Bill Bayliss, Viking SeaTech, UK, analyses the important role that smaller, specialised offshore services companies can play in making sure that supermajor projects go according to plan.
Sustainable support systems are the backbone of the oil and gas industry. In the energy sector, small to medium service firms provide the stability and assistance required by the industry’s major players. There are future challenges. Demand outstrips supply. Oil prices are unpredictable. The workforce resource pool is draining. But better collaboration could ease the energy industry’s lingering headache.
The sector faces problems of supply and demand. Partnerships between the sector’s heavyweights and smaller, specialised companies are being formed to move operations forward. Individually, these service firms’ contributions to the sector can be limited, but it makes business sense to connect the talents and services of smaller companies.
In the light of this partnership potential, the role of the offshore support company is changing. Service firms are developing creative ideas to support the industry in tackling difficult issues. Entrepreneurial businesses are being created on request from the energy majors. Viking SeaTech has up a positioning department to provide subsea solutions. In addition, the company has made the decision to provide manpower services through VS people. Smaller companies are creating full packages that are attractive and cost-effective alternatives for oil and gas heavyweights. As energy markets fluctuate, offshore support companies provide comfort in collaboration.
The upstream oil and gas industry is cyclical in its nature. This can be problematic, as supply directly relates to uncontrollable factors, such as international economic influences and oil and gas prices. Suppliers and contractors must adapt to the changeable markets, yet still retain competitive advantage. New technologies and alternative ways of working are being developed in order to meet the world’s supply requirements. Locating and producing large volumes of reserves long term requires investment, precious time and cutting edge technology.
Matching supply to shifting patterns of demand is troublesome for operators. Demand for oil across the globe varies, and is proving difficult for energy majors to gauge. Last year BP reported that demand for oil in the US peaked in 2005 at approximately 21 million bpd and by 2011 it had fallen to around 19 million bpd. But in China, oil demand has risen over the same period from around 7 million to 10 million bpd. Evolving global energy requirements challenge industry players.
Exploration and production can pose an element of risk. As activity ventures into deeper water, supermajors must evaluate their risk management strategies in relation to unexplored environments. With many of the easy to remove reserves already extracted, new techniques have been devised to further bolster global supplies.
In additional to geological risk, the price of oil is the biggest factor in deciding whether a reserve is economically feasible. The tougher the geological barriers to ease extraction, the more risky the project becomes. Oil and gas companies do endeavour to forecast the predicted oil prices over the term of the project in order to decide whether to begin the activity.
Supermajors readily face the problem of political risk. Oil and gas companies deal with regulatory factors daily, outlining how and when extraction can be done. Variations of laws and regulations can differ around the globe and restrictions generally apply when working in politically unstable territories. Companies often go where the oil and gas is located, despite political problems. This can prove tricky for major operators, as sudden nationalisation or changing political persuasions can alter the regulatory environment.
Uncertainty challenges the industry, but the offshore services expertly deliver alternatives to alleviate problems. While energy majors cannot predict the future, they can use integrated, flexible offshore support services to guarantee efficiency and responsiveness.
The answer to oil and gas majors’ problems lies in outsourcing. Contracting to service firms is cost-effective for national companies. When oil and gas prices waver, the industry must endeavour to cut costs wherever possible. Other sectors would immediately look to trim the workforce, but this is not in the interest of the energy majors. Due to the fickle nature of industry, reducing staff numbers is not an option as the next upturn may be just around the corner. The ability to mobilise quickly is key.
Deploying the services of smaller companies makes business sense. They hold the map for large corporations looking to gain entry to unconquered territories. By forming these essential partnerships, majors can gain access to markets previously undiscovered. Testing the water in provinces that have not been tapped allows big companies to trial new equipment, systems and processes. When paired with a firm already making waves in a particular region, the transition into that area is somewhat smoother.
Innovation is at the heart of these partnerships. Although significantly reduced in size compared to their major big brothers, offshore support firms are developing highly sophisticated technologies. In a bid to reduce expenditure, energy operators consider the offshore specialist for support, and ultimately, to use alternative equipment. Support companies have been investing in technology to make their customers’ experience quicker and economical. Technology is so important to the future of the energy sector, but large firms do not have exclusive influence over it. They can add value by screening it in the marketplace first. Finance for supermajors’ R&D departments may be decreasing, therefore contracting engineering to service companies still allows for the industry’s boldest inventions to be created.
All in one
Core businesses are changing. Offshore service firms are strengthening their position in the marketplace by providing a fully integrated package. Providing end-to-end services is highly favourable for large companies. If operators move a rig, jack-up or FPSO from location X to location Y, offshore support firms can provide a fully comprehensive service to enable the move to take place and for it to be positioned in precisely the right place. Previously, smaller firms offered a limited service that was perfectly adequate two decades ago. But as the priorities of major companies have evolved in accordance with supply and demand, support companies have met the challenge.
Majors have the option of utilising the offshore support specialist for their skills in rig moving operations. Service firms can step in at the engineering and mooring design stage when decisions are made on what sort of equipment is going to be used and where and how it will be configured. Once the engineering and design is completed and approved by the client, a list of marine procedures can be made. This step-by-step guide advises as to how the boats and personnel will move the rig from start to finish.
The oil and gas industry never stands still. Large corporations face testing times ahead and require support from all areas of the sector. Whether that support comes in the form of subsea expertise, drilling or allocation of provisions, there must be a unified approach to solving the complex problems attached to the industry. Supermajors have outsourced some of their core businesses. Following this, they may be dubbed ‘super contractors’ and ‘super project managers’ but these changes are entirely positive, creating an industry that is in a stronger position to solve tricky energy quandaries. The term ‘supermajor’ was created following their creation in the mid 1990s, and also relates to the size of projects carried out. As the industry evolves, their role will alter significantly too.
New challenges arise day after day and it is essential that they use the skill set of small to medium offshore support firms. These companies are building global service provisions in response to the needs of the major operators and drilling contractors. The VS People business and positioning department are just two examples of service and product lines, which support companies are creating. Other service specialists will create further efficient and cost-effective measures to drive their businesses forward.
An entrepreneurial spirit drives forward thinking and is undoubtedly the prerequisite to solve the energy markets’ toughest problems. By developing new service lines, support firms meet their strategic objectives and subsequently cement their reputation with large businesses. This level of focus, tenacity and commitment to continual improvement guarantees the brightest future for all.
Adapted by David Bizley
Read the article online at: https://www.oilfieldtechnology.com/exploration/23122013/sharing_the_workload/