Continued instability in the North Sea is prompting a new generation of oilfield services companies to look towards expansion into the US as a means of securing new business and attracting investment.
Ties between the UKCS and US are longstanding – our excellence in technology means companies with a unique or industry-leading product to offer to drillers, operators and service companies may see the Gulf of Mexico as a prime opportunity to grow abroad when times are tough at home.
While this may well be the time for some to supplement their business in the unstable North Sea by selling expertise in a more resilient market, the first steps toward relocation or expansion are fraught with potential risks.
There may be a temptation to commit to a move, thinking that the long-standing relationship between the North Sea and Houston means it’ll be an easy task to set up shop and start building the business.
Companies of all scales have to consider the pitfalls, which are primarily centred on local considerations, unforeseen costs and processes misunderstood or simply ignored, and which may be more trouble than the actual expansion will be worth to their business.
In the first instance, they need to know which areas are the most likely bases for a successful US operation – if you consider the way in which Westhill was established as the subsea capital of the North Sea, similar zones exist in and around Houston.
OTC, and UK-based events such as the Houston Gateway provide an opportunity to speak to the local development organisations offering incentives to move to areas such as Greenspoint or Katy, and vital intelligence on what’s available.
When a location has been identified, access to professional services support on the ground through organisations such as PKF Texas with whom we work, with experience of payroll, tax and also the cultural differences the companies will experience as they move, is as important as choosing the right property from which to operate.
In terms of the labour force, there is a strong skill base available in the US for those looking to grow but for many companies looking to make their first push into the country, relocating staff normally based in the UK will be a key step.
Their transition into Houston must be handled correctly – it’s vitally important that firms know which agents to work with, to ensure that personnel support is established before those relocating arrive.
Businesses must be assured they are paying the right taxes, both corporate and personal, have a pension plan, healthcare and dental insurances in place – these hidden costs of doing business require significant advance planning and local knowledge is priceless.
Any major change in administration creates a potential risk – in the same way that the Scottish independence and European referenda raised questions, the changing Presidency and reappraisal of Government policy which will follow the November election is something all firms looking at the US need to be conscious of.
With the economics of energy fluctuating as they are, being on the ground at OTC is crucial if we are to answer the questions which flow from all of these opportunities and associated issues.
Craig Yeoman is the business development director for Johnston Carmichael.
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