The Oil and Gas Authority (OGA) in January started the roll-out of new measures to ensure operators better engage the supply chain in future projects.
Supply Chain Action Plans (Scaps) this month become mandatory for all new green and brownfield projects, including decommissioning.
Moreover, the OGA’s Pathfinder projects service, which is in essence a reactive online Share Fair hosted by the regulator and which carries details of all new and decommissioning projects, has become an integral part of the Scap process.
It is therefore now becoming a requirement for operators to post information on projects together with details of relevant contacts.
The link-up pumps “demand information” into the public arena and is intended to make it easier for supply chain companies to pursue opportunities. Also, as information will be made available at early stages of projects it will help provide the service sector with confidence to invest in new technologies and equipment.
In a nutshell, the purpose of Scaps is to help operators ensure that their contract strategies and concepts are comprehensive and well-positioned to deliver best value in accordance with any live field development plan (FDP) or decommissioning programme (DP).
And they need to. A recent OGA report, Lessons Learned from UKCS projects, 2011-2016, said a significant number failed to deliver in accordance with their FDP commitment. One of the main reasons cited for that failure was “poor engagement with the supply chain”.
According to OGA, Scaps were adopted some years ago in other sectors and proved successful in driving enhanced value and collaborative behaviours into new projects.
Even offshore wind is streets ahead of Big Oil in this regard. Indeed, the OGA has been using the offshore wind process as a guide and an industry workgroup was established comprising five operators and two tier-one contractors to reshape the process and make it fit for oil and gas projects.
In broad terms, it’s not new in the North Sea either as a raft of initiatives was assembled under the Crine and Crine Network programmes to get the UK offshore industry to function more effectively.
But this is perhaps more focused and it has the commitment of the still relatively novel OGA, which is the first UKCS’s first regulator, not counting the Health and Safety Executive.
That said, the supply chain is only now being formally recognised by the OGA as being fundamental to the future health of the UKCS.
Revitalising exploration and maximising economy recovery of the UKCS is dependent on having a competitive and competent supply chain, which can operate efficiently and innovatively to deliver the services and technologies required to unlock the full potential of the basin.
The OGA acknowledges that delivery of the Maximising Economic Recovery UK vision will be dependent upon a strong, innovative and competitive supply chain.
Around 85% of people in the UK oil and gas sector are employed and about 80% of all the money spent by operators is via the supply chain.
At the end of the first year, feedback will be sought from industry and the process will be refined.
Returning to Pathfinder and its role in reinforcing Scap, the portal is be further developed to incorporate a “challenge wall” where operators can post and provide suppliers with solutions and contacts.
This will aid the flow of new technological solutions to unlock the next tranche of challenged projects.
Energy Voice checked out the Pathfinder portal and found around 25 operators listing projects. Several were checked out. However, the information provided has a “copy and paste” look to it and perhaps needs more tailoring.
It is supposed to:
• Provide the supply chain with a real-time overview of UKCS project activity;
• Enable the supply chain to pin-point and target real opportunities and upcoming developments;
• Be updated on a weekly basis by operators to keep the information relevant and purposeful.
Bill Cattanach, OGA’s head of supply chain, said that to derive the most value from Scaps it will be necessary to have early engagement on all projects, possibly up to 18 months before FDP or DP approval.
He is looking for an open-minded and proactive approach from operator project teams to help ensure the majority of plans will succeed from the onset.
“Success will be behavioural change in the relationship between operators and suppliers driving additional value into all projects and unlocking a range tranche of projects currently stranded,” Mr Cattanach said.
“Scaps are intended to provide the supply chain with a voice. It will also give the firms an opportunity to engage proactively with the operators.
“We feel that a lot of the good ideas lie within the supply chain but they need a vehicle to actually be able to engage with the operators and push their ideas forward.”
Mr Cattanach is well aware of past failures by North Sea operators to work effectively with the supply chain, despite fine words by CEOs and country managers.
He said: “Yes, we’ve been there before; but we’re in a ‘sweet spot’ at the moment to have another real push at the supply chain engagement issue. The North Sea is now very mature.
“Back in 2000, the UK North Sea was producing 4.2million barrels of oil equivalent per day. But that was the peak. Now it’s producing around 1.7-1.8million boe.
“We’re now in a position where the oil price has recovered and supply chain costs are under control. This to me is a golden opportunity to push for changes that I think will be more sustainable.”
How relevant is this to fostering further internationalisation of the UK-based supply chain, bearing in mind much of it is foreign owned?
Mr Cattanach is clear: “This goes hand in hand with what we want to see happen in the North Sea.
“If we don’t grow a strong supply chain in the UK, and we can only do that on the back of maximising recovery from the UKCS, then we’ll never have anything to export.
“If we don’t have a supply chain capable of doing well at home, including developing new technologies, then how can the companies succeed elsewhere?”
But who does he need to partner with the OGA to achieve this; and what about the “Sector Deal” worth around £1trillion over the next 17 years that the North Sea industry is looking to secure with the UK Government? And, did the OGA in fact overlook the supply chain during its first two years of operation?
Mr Cattanach said: “There is the realisation that the supply chain is the enabler. Through the Aberdeen City Deal, we’ve got the Oil and Gas Technology Centre, which is helping bring forward the development of technologies by the supply chain to deploy in new and brownfield developments.
“The operators are not really interested in technology anymore. They just want to buy it/use it.
“And now we’ve got the Sector Deal being negotiated which is intended to bring everything together.”
There are three core aspects to the Sector Deal:
• Drive forward enhanced technologies with OGTC’s involvement;
• To have a centre of excellence in subsea, probably the UK’s greatest success story in supply chain terms and the big prize for the UK supply chain to secure overseas;
• A centre of excellence for decommissioning. The North Sea is more mature than most other basins and is well placed to host development and application of technologies and methods which will also be exportable.
According to Mr Cattanach, to date the process has been received well by industry.
Recommended for you
