By Stephen Marcus Jones
Our members are telling us that it’s vital the offshore industry pulls together to tackle its current challenges – operating in a relatively high cost basin, at a time of low oil prices. That’s why Oil & Gas UK launched its Efficiency Taskforce (ETF).
As the leading trade association for the offshore business, representing 100% of production in the UKCS and hundreds of service companies across the UK, many of them based in Scotland, Oil & Gas UK is committed to seeing the UK oil and gas sector continue as an industrial success story and the safest and most competitive basin in which to do business.
There is growing recognition of the competitive benefits to be gained through greater cooperation. The ETF was launched last year to provide the catalyst for such cooperation across the sector. It does this by sharing best practice as well as by spearheading cross sector projects that will benefit the industry as a whole. Its purpose is to help the sector boost efficiency, improve its competitiveness and help attract investment back into the UK Continental Shelf (UKCS).
Inefficiency is being tackled on three fronts. The ETF is looking to reduce ‘bespoke’ practices across the sector and introduce widespread standardisation. It also aims to help streamline business processes; and is championing greater co-operation across businesses, by challenging culture and behaviours.
It is arguably cultural transformation which needs to be tackled first if we are going to change the way we do business in the UK Continental Shelf. We need a fundamental change of mindset in order to secure a sustainable future for the sector as a global competitor in the lower oil price world.
That’s why we are calling on companies to get behind the Industry Behaviours Charter, which the ETF launched at the end of last year to help define and drive the cultural change we believe is needed. More than 30 companies have so far signed up to it and in doing so have demonstrated their commitment to work effectively, efficiently and co-operatively.
The good news is that a recent survey published jointly with Deloitte indicates that companies are starting to work together to find mutually beneficial business solutions. The Collaboration Index Is showing the industry heading in the right direction – feedback from companies in the supply chain on major operators across the North Sea revealed that, on a scale of 1 to 10, the Operator Collaboration Index score moved from 5.9 to 6.7 – but there’s still a way to go.
To help illustrate cultural change in practice, Oil & Gas UK has launched the Rapid Efficiency Exchange, an online portal – firstname.lastname@example.org – where case studies supplied by companies highlight the efficiency measures being put in place – and the benefits achieved. Businesses are also encouraged to share their issues and invite the market to respond with potential solutions.
Evaluating business processes as a group means taking a fresh look at the day to day operations of the industry and exploring how companies can work together to pool resources and share good practice.
One area of particular focus is inventory management. Six companies have combined their equipment inventories, offering up the details of some 200,000 spare parts to share online. Participating businesses can now search for a piece of equipment in this virtual warehouse to see if it is available immediately, rather than wait weeks for it to be manufactured and shipped.
We’re also looking into new areas for improvement – the tendering process, for example – is a labour intensive and expensive process for all parties concerned, with inefficiency all the way through the supply chain. That’s why we’ve formed a group of experienced specialists, from operator and contractor companies, to optimise the tendering process across our industry.
Inroads are also being made on standardisation where a team of industry experts has identified the potential for cutting costs by up to 30% by using standard rather than bespoke specifications in subsea design and construction.
The team is now working with three operator companies to apply their finding on undeveloped oil and gas discoveries that are not currently viable in today’s price environment – hopefully unlocking new development for the future.
The shared vision, held by industry, government and the new regulator, the Oil and Gas Authority, is one of maximising economic recovery from the UKCS. To succeed will require recognition that our competition is outside, not inside the basin and that as an industry we need to work together to make the region globally attractive for inward investment and growth.
The transition will not be easy nor will it happen overnight. But the good news is that we’re shaping up to the challenge and well on our way.
Stephen Marcos Jones is business excellence director at Oil & Gas UK To find out more about the ETF, or to get involved, contact the team at email@example.com