities of the city, Reid those —said. that is the broader “AWPRthat is crucial to the area’s message sits comfortably with econwhat omy,underlying so gettingthemes a green for busithat the arelight for our in thetoday, next few would ness and months it’s driving ourcreate teamsa tremendous feelgood factor. across the world.”

PROFESSIONAL BRIEF

Tendeka invests Challenge of to supportbig turning international ideas into growth is key reality

By Gary Smart, Tendeka CEO

T

F

endeka, the provider of compleor many years, Scotland’s life tions and reservoir monitoring science sector has been as products and services to heralded the oneoilofand the gas nation’s rising stars. upstream industry, is experiWe haveinternational a tremendousgrowth oppor-in encing enhanced tunity to leverage our resources including many key areas within the energy sector. theContinuing NHS, our universities our excepinvestment and enables the tional heritage forsupport medicalthis innovation, company to fully growth talent and and toand takeinfrastructure advantage of to theencourage opportuniattract big business.

So why does it that ties wherever and whenever theyisarise, many of our science including theyoung Northlife Sea whichcompanies still are struggling get opportunities. off the ground? presents signifito cant The One challenge area for of turning ideas into reality and has companies expansion been of scale still seems to elude all, but a few, Norway, following on and is an issue that needs to be urgently from our recently an-addressed.

The lifeframe science industry is truly global nounced agreeand as others, mentScotland, with Statoil for has identified it sand control products. as a key sector to drive future wealth Norway is an and prosperity. important market But aspiration isn’t for Tendeka, not Gary Smart - CEO enough and we only because of need tobut actbecause now our relationship with Statoil, to fullyprojects exploitin the of the number of innovative opportunity before Norwegian waters which require industry weour getwireless left behind. leading products such as Lack of funding technologies and gauge installations.

Neil is a vociferous InMcInnes line withlooks our commitment to ento pooling resources by those hancing our portfolio oflament products and our in recently the sector. international growth, we created Scotland a vibrant business angel a new UKhas headquarters in Aberdeenshire community and the development Scottish Investment and announced of a Bank’s Co-investment Venture Funds high-tech research andand development play an in important role.

However, there facility Aberdeen.

The headquarters is growing senseCourt, of foreboding this inaAbercrombie Arnhall that Business money could beincorporates redirected atexecutive, renewables.

Park, Westhill, Coupled with our of a services. strong active sales, projects and lack support Venture Capital in community, specialisOur premises Peterseat Drive, ing in life sciences in growth is Altens, Aberdeen, areScotland, being converted inevitably slow.research and development, into high-end That and said,assembly life science is fundamentesting facilities.

A fluids, tally a longrubber term, and high-risk business. Itfor chemical, sand laboratory is instance, toportfolio take drugs ourexpensive, extensivefor completions will through clinical andenhancements into the market be included, withtrials further with guarantee engineering of a return. But if Scotof ournosub-surface capabililand ties. is serious about its life science sector, weThe needAltens to findpremises ways to will get businesses also housetoa anew point where venture capital is compounding facility for money our leading forthcoming. range of swellable packers and a regional While life science sector sales and Scotland’s technical centre. remains made up ofsupports many diverse small This expansion on-going busicompanies, mayparts also of be the an arguness growththere in other world, ment for consolidation. resources including Russia, where Pooling we are working and to create critical mass withcollaboration major operators on new software with otherand indigenous companies orand partcontracts data interpretation, nering organisations is one in Westwith Africa, where theoverseas focus is on route and may well prevent some compadeepwater developments and reservoir nies from failure in these particularly hard monitoring. times.

Getting ready is another In order to investor expand our service and prerequisite, especially majorrecruitforeign product offering, we arewith actively organisations ing in the UK,looking Europeon. and globally for Scotland has an exceptional pool of regional managers, sales and technical talent and ideas.

Butand in today’s global staff, R&D support designers. competitive is not Our clientseconomy operate that in some of enough the without and the busiharshest the andright mostincentives technologically chalness infrastructure to support them. lenging environments, and our expansion Neil McInnes, Head Technology, and commitment toofthe development of Grant Thornton Scotland and the evoluinnovative technologies tion of our existing offering ensures we areassociation meeting their in with needs.

Tuesday October 2 2012 | the times

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Power of Scotland

Subsea export

New ports proliferate in Subsea engineering companies are looking hungrily at new and distant destinations for their products and services, writes Rob Stokes

A

lan Charlton, the UK Ambassador in Brazil will address an oil and gas supply chain event in Aberdeen on October 9, where some of his most attentive listeners will be from the subsea engineering companies that have set their eyes hungrily on the South American country’s potentially huge market for their products and services.

Just how huge was underlined by the announcement at last month’s Rio Oil & Gas Expo 2012 in Brazil of a near $1.1bn deal between Brazilian energy company Petrobras and America’s GE Oil & Gas, under which the latter will manufacture some 380 sub-wellhead systems and installation tools for offshore oil and gas exploration.

It is the world’s largest ever subsea wellhead production contract. GE Oil & Gas owns Aberdeen based VetcoGray, a worldleading supplier of such systems that claims to supply nearly half world’s demand and 25 per cent of the parts manufactured in the Petrobras deal will be made outside Brazil, though it is not yet clear what this could mean for other parts of VetcoGray, which has decades of experience in Brazil.

Subsea is becoming a poster-child for the UK and Scottish governments’ version of the ‘export or die’ mantra that was trotted out regularly in the 1950s. Exports account for 56 per cent of the UK industry’s £6 billion annual output according to latest estimates from Subsea UK. “The whole global market is growing,” said Neil Gordon, Subsea UK’s chief executive.

Analysts at consultants Rystad Energy in Norway predict that annual output in the subsea industry could double globally to £40 billion over the next five years.

It is a globe trotter’s game. Subsea UK, the industry association, promotional and skills training body, is this week running Subsea Asia 2012, a conference and exhibition in Kuala Lumpur, Malaysia, and was also in Rio de Janeiro, Brazil for Rio 2012. More than 150 companies attended Subsea Asia — many of them local but a good many also from the UK in general and Scotland in particular.

The Aberdeen event will focus on how to do business in Brazil and is being hosted jointly by Subsea UK and Scottish Development International (SDI), the business internationalisation organisation that is a partnership between Scottish Enterprise, Highlands and Islands Enterprise, and the Scottish government.

The locations of SDI’s overseas offices

already reflect the importance of energy to Scotland and more are to be added: in Brazil, Norway, and West Africa.

State support for subsea exporters is a key focus within development agency Scottish Enterprise’s work in the Oil and Gas (O&G) sector, said David Rennie, Director, Oil and Gas/Thermal Generation and Carbon Capture and Storage at Scottish Enterprise.

To that end, the agency has asked Subsea UK to collaborate on guides to doing business in overseas locations. The first one, on Brazil, is to be presented at the event in Aberdeen. Similar guides for Africa and Australasia will follow. Rennie said that more export advisers have been taken on in recent years to advise companies in Scotland.

Brazil is just one gleam in the eye of large subsea contractors such as Subsea 7, Technip, FMC Technologies, Wood Group and GE Oil & Gas, who all have global operational centres in Aberdeen.

They already bestride the world and want more. Australasia, Africa, Russia and maybe, eventually, the Arctic, are also on the list.

“For some UK subsea companies, as much as 90 per cent of their turnover is from exports. So we’re working very closely with SDI and UK Trade & Investment (the UK trade promotion body) to make sure companies get the help they need in certain regions,” Gordon said.

“Brazil, for example, is a very big market but you have to narrow you focus down to the bit of the pie that interests you to see where you fit into the supply chain.”

So what are the export prospects for the UK’s subsea companies in the world’s emerging oil and gas provinces and what self-evident and less obvious challenges might companies face in entering these waters, known to some, uncharted to others?

Lawyers who advise on corporate deals in just these markets and niches are in

The importance of Brazil is attracting increasing numbers of Aberdeen-based companies and also SDI

no doubt that export prospects for subsea are excellent, judging from the level of contract business that is flowing back and from their own travels prospecting for future fee income.

When the Edinburgh-based international law firm Brodies established an office in Aberdeen 18 months ago, it was anchored by an O&G team that has since grown rapidly to 10 people. Brodies strategy is to pursue separately the opportunities in both the Exploration and Production (E&P) and service sectors and they have backed that by having two partners dedicated almost exclusively to each of these business areas.

“We’re very busy, attracting a lot of work, and the signs are that we will need to grow with that business,” said Finlay Crossan, the partner, along with Greg May, in charge of developing Brodies’ business with O&G services clients.

As a subset of this, subsea is a key focus for Brodies. “Subsea companies operat-

the times | Tuesday October 2 2012

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Power of Scotland

growing world of subsea ing in or from the UK are in a strong position to exploit export opportunities because they have strong technical capability and expertise and a strong position in the market,” said Crossan. “They don’t have a lot of competitors with the same background.”

Greg May added: “Companies such as Technip, Subsea 7, Wood Group, FMC Technologies, Wood Group, GE Oil&Gas are very big players in a substantial market that is also niche in terms of the technological expertise that they have developed and which is transferable to deep water elsewhere.”

This, he said, provides a unique opportunity to offer a unique service to a very specific substratum of the O&G industry.

“So they are very well placed to develop these relationships with operators who will be driving development in emerging provinces.”

And so on down the supply chain.

Many Tier 1, top level, contractors in Aberdeen and Abrdeenshire already have significant global market shares. Tier 2, specialist sub-contractors supplying products and services to Tier 1 clients can follow these into new markets where there is also potential to build relationships with other customers.

The sheer size of the Tier 1 contractors is another strength as it brings with it the resources to confront challenges in new markets and the relationships to work through these with operators. “Follow the leaders,” Crossan advised.

“Be pragmatic and prudent,” May added. “I’ve worked with suppliers to Tier 1 companies, and what they are trying to achieve is balanced terms and conditions, which is not always easy. What we find in the post-Macondo environment is that there is a predisposition for risk to be transferred.”

Pedigree, innovation, good service, relationships and having a local presence add up to a powerful package but are not necessarily a deal clincher in new provinces where economic, political and fiscal factors are in play.

Said May: “We have experience of working with a number of these types of companies both in-house and as external lawyers and know there are issues with moving people and property and managing supply chains as you try to enter these various provinces. Political overtones can exist and there can be fiscal and legal issues.”

“In some markets you may see opportunities but have to ask yourself if you can

Aker chief sees sustained export success The globalisation of subsea need not halt the UK industry’s export success, according to the boss of the UK subsea subsidiary of Norway’s Aker Solutions ASA, the international engineering services company.

Aker has hubs throughout the world’s established and developing oil and gas provinces and is developing their competence to handle more work locally. Almost 50% of business for its subsea subsidiary in the UK comes from exports to the same regions.

Matt Corbin, right, Aberdeen-based managing director with Aker Solutions, said the UK retains competitive advantages: “A lot of subsea technology has been developed in the UK and it continues to be a hotbed for trying things out.

We’re not like transportation, where every unit is probably a repeat version of the first. Every subsea system is slightly different to the last one. And for components — subsea trees, control systems, pipelines and so on — each requires an element of engineering.

Customers want consistently reliable engineering that delivers good products and no risks in terms of quality.”

These requirements have tended to keep subsea engineering rooted in the UK rather seeing it transferred to lower-cost regions. “I don’t think that increasing the competence of overseas hubs will reduce our footprint in the UK,” Corbin added.

“I think we will still grow in the UK and will probably export as much. We will continue to be a centre of excellence and to be a hub for these many regional sites.

That’s where places like the UK add value, by having high-end, complex technical solutions that can be sent out around the world to be configured as needed for local customers.”

“There’s a drive in subsea to have increasingly reliable solutions, which makes the case for having the best and most experienced engineers in the world putting together systems destined for the seabed.”

“Bread is a professional and innovative communications company with a talented,

hands-on team, focused on delivering great results. The team combine big agency ideas and creativity with a small agency style that leads to a more personal service for clients.”

Andrew McCallum Director of Communications and External Affairs Dana Petroleum

What can Bread PR do for you?

Contact louise.nicolson@breadpr.com on 01224 615850 follow us on Twitter @BreadPR www.breadpr.com

Tuesday October 2 2012 | the times

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Power of Scotland

actually export directly as, say, a manufacturer or do you have to use agents or have a certain amount of local content,” said Subsea UK’s Neil Gordon. Brazil is an example.

The local content of a project must be at least 60 per cent: thus 75 per cent of the parts involved in the GE deal with Petrobras will be manufactured in Brazil.

“Sometimes it can take a bit longer than first thought and can cost more to operate in another country,” said Gordon. “So particularly in a recession, when money is tight for smaller companies, it is important not to make errors.”

Although the O&G industry is international, many contracts are entered into under English Law despite the fact that many companies involved are not necessarily indigenous to the UK. ““But that does not mean that there are not projects in places such as Brazil, for example, that will require local law,” said Crossan. “So we have an alliance with a number of ‘best of breed’ law firms elsewhere which allows us to confront legal challenges facing clients in Aberdeen in other jurisdictions.”

Malaysia has huge opportunities in shallow and deep waters for subsea companies

Brodies’ international experience in the sector has been enhanced by an 18 month long association with the Scottish Council Development and Industry (SCDI), the economic development organisation that also runs trade missions.

Said May: “On the SCDI trip to Brazil, for example, we were able to leverage my background and contacts from previous experience with transactions in Rio: it provided a network and introductions for SCDI members and other O&G companies from Aberdeen participating in the visit.”

Crossan also sees opportunities for UK subsea contractors to open up new markets by forming good relationships with state-backed entities that moved into E&P in the North Sea in recent years. These include Abu Dhabi’s TAQA, Korean National Oil Company, and CNOOC and Sinopec of China.

“A lot of these are not just looking at the UK for production and supplies of oil and gas,” he said. “They are also looking at Brazil, Africa, Russia and other emerging and continuing production supplies.

UK subsea companies could follow these operators around the world.”

Kuala Lumpur, Malaysia, is the operational hub of the subsea industry there.

“That whole area has huge opportunities in shallow and deep waters for subsea companies,” Neil Gordon said.

Australia follows next February when Subsea UK co-organises a Subsea Australasia conference and UK pavilion at the Australasian Oil & Gas conference and exhibition in Perth. It will take place amid high hopes of sustained and grow-

ing business from the region for the foreseeable future — a recent positive trend for subsea, said Gordon.

“Australasia used to be quite cyclical as projects started and finished. Over the past 12 to 18 months, however, we have seen five or six major projects coming along simultaneously. It is very much a hot spot, with a big coastline, and the growth will be astronomical in coming years.”

Australasia is seen as “a soft landing” for UK exporters because English is spoken, the law is familiar, and it is a politi-

Greg May of Brodies says that you may have to consider using an agent when exporting

cally stable oil and gas province. “The challenge is that it becoming a very costly place to do business,” Gordon said. “Salaries, wages and house prices in Perth, for example, are becoming very expensive.

So while the prizes are large, the set-up costs are too.”

On the other side of the world, the record summer melting of Arctic sea ice has revived discussion over the prospects for O&G exploration and production throughout the region.

“The Arctic is more than one area with different challenges,” Gordon observed.

“Maybe the most challenging is the weather on the surface, because in some places it is usually warmer in the water than above. So operational reliability of equipment is important, and of course the environmental issues are large. ” That said, he sees no reason why UK subsea companies could not be as successful in the Arctic as elsewhere. “The UK is the benchmark. Wherever you go in the world you will find someone who served their apprenticeship or time in the office in the UK. “Many companies recognise that if you want to do global business in subsea you have to have a presence in the UK and particularly round Aberdeen and Shire.”

Commercial prospects for subsea abroad extend beyond oil and gas to defence contracting and oceanography, which is becoming an area of considerable research and development interest, for environmental protection, mapping and surveying, and for exploitation of natural marine resources such as sea-bed minerals.

commerciAl report: HoUlDer

Aberdeen office is key to historic firm’s 21st century vision

I

T may be able to trace its roots back to the 19th century but UK engineering consultancy Houlder’s modern-day focus is firmly on the future.

The company is responding to today’s fast-evolving and dynamic offshore industry through a range of specialist consultancy, design and engineering, fabrication installation and mobilisation expertise.

The business is comprised of highly skilled teams of naval architects, CAD draughtsmen, project managers, marine and structural engineers, who strive to deliver bespoke solutions to clients around the world.

Growth in the UK offshore wind industry has signalled a move into the sector, with recent projects such as Turbine Access System (TAS), aimed at ensuring higher levels of safety and operability for offshore wind farms, demonstrating Houlder’s capacity to respond to challenges.

Continued growth in the offshore Oil and Gas sector has been another key driver, with projects such as vessel and rig conversion, upgrade projects, equipment design and supply.

Current high-profile projects include

multiple turnkey design, engineering and fabrication contracts for Ensco, one of the world’s leading Oil and Gas service companies.

Originating as Houlder Line, the firm has a long pedigree in the marine industry. The original ships were known all over the world, their distinctive black funnel with white Maltese cross on a red background a familiar sight. Started by E.S. Houlder in 1849, Houlder in 2012 a wholly independent consultancy owned by its employees and operated through an Employee Benefit Trust.

Today the company has offices in Aberdeen, London, Portsmouth and Tyneside, and divides its expertise among four main business sectors – defence, marine, renewables and oil and gas.

Against a backdrop of a global economic recession and sluggish demand, Houlder managed a respectable turnover of £11million in the last financial year. A major contributing factor to business growth has come from its Scottish operations.

“Essentially we’re being ambitious,” says Garry Kennie, Offshore Projects and Engineering Director.

“For example, our headcount has doubled in the last three to four years, despite the economic outlook, and much of this expansion is due to activity in Scotland.”

The Aberdeen office represents Houlder’s largest operation in the UK by headcount, managing around 40 personnel.

Aberdeen’s status as a global energy hub, coupled with the buoyant oil and gas industry, has made the city a natural choice for Houlder’s Scottish operations.

It is home to the firm’s Offshore Projects and Engineering Business, specialising in major offshore energy infrastructure projects.

The office, which has grown rapidly over the last three years due to targeted investment, is based in the modern, spacious and wellconnected Aberdeen Science and Energy Park, strategically located in the UK’s centre of Offshore Oil and Gas. It offers significant in house engineering, design and fabrication expertise and is equipped with the latest technology and software – including in house 3D design capability.

The office also has close links with local fabrication yards and one of the UK’s major shipyards in Teeside.

Clients can enjoy a genuine turnkey approach to even the largest jobs.

Its operations in Aberdeen ensure that Houlder is well placed to supervise marine installation, upgrade and conversion projects in the UK and overseas – with a team currently deployed to South Africa.

Houlder has also recently expanded its marine design consultancy business through the integration with Portsmouth-based naval architects and design firm Hart, Fenton & Company.

The firm previously operated as a wholly owned subsidiary within the Houlder Group. The main outcome of the change is the formation of a centrally coordinated marine design team, making the company’s capability more readily available.

Rupert Hare, CEO, comments: “Houlder’s capability in Aberdeen is growing, as it is across the whole company. The team is delivering large, multi faceted and complex projects – acting as a responsive trusted partner to clients across the Offshore Energy sector. The future is looking good.”

Garry Kennie, Houlder’s Director, offshore projects & engineering

Houlder / Bmt turbine Access System fitted to 24m workboat

the times | Tuesday October 2 2012

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Power of Scotland

Renewables Reducing carbon emissions is seen as an opportunity for a sustainable econonomy

Turbine of change is rolling onward Already leading the way in the wind and wave stakes, Scotland is now looking at the potential of biomass, writes Ginny Clark

A

mid the jokes about whiskyfuelled cars, last week’s news of a plan to produce bio-fuel from the by-products of our national drink also delivered the serious prospect of building an industry in Scotland that could be worth £60 million a year. The partnership between Tullibardine distillery and Napier University spin-out Celtic Renewables aims to process sugar-rich whisky leftovers draff and pot ales by feeding them to bacteria that will then produce butanol, in what has been hailed as a world first.

Offering significant benefits to both environment and economy, it is just the latest step forward from Scotland’s burgeoning renewable energy sector.

Increasingly recognised as a global pioneer in terms of research, policy and ground-breaking projects, Scotland already leads the way in Europe when it comes to wind, wave and tidal resources, with the biomass sector now also offering potential in the fuel industry.

Yet this is only the start. Right now, Scotland meets almost 30 per cent of its equivalent electricity demand, with nearly 3 per cent of heat, from renewable sources.

However, the Scottish government is committed to generating an equivalent of

100 per cent of electricity demand from renewable sources by 2020, along with at least 11 per cent renewable heat.

It’s often referred to as an ambitious target, and it certainly tops the aims ofthe European Union. If Scotland does reach 100 per cent electricity consumption from renewables in eight years time, then along with the targets of 11 per cent on renewable heat and 10 per cent on renewable transport, our share of renewable energy overall would be at least 30 per cent, which would be double the UK’s agreed EU target.

Along the way, the Scottish government hopes to create up to 40,000 jobs and attract around £30 billion in terms of investment in the Scottish economy.

Reducing carbon emissions is seen as an ‘opportunity’, not just in terms of securing sustainable energy resources, but for securing a sustainable economy.

So how realistic are these ambitions?

Can Scotland really deliver on these targets? Well, the Scottish government can already point to a level of investor interest in our offshore renewables leasing as one of the largest in Europe, and just two months ago industry organisation Scottish Renewables also produced the figures to demonstrate that while many sectors have continued to struggle through the recession, Scotland’s renewable electricity industry has delivered capital investment of around £3 billion since the beginning of 2009. As the renewable

electricity sector has expanded by more than 10 per cent a year — with onshore, followed by offshore wind the two main sources of investment — it now generates the equivalent of 35 per cent of annual demand, and has been crucial to growing the supply chain, and supporting more than 11,000 jobs in the process.

The strength of the existing wind industry is now helping to fund the growth of emerging sources of renewable electricity, such as wave and tidal.

There are plenty of success stories. In July, the new Marine Energy Park, in the Pentland Firth and Orkney Waters, was officially launched at Thurso, to underline their role at the forefront of the world’s marine energy development along with existing centres of excellence such as EMEC (European Marine Energy Centre).

Another major wind energy project is also being developed in Aberdeen,where the spin-out Aberdeen Renewable Energy Group (AREG) — with almost 200 organisations — is working with Swedish company Vattenfall on their proposals for a European Offshore Wind Deployment Centre (EOWDC).

Iain Todd, AREG’s renewables champion and spokesperson for the centre, said: “The EOWDC is one of only two major offshore wind demo sites in the UK, and as such is at the cutting edge in global terms. By demonstrating the operation of the new 5-7 MW turbines that are coming to market, the project will cut the cost of offshore wind for the whole sector. It will also place Aberdeen and Scotland as a world centre for offshore wind, and capture telling economic value for the region.”

A recent Task Force report by DECC called for the EOWDC project to be built as soon as possible, and the European

Union has invested 40 million Euros to help fund creation of the project — which will also supply more than half the domestic electricity for the city of Aberdeen. “Aberdeen is not only looking to offshore wind for its energy future. It has developed plans and assembled financing to build some of Europe’s most advanced and extensive infrastructure based on renewable hydrogen,” added Todd. “This will keep our city at the forefront of energy thinking for decades to come.”

Quite simply, says Niall Stuart, chief executive of Scottish Renewables, our renewable energy industry is helping drive investment, plus create jobs and training opportunities while also tackling climate change and helping us to meet our renewable energy targets.

“Scotland’s renewables industry is establishing itself as a global leader, particularly in those emerging technologies such as wave and tidal,” he said. “It’s an industry delivering real benefits to businesses and communities across the country with 11,000 jobs and around £3bn of capital investment since the beginning of 2009 during the worst of the economic downturn. Scotland’s renewables industry now generates the equivalent of 35 per cent of annual electricity demand.

“The Scottish government set the ambitious target of generating the equivalent of 100 per cent of our energy needs from renewables by 2020. It’s going to be a challenge, but we believe it is achievable as long as we see continued investment in infrastructure such as grid and storage, and the right market framework. In the next few weeks the UK Energy Bill will be published which we hope will bring some much needed clarity to the electricity market reform process and give the industry the certainty it requires to fulfil its potential.”

Demand for a better mix Scotland’s renewables industry is calling for new measures to ensure connection charges for Scottish islands do not stifle the development of our worldleading wave and tidal sector.

Every electricity generator has to pay Transmission Network Use of System (TNUoS) charges to connect to the UK network, but island-based generators also have to pay for ‘local works’, that include the connections from the mainland to the islands.

There has been an independent review by energy regulator Ofgem, but the charges are continuing to increase, and the costs are seen as a real threat to wave and tidal projects. Wave energy company Aquamarine Power chief executive Martin McAdam, pictured right, believes this means Ofgem and the National Grid are now out of step with the needs of the renewable energy sector.

“With a quarter of the UK’s generating capacity shutting

down over the next 10 years and domestic gas bills increasing 78 per cent since 2000, more than ever the UK needs a diverse renewable energy mix to secure future energy independence and to act as a hedge against fossil fuel price volatility,” he said. “Wave energy can be a valuable part of that mix, but wave projects have to locate where the waves are – and 92 per cent of all UK wave energy projects will be subject to islands charging.”

“ The work is

full-on, but I can unwind in an instant.”

David, Operations Engineer, Shetland

We need more engineers like David.

“I really do have it all living and working in Shetland.

I’ve travelled the world as an engineering consultant, but my career has come on leaps and bounds here.

Rejuvenating a terminal to extend its working life in the light of advances in technology is a challenge in itself. But once my shift is over, I can gaze out over outstanding scenery and marvel at wildlife that includes seals and seabird colonies. If you want to get back to nature and enjoy some peace and quiet with your family, Shetland is the place to be, as well as there being plenty of other activities to get involved in. There is a strong community feel you only truly get on an island, and lots of interesting historic and cultural sights, as well as excellent sporting and leisure facilities!”

Like David, you could enjoy the ultimate work/life balance with BP in Shetland. We currently have around 300 talented engineers, from all kinds of disciplines, working here to optimise the investment we’re making to revitalise the Sullom Voe Terminal.

There’s a real team spirit, a unique camaraderie and everyone is valued for their contribution.

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