This month, February 1 to be precise, shiny new Costain Upstream was formally launched, with Keith Wallace at the helm.
The launch of this business, a unit of Costain Group, follows the acquisition of ClerkMaxwell in 2011 and EPC Offshore in 2013.
Its mission: to provide integrated whole-life services, from design consultancy at the start of a project to the post-construction operation and eventual decommissioning of assets.
Like various other UK companies, Costain Group has dipped in and out of the offshore industry and it first came to Aberdeen in 1994.
“Costain has a long heritage in civils and complex project programme management, engineering solutions and delivery across infrastructure, mining projects, rail networks and so-on,” said Wallace.
“It’s a company with more than 100 years’ history and has been in the oil and gas industry previously through Land and Marine which used to run the bundles base at Tain, and it built the gravity base for the Harding field platform at Hunterston on the Clyde. So there’s a long history in the oil and gas.”
However, over the past decade or so the group pulled back from the upstream market due to financial pressures in various parts of the group’s business.
But in very recent times, Costain has been looking at its performance in complex programme project delivery and engineering solutions across the business and came to the view that the oil and gas industry represented a huge growth market; a market it wanted to re-enter.
And it did so through the acquisition of Clerk Maxwell a couple of years ago. That restored an upstream engineering footprint.
Wallace’s background is oil and gas . . . EPC Offshore.
“We went into conversation with Costain maybe 18 months ago as to how we could perhaps combine the upstream oil and gas project management programme delivery and engineering excellence of Clerk Maxwell together with EPC,” he told Energy.
“The idea was to create a management and engineering team underpinned by Costain’s heritage in programme management and engineering to build an upstream group that could penetrate further into the market. And so here we are 18 months later and we’ve formed the group. This isn’t more of the same. We have a team of about 180 in Aberdeen; totally focused to mirror the business frameworks of our clients.”
Wallace said the company currently works with a small number of clients, but across a wide spectrum . . . BP, Ithaca and Premier to name three.
A key reason for Costain Upstream’s creation is the gap that exists between the engineering contracting heavyweights employing tens of thousands of people globally and boutique consultancies up to about 100 head.
He explained that the big players were not always as fleet of foot or responsive to client demands as they ought while the small consultancies could be too narrow and unable to take on risk.
Costain Upstream is supposed to marry the best characteristics of each . . . fleet of foot, broad yet capable of being highly specialised and with enough muscle to shoulder risk as necessary.
“Take a company that’s got, say, 30 assets; they’re going to engage with service providers of size; they may need 2,000 people to service those assets,” said Wallace.
“But within those assets are highly critical and highly complex pieces of work that need focused, agile, responsive, high-end teams. But how do you get that focus within a company employing 30,000?
“So we’re concentrating on creating a group that can really focus on adding the right value to the right projects for the right clients by capitalising on the complex programme management and skills-sets that we have within Costain. It’s about adding real value.
“As for scalable, I mean from about 180 to a more significant size. And I’m not talking of 30,000.
“A lot of time was spent with clients, discussing with them what they see as the gaps and weaknesses that need to be filled.”
But Costain is not the first to try and slot into this space and generally get taken out by the heavies; consider Amec’s very recent swoop on Foster Wheeler for example.
One difference is that it intends to draw on its experience in other sectors like airports, rail and nuclear as these could bring value to the oil and gas table and help Upstream align with its oil and gas clientele.
This alignment is very important to Wallace.
“There are not as many companies as you might think that are actually aligned with their clients’ expected outcome. Our aim is to align and deliver the value and be rewarded for delivery by picking the right solutions.
“Some companies specialise in particular areas, but we’re right across the range of development options which is really important to companies like Ithaca and Premier Oil.”
Wallace said too that, while Costain is currently almost wholly UKCS, this will change over the next three to five years, perhaps pushing to 30% international. A sizeable London presence is to be built up to drive such business.
“There’s a heavy trend towards looking at the Far East and West Africa and we may go international sooner than planned. There are projects that we’re currently working on where assets are going to be built in the Far East,” he said.
“But don’t forget, UK developments often involve assets that are built internationally and these need to be engineered, controlled. We intend to do that and ensure such assets arrive in the UK in an operable commissioned state . . . fit for the North Sea regime.
“I see significant growth opportunities here and I see us being able to grow the Aberdeen business substantially over the next three to five years.”
Keith Wallace: Q&A
Age: 53
Education: university, college, other: Degree in Mechanical Engineering and Management Studies The Robert Gordon University.
The 2/3 main roles in career and dates:
CEO EPC Offshore – 2009 to 2013. Cofounder and Managing Director of CSL – 2000 to 2006.
Senior Project Manager – McDermott 1995 to 1999.
What has been the hardest decision you have made in business?
Selling my stake in CSL.
Who do you admire in business? Or Who has inspired you most in your career?
Steve Jobs, for mastering the ability to create desire.
What do you regard as being your greatest success to date?
Creating two successful companies.
What do you do to relax?
Cycling and spending time with my children and wife.
Where is your favourite holiday destination?
I love to ski with my family.
What charity do you support?
Royal Aberdeen Children’s Hospital and their eye department in particular.
If you were not in the job you are in, what job would you like?
My son would love me to be CEO of Apple Inc, my daughters want me to be CEO of American Girl and my wife would want me CEO of The Little White Croft. Me, I love any challenge.
Where would you like to retire to?
I don’t intend to retire, ever.
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