Oil and Gas Operations and Maintenance Market Report ... · LPG Liquefied Petroleum Gas ... –...

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O&M Markets

FINAL REPORT 16th July 2012

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Established in 1990, Douglas-Westwood is an independent employee-owned company and the leading provider of business research & analysis, strategy and commercial due diligence on the global energy services sectors. We have offices in Canterbury (England), Aberdeen (Scotland), Singapore and New York (USA) and to date have completed more than 650 projects for clients in over 70 countries. We provide two primary services:

Advisory – development and facilitation of business development & market strategies: • We work as complementary partners to our clients worldwide as part of their strategic planning process. We develop and test advanced

competitive strategies for new products, new business streams, mergers and acquisitions, through market insights, modelling and simulation. • We are the leading provider of commercial and market due diligence on the oilfield equipment & services sector and also provided services to

players in upstream and downstream oil & gas, power and renewables. We have provided services worldwide on refinancing, M&A deals and IPOs ranging from $10 million to $1 billion.

Research – on all aspects of the markets for suppliers to the energy sectors

• Business research, analysis and modelling are our core activity. Over the years we have built a huge knowledge base of both sectors and players. Our experience of researching the oilfield equipment & services (OFS) sector is probably unequalled worldwide. We also specialise in emerging markets and technologies such as offshore windpower, wave & tidal, difficult-to-access markets and geographies such as Russia and the Middle East.

• The ‘Gamechanger’ series values the markets for an emerging technology that over the next decade could have transformational impact on a business sector.

• Our published business research has received accolades from users worldwide. Each of Douglas-Westwood’s ‘World’ studies assumes the reader has no knowledge of the market and both educates and informs and culminates in a five-year forecast by region and industry sub-sector.

Tel: +44 1227 780999 Fax: +44 1227 780880 E-mail: [email protected] Web: www.douglas-westwood.com

FINAL REPORT Page 3

P775 Invest NI O&M Markets

Authors

Lucy Miller

Project Manager

Lucy is an analyst with DWL and has conducted market analysis on a variety of DWL’s commissioned research projects for clients in the oil and gas sector, as part of commercial due-diligence and published market studies. She has contributed to studies including ‘The World LNG Market Report’, ‘The World FLNG Market Report’ and the ‘The World Floating Production Market Report’. Her analysis has been quoted by Bloomberg, Citigroup, Upstream, Penn Energy and World Oil among others. Lucy has a background in the offshore oil and gas sector and previously worked for FoundOcean Ltd. She has a degree in Economics and Geography from the University of Leicester.

Jenny Harbour

Market Modelling

Jenny joined Douglas-Westwood in 2011 as a Researcher, having previously worked within the field of industrial energy generation, distribution and efficiency measures. She is a graduate from the University of East Anglia’s School of Environmental Sciences where she focused her studies on energy management, low carbon energy technologies and scenarios of peak oil. Since joining Douglas-Westwood, Jenny has been responsible for the collation and verification of data from a wide range of sources, her input having being pivotal in the derivation of metrics used to determine future expectations of demand.

Isla Parsons

Supply Chain Analysis

Isla is a Researcher for DWL and is involved in research and market analysis for a range of sectors throughout the upstream oil & gas supply chain. Her work has contributed to commissioned reports and DWL’s published market reports, including The World Offshore Operations & Maintenance Market Report. Isla is an MA Economics graduate from the University of Aberdeen and also holds an BA in Business Management from the University of Glasgow. Her previous experience includes working for Talisman and engineering services company, Senergy.

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QUALITY ASSURANCE (to be initialled by authors, proof-reader and project director for each revision)

REVISION AUTHORS PROOF-READ BY: CHECKED BY PROJECT DIRECTOR:

First Draft Final Draft Final Report

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Contents

Executive Summary & Conclusions

Market Overview

Supply Review – Personnel

Supply Review – Contractors Market Review – Support Services

Market Review – Production Services Market Review – Platform Drilling Market Review – Asset Services

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Market Review – Subsea IRM Market Review – Logistics

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Appendices 61

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Acronyms, Abbreviations & Definitions

Artificial lift Hardware used to boost downhole pressure and increase oil production bbl Barrel(s) of oil and/or condensate Bcm Billion cubic metre b/d Barrel(s) per day boe Barrel(s) of oil equivalent CAGR Compound annual growth rate Capex Capital expenditure cf Cubic feet cf/d Cubic feet per day Deepwater Water depths greater than or equal to 500m E&A Exploration & Appraisal E&P Exploration and Production EIA Energy Information Administration EOR Enhanced Oil Recovery ESP Electrical Submersible Pumps FDI Foreign Direct Investment FPS Floating Production System FSO Floating Storage & Offloading vessel FSU Former Soviet Union GDP Gross Domestic Product GTL Gas to Liquids LPG Liquefied Petroleum Gas LNG Liquefied Natural Gas mmb/d Million barrels per day mmboe Million barrels of oil equivalent mmcf/d Million cubic feet per day NGL Natural Gas Liquids NOC National Oil Company OFS Oilfield Services OOS Ocean Observation Systems OPEC Organisation of Petroleum Exporting Countries Opex Operating expenditure R&D Research and Development ROV Remotely Operated Vehicle Scf/d Standard cubic feet per day Tcf Trillion (one million million) cubic feet Tcm Trillion cubic metres UKCS United Kingdom Continental Shelf Water cut Ratio of water to oil produced from a well Water sweep Injection of water into the reservoir to boost downhole pressure and increase oil production WD Water Depth YTF Yet to Find (reserves)

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Executive Summary & Conclusions

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Summary & Conclusions Executive Summary & Conclusions

• The operations and maintenance (O&M) market focuses on expenditure required to sustain the installed base of infrastructure that is key to maintaining necessary production from offshore oil and gas fields. Overview

• At present Northern Ireland is not a major source of personnel although most offshore workers come from the UK. • Fabric maintenance and support services offer the best employment opportunities for personnel as these sectors offer

the most potential for skills transfer from other industries.

• Changes in offshore practices may see an increased demand for skilled workers in certain sub-segments such ROV operations.

Personnel Supply

• The operations and maintenance offshore supply chain is dominated by large international contractors who either act on the Operators behalf as a duty holder or are contracted by the Operator directly. These contractors then sub-contract further down the supply chain to support, logistical and fabrication companies.

• The larger contractors typically focus on drilling and production services.

Contractor Landscape

Market Summary • O&M expenditure is forecast to increase by 13% between 2011 and 2016. This is in part due to cost inflation rather than

any large growth in the population of fixed and floating production platforms.

• Production services account for over a third of O&M expenditure. A key sub-sector of this market are stimulation services which are expected to increase as operators seek to rejuvenate mature fields.

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Scope of Work

Review of the UK market for maintenance, modification and operational services; – Outline of the primary market areas/segments, including current size and

outline forecast activity/direction. • To include engineering services (white and blue collar activities),

inspection, fabrication, maintenance services (mechanical, electrical), support services (logistics), etc.

– Review of the buying patterns and segmentation/structure of the market. – Identification of the primary contractors active in the UK market as defined

by the segments in 1.a.i; • Focusing on the major players and recognising one participant

may cover a number of areas.

Supply review – assets and personnel; – Consideration of the primary requirements for assets and personnel

required in the main markets outlined above. – Indicative view of current and future requirements, considering;

• Current age profiles of personnel. – Training, certification requirements;

• Identification of the primary requirements of personnel; – Technical diplomas, qualifications. – Offshore specific requirements to compliment technical

– e.g. offshore survival training.

Analysis – High level review of each segment/skills area to identify;

• Areas with the greatest requirements of personnel. • How certification requirements are met generally – company

sponsored, government sponsored, individual. • Primary supply routes for new personnel – considering other

industries, other EU countries. • Strategies of governments, companies, EU personnel used to

enter or distort the market.

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Market Overview



Operations and Maintenance Market

Market Review

• Operations and maintenance expenditure range from well stimulation work designed to bolster productivity to the logistical costs required to transport workers to and from offshore production platforms.

The DWL O&M market consists of the following sectors and sub sectors:

• Support Services

• Production Services

• Platform Drilling Services

• Asset Services – Fabric Maintenance

• Subsea Inspection, Repair and Maintenance (IRM)

• Logistics

Overview

• Sectors such as support services and asset maintenance will continue to require personnel into the future. These are sectors where existing skills may be easily transferred to offshore positions.

• Changes in offshore practices may see a increased demand for new skilled workers. For example, to carry out subsea inspection, repair and maintenance ROVs are increasingly being used. These ROVs will require operators and technicians to drive and maintain them.

• In 2010 85% of the UKCS offshore workforce was from the UK. The market is unlikely to be effected by entrants from other EU countries in the future as there are more attractive regions with competitive salaries for ambitious workers.

• The government has a strategy to boost and retain local employment. The Offshore Petroleum Industry Training Organisation (OPITO), a NGO representative of the oil and gas industry requires the UK government to provide help with initial funding for industry led training schemes.

Opportunities

UK Operations and Maintenance Expenditure by Sector 2007-2016

Source: Douglas-Westwood

• UK operations and maintenance market is forecast to grow to approximately $5 billion in 2016. This is an increase of 13% from 2011 when expenditure was $4.4 billion.

• The market is dominated by production services, accounting for 36% of UK O&M expenditure. These services are directly associated with production levels from offshore production facilities and are intensified as an oil or gas reservoir matures and requires additional effort to sustain production.

Market Analysis

• Growth in the Operations and Maintenance market driven by cost inflation as well as new installations.

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Support ServicesProduction ServicesPlatform Drilling ServicesAsset ServicesIRMLogistics



Offshore Lifecycle Market Overview

Maintenance: Ongoing inspection, repair and upkeep of installed infrastructure, including protective coatings, electronics and process systems, valves and flowline equipment and the maintenance of production wells.

Modifications: Upgrade of existing infrastructure including the installation of new accommodation and capacity on the platform deck (offshore) or processing systems.

Operations: Services required for ongoing production, including the supply of labour and raw materials.

Hydrocarbon Exploration Decommissioning E&A Drilling Development Drilling

Maintenance, Modifications &

Operations Construction

• Platform jacket upgrade • Topsides upgrade • Platform drilling equipment • Deck infrastructure

• Accommodation units • Engineering cabins • ROV lift systems and cabins • others

Production Services: • Power Generation • Produced Water Management • Wireline Services • Stimulation Services Support Services: • Hotel Services • Deck Crew • Misc Personnel Platform Drilling Services: • Rig & Crew • Well Construction & Integrity • Consumables Logistics: • Helicopters • Platform Supply Vessels

Asset Services: • Fabric Maintenance Subsea IRM: • Pipeline • Field Related (Subsea Hardware) • Subsea Well Intervention • Subsea Asset Integrity (Fixed and Floating Platforms)

Capex Phase Opex Phase

The Douglas-Westwood Operations & Maintenance (O&M) Market



Operator Landscape Market Overview

• The largest Operators in the UKCS are Shell, BP and Talisman. Centrica is one of the most active operators in terms of exploration activity.

• The recent West of Shetland developments have been a driver for increased activity in the North Sea, operated by BP and attracting investment from BP, Shell, ConocoPhillips and Chevron.

• Exxon Mobil’s presence in the North Sea is very low as the company sold it assets, as well as its interest in the Beryl Field, to Apache in 2011.

• TAQA is a relatively new entrant to the North Sea and Enquest also has an increasing presence.

• Operators tend to employ highly skilled, experienced engineers. Entry to graduate schemes is very competitive.

• The majority of employment opportunities are based onshore, with offshore operations outsourced to contractors.

Key Points

Recruitment

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Shell 388 93,000 Netherlands 30 77 191 High

Exxon Mobil 370 83,600 U.S. 1 0 n/a Low

BP 297 79,700 UK 33 103 137 High

Conoco Phillips 199 29,600 U.S. 14 65 175 High

Chevron 198 58,000 U.S. 4 19 37 Low

Maersk 49 110,000 Denmark 7 34 50 Medium

Total 30 96,400 France 9 60 n/a Medium

BG Group 17 6,000 UK 4 33 134 Medium

Centrica Energy 7 1,556 UK 16 75 30 High

TAQA 6 2,800 UAE 3 28 37 Low

Talisman Energy 3 3,000 Canada 10 123 77 High

Perenco 3 4,000 UK 14 52 50 Medium

Nexen 2 3,000 Canada 6 63 62 Medium

Premier Oil 1 560 UK 3 31 16 Low

Enquest 1 1,200 UK 5 31 21 Low

Company Operations



Supply Review – Personnel



84.8%

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49,960

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Norway

Top 5 EU

North America

Miscellaneous

Current Personnel Supply – Locality Supply Review - Personnel

Within the UK • In 2010 there was a total workforce of 49,960. Of this, 42,388 or almost 85% were

from the UK.

• The core offshore workforce on the UKCS (100+ nights offshore) make up 21,896 or 44% of the total workforce.

• The UKCS Personnel by Postal Code chart indicates that only a small proportion of the workforce comes from Northern Ireland.

• UK employees are mostly from the North and Coastal regions of the UK – the largest concentration are from Scotland.

Outside the UK

• It is unlikely that the contribution of workforce from the EU will increase, as there are

other regions that are more competitive that are likely to attract skilled workers with ambitious growth plans.

• Norwegian contribution to the UKCS workforce is a natural occurrence and reflects reciprocal labour flows the between the UKCS and NCS.

UKCS Offshore Personnel by Postal Code Source: Oil and Gas UK

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UKCS Personnel Supply

• The vast majority of UKCS personnel come from the UK. At present Northern Ireland only accounts for a small proportion of supply.



Current Personnel Supply – Age Profile Supply Review - Personnel

• There appears to be a fairly even spread of ages within the UKCS offshore workforce – however the greatest number of employees are aged between 33 and 53.

• This implies that without an active drive for new recruits in the younger age groups, there could be a shortage of supply or experience.

• The ‘Promote UKCS’ drive for new recruits in 2000 and the following years can be seen in the peak in workforce aged between 25 and 30;

• A new drive for young applicants at apprentice or graduate age would mean another peak in workforce at the bottom end of the age scale, who would be able to acquire a wealth of experience from the ‘aging’ workforce that exists.

• New challenges face the UKCS over the next few decades, the vast amount of decommissioning work due to take place will challenge the most experienced offshore workers and provide the new recruits with a diverse set of offshore skills from a harsh environment; these skills will be key for future Arctic exploration and mean that UKCS workers will be some of the most valuable and experienced engineers in the world.

UKCS Workforce Age Profile

Age Profile for Total UKCS Workforce Source: Oil and Gas UK

• There is a top heavy work force in terms of age and experience which needs to even out over the next decade to ensure a strong supply with enough experience to deal with future UKCS offshore challenges.



Government & Non-Government Strategy Supply Review - Personnel

• Government strategy is to boost and retain local employment, however, current training programmes are suggested to have distanced government from industry. This is believed to be due to an inefficient process of providing feedstock for skills shortages required by employers; as indicated within the OPITO review: ‘UK Government (BIS) Consultation – Skills for Sustainable Growth Response From OPITO’. Government needs to have the needs of the industry at the forefront of their policy decision making.

• Government must provide reward in industry for training and development of young people programmes such as apprenticeships and higher education. Recent pledge by the Prime Minister to promote apprenticeships within this industry with £250m government funding available to employers – the ECITB aims to support this opportunity by guiding employers through the “Employer Ownership of Skills” funding pilot.

• Reduction in public sector cuts means training schemes will be reduced, industry must fill this gap with initiatives such as those suggested and promoted by OPITO. This could lead to stronger industry accountability for promoting and nurturing appropriate workforce skills with their enhanced and more direct involvement in education.

Government Involvement NGO Involvement

• OPITO – Offshore Petroleum Industry Training Organisation, operates in 32 countries as a NGO representative of the oil and gas industry, including UKCS. They aim to create a stronger industry led responsibility that solves the skills shortage, in collaboration with government.

• OPITO UKCS strategy require the UK government to accept curriculum suggestions, and provide help with initial funding for industry led training schemes. Furthermore industry must be represented in the form of those operating learning bodies.

• OPITO have set up the following website: www.myoilandgascareer.com which acts as a central and integral part of offshore oil and gas recruitment and training.

• At the end of 2011 OPITO addressed the House of Commons in order to highlight skills issues and activities of the company. It is currently an industry trend to offer higher salary to attract experience, rather than nurturing development of employees in house over a longer term – future skills gaps are more likely to be dealt with by inverting this practise in the near term.

• ECITB – Engineering Construction Industry Training Board work with government, employers and NGOs such as OPITO to ensure a suitable workforce is provided to industry through active recruitment drives of young talent who must all meet high industry standards. A recent simplification of required qualifications has been put in place in order to highlight those skills industry values most; a greater aim is to align these skills and qualifications within the EU and overseas.

Basic Offshore Requirements • Offshore Safety and Induction & Emergency Training (BOSIET) is the basic

offshore survival training course which is required for working in the UK sector.

• This is widening for trades to also require MIST – Minimum Industry Safety Training; this is available as a two day course from an approved training organisation or through an employer who has been certified to provide it.

• If an employee does not have a trade, a Greenhands training course is required to prepare them for working in a hazardous environment.

• Importantly a medical examination by a doctor or medical centre which is registered with Oil & Gas UK (OGUK) is required in order to work offshore UK. Other basic requirements include a minimum age of 18, no travel under the influence of alcohol or drugs, possession of a Vantage card or MAPS to count days spent off shore.

• In order to reach industry standards, a level of ‘on-the-job’ training is required. In place is a Modern Apprenticeship Scheme which begins with a 21month college taught position, followed by a two year industry placement – OPITO partnered with ETICB to provide this initiative.

• Requirements are met by an individual through traditional methods – such as college or university, however, there are many initiatives through apprenticeships and company funded training which mean an individual is more likely to gain the suitable skills required for work offshore. In addition, these often lead to an industry placement which enhances relevant capability and training.

Flow of Required Workforce Source: ECITB

http://www.myoilandgascareer.com/



Supply Review – Contractors


P775 Invest NI O&M Markets Supply Review - Contractors

• Production Operators exercise any function of organising or supervising all operations in searching for or extracting petroleum. In some instances, a duty holder is contracted to assume this responsibility on their behalf.

• Contractors are typically selected from Invitation to Tender (ITT) bids, with FPAL being a popular means of selecting contractors to tender.

• Details of a contractor’s experience in planning and execution are especially relevant when operations proposed involve more risk, such as deepwater, High Pressure High Temperature wells or dangerous goods.

• Drilling contractors themselves outsource logistic support and operational services, offering potentially large revenue streams for companies further down the supply chain.

• Intervention services tend to be provided by the oilfield service providers that were involved in the earlier development phase of the well.

• Permit to Work systems are frequently used by Operators to maintain awareness and control over higher risk operations. These may require contractor personnel to be trained in the use of such systems.

Key Points

• Operators and duty holders contract service providers who will often sub-contract further down the supply chain.

FURTHER OUTSOURCED

Contractor Supply Chain Overview

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The supply chain of each component of the operation & maintenance market is further expanded in each related section



Contractor Landscape Supply Review - Contractors

• There are many large international contractors operating in the UKCS, including four offering platform duty holder services.

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Siemens 76 405,000 Germany Low

Sodexo 8 380,000 France Medium

GE 15 300,000 U.S. Low

Aramark 12 240,000 U.S. Medium

ABB 32 116,500 Switzerland Low

Schlumberger/MI Swaco 27 113,000 U.S. High

Maersk 49 110,000 Denmark Medium 60

Halliburton 18 70,000 U.S. High

ESS Offshore 1 56,000 UK Medium

Baker Hughes 14 53,100 U.S. High

Saipem 14 40,000 Italy Low

WoodGroup PSN 5 38,000 UK High

Technip 8 30,000 France High

Amec 5 27,000 UK Low

Offshore Marine Services n/a 27,000 UK High

Aker 8 19,000 Norway High

Cape 3 19,000 UK High

Transocean 10 18,000 Switzerland Medium

Stork/RBG 2 14,500 Netherlands High

Petrofac 4 13,900 UK High

Fugro-TSM 3 13,500 Netherlands Medium

Hertel 1 13,000 UK High

Subsea 7/Acergy 2 12,000 UK High

KCA Deutag 1 8,008 UK Medium 39

Tidewater Inc. 1 7,900 U.S. Low 350

CHC Helicopter 1 4,300 Canada Low 233

Vroon BV n/a 4,000 Netherlands Low 150

Bristow Group 1 3,410 UK Low 570

Support ServicesCompany

Asset Services Subsea IRM Logistics

Production Services Platform Drilling






Market Review – Support Services



Support Services

Support Services

• Expenditure to grow in the Support Services sector, but the volume of support personnel is expected to remain relatively stable.

• Offshore oil and gas platforms serve as hotels for the offshore workforce providing, accommodation, catering and other hospitality functions.

• The support service sector deals with offshore personnel involved in the everyday running of offshore oil and gas production facilities.

• Mobile offshore drilling units and floating accommodation units have not been included in this analysis.

• A typical North Sea platform will accommodate 50-100 core crew member who will stay on the platform for up to two weeks at a time working in shifts of 12 hours a day.

• Supporting this core crew workforce are a number of personnel sectors such as medics, radio operators and administrators (Miscellaneous Support), caterers, stewards, maintenance staff and facility managers (Hotel Services) and Deck Crew.

Overview


• It is not expected that there will be a significant increase in the number of personnel required in the support services sector. However, there is still a stable requirement for a large number of people to provide support services to the offshore crew.

• Support services is an area where there is significant scope for movement from other industries. Relevant experience in hospitality or catering could be relatively easily transferred to an offshore environment.

Opportunities

UK Support Service Expenditure by Personnel Type 2007-2016


• In 2012, DWL estimate UK demand for offshore support services at $560 million growing to $743 million by 2016.

• Much of this growth is driven by price inflation as we do not see a major increase in the number of offshore accommodation berths (a key determinant of the number of personnel).

• The North Sea is a mature basin and the number of accommodation berths (and subsequently the number of personnel on a platform) is expected to decline in the future. This is due to decommissioning activity where a number of platforms are going to be removed coupled with an increase in subsea production.

Market Analysis

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Support Services

Average Personnel Breakdown of a UKCS Platform (100 Berths)

HOTEL SERVICES: Includes all jobs related to Catering, Hospitality, Facility Management and Non-Technical Maintenance. This is the largest component of support services and typically accounts for around 14% of core personnel.

DECK CREW: Includes Helideck Crew, Deck Hands and Crane Operators. These positions account for approximately 3% of core (100+ nights) platform personnel.

MISCELLANEOUS SUPPORT SERVICES: There are numerous jobs on an offshore platform which do not fall under any of the other categories listed such as Medics, Admin, IT and Office Support and Radio Operators. These positions currently account for around 4% of core platform personnel.

PRODUCTION & TECHNICAL MAINTENANCE STAFF The vast majority of platform-related jobs are related to production or technical maintenance.

OFFSHORE INSTALLATION MANAGER

Support Services

Source: Oil & Gas UK, Douglas-Westwood estimates



Supply Chain Support Services

OPERATORS

Fixed Platforms

Floating Platforms

Support Services

Production & Maintenance Staff

Deck Crew

Hotel Services Integrated Asset Management Companies

Specialist Sub-Contractors

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Tier 1

Tier 2

Tier 3

Tier 4 Company Type

Infrastructure (Key Market Driver)

Support Services Market Segment

Hotel Services

Deck Crew

Support Services

TIER 1) OPERATORS: As the ‘duty holder’ operators have total authority for the day to day running of offshore oil & gas platforms and are therefore responsible for supporting offshore workers, both direct employees and sub-contractors. It has become increasingly common in more fragmented markets such as UKfor smaller operators with to delegate “duty holder” status to asset management companies in tier 2, allowing them to focus on their core competence of oil & gas production.

TIER 2) Integrated Asset Management: As well as providing a range of support services to operators these companies may be awarded integrated service contracts where they will contract tier 3 companies on behalf of the operator or they may even be granted ‘duty holder’ status by the operator giving them day to day responsibility for the running and management of an offshore asset.

TIER 3) Specialist sub-contractors: Provide specific services to the ‘duty holder’ of an offshore asset including medics, catering and telecommunications support.

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Contractor Landscape – Support Services Support Services

• Hotel services are usually sub-contracted by integrated asset management companies such as Wood Group, Petrofac and Amec.

• The main hotel service contractors are Sodexo and Aramark.

• Wood Group is the largest provider of general support services.

• ESS has a long standing relationship with Chevron in the North Sea, having being contracted by the Operator 18 years ago.

• Support services is an area that has an established contractor base. There is little scope for new entrants into this market.

• This market is relatively saturated and unskilled jobs offshore are very sought after and increasingly competitive. Candidates often pay for their own Offshore Survival certificate etc.

Key Points

Recruitment

Market Outlook

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Sodexo 8 380,000 France

Aramark 12.3 240,000 U.S.

ESS 1 56,000 UK

WoodGroup PSN 5.06 38,000 UK

Amec 4.56 27,000 UK

Offshore Marine Services n/a 27,000 UK

Petrofac 4.35 13,900 UK

Company Support ServicesServices



Personnel Requirements

Support Services

• Responsible for running the hotel services department, including catering, hospitality and maintenance. The manager is directly responsible for health and safety requirements across the service lines, staff induction and training, service delivery and customer satisfaction .

• Basic entry requirement are a facilities management qualification or relevant facilities management experience. A desirable qualification is the Institution of Occupational Safety and Health (IOSH) Managing Safety certificate. The offshore survival certificate and the offshore medical certificate are also required.

• Facility managers have an average salary of £45,000

• The average age for facility managers in 2011 was 48.

Facility Management


Catering

• Responsible for catering on the offshore installation, jobs include chefs, cooks, assistant cooks, night bakers and galley hands. The crew will be supplied with a variety of meals from breakfasts at 5am to late suppers at 1am.

• The necessary basic entry requirement is experience in catering, it would also be desirable to have knowledge of working offshore and a qualification in catering. In addition, the offshore survival certificate and the offshore medical certificate are required to work offshore.

• There are specialised contracting companies which handle catering and housekeeping for the offshore platform operation company. They will recruit their staff independently.

• Salaries for workers in offshore catering range from £27,000 to £38,000

• The age range of catering staff is fairly well distributed between 24 and 55. The average age was 43 in 2011.

• Responsible for the day to day running and operation of the offshore platform including the health, safety and welfare of all personnel onboard. The OIM has absolute authority similar to that of a ship captain.

• Necessary entry requirements include extensive offshore experience at a supervisory level, the offshore survival certificate, the offshore medical certificate and a degree of experience as an OIM. It may also be desirable to have evidence of a career path in the oil and gas industry and experience of the Offshore Petroleum Industry Training Organisation (OPITO) standards for OIM.

• Average salary is £55,000 - £100,000

• Given the level of experience required it not surprising that OIM tend to be older than most offshore personnel. According to Oil and Gas UK average age for an OIM was 50 in 2011 and the majority of OIMs are between 45 and 59 years old.

Hospitality

• Stewards and stewardesses are responsible for the cleaning of the offshore installations kitchen and chow hall, recreational areas and sleeping quarters. On smaller platforms stewards take on both janitorial housekeeping and galley hand responsibilities.

• The necessary basic entry requirements are the offshore survival certificate and the offshore medical certificate. Other desirable qualifications are a health and hygiene certificate and/or experience in the catering and hospitality environment.

• Salary of £28,000 to £33,000 per annum including offshore/shift allowances

• The average age for a steward in 2011 was 43.

Offshore Installation Manager (OIM)

• Support services account for around 20% of the personnel on a platform. The following section details the range of jobs available.




Support Services

• Are responsible for providing medical services to all personnel and for ensuring that the stock of medical and nursing equipment is kept at the required level at all times. On smaller platforms they are often expected to perform other duties such as the safety officer, helideck crewman, storeman and the supervisor of drinking water supplies.

• The necessary entry requirement is the Health and Safety Executive (HSE) Approved Offshore Medic Certificate. To complete the required course it is necessary to previously have been a registered general nurse with three years experience or have held a suitable medical rank in the armed forces. The offshore survival certificate and offshore medical certificate are also required.

• Average salary is between £38,000 and £65,000

• The average age for a medic in 2011 was 45. The majority of medics are between 30 and 49 years old.


Admin, IT & Office Support

Radio Operator

• Control all movements of the helicopters, passengers and freight related to the offshore installation. He or she will also communicate with shipping in the area – unlike some other positions it is rare for a radio operator to double up with other deck duties as the radio must be manned at all times.

• The necessary basic requirements are a Global Maritime Distress Safety System (GMDSS) Radio Operator's Licence, the offshore survival certificate, the offshore medical certificate and excellent communication skills.

• Salary for a radio operator ranges from £23,000 - £40,000

• The average age for a radio operator in 2011 was 45.

• Functioning very much like the human resources department of most organisations, administrative serices offshore are often responsible for crew rotas, logistics and payroll duties. Administrators can work in both technical and non-technical departments.

• The necessary basic entry requirements are good IT, organisation and administration skills. It may be desirable to have a qualifications such as a Higher National Certificate or Diploma in business or administration.

• Average salary once experienced is £20,000 - £28,000

• Includes maintenance work that supports the living quarters and other public areas of an offshore platform such as galleys, recreational rooms and in some cases gymnasiums. This work is often varied and can constitute elements of electrical and plumbing work as well as carpentry trades such as fitting, joining and plastering.

• Basic entry requirements are the offshore survival certificate and the offshore medical certificate. Relevant labouring experience will also be required . Employers may also desire a certificate in City and Guilds Level 1 Basic Construction Skills and offshore experience.

• A salary of £20,000+ can be expected for maintenance staff.

• The average age for maintenance staff in 2011 was 40, the greatest number of personnel were found in the 24-29 years old category.

Maintenance

Medics




Support Services


Deck Crew

• Perform a wide range of manual labour onboard offshore platforms including loading and offloading supplies, sweeping and cleaning. On smaller platforms they may double up as helideck personnel.

• Minimum entry requirements for deck crew are the offshore survival certificate and the offshore medical certificate. It would be desirable to have experience in the offshore industry, preferably on platform and a Banksman Slinging certificate and/or Heli Deck qualification may be necessary.

• Average age in 2011 was 45 and the majority of personnel are aged between 40 and 54.

• The starting salary for deck crew is in the region of £25,000.

Crane Operator

• Responsible for all crane operations on board the offshore installation. They supervise the loading and discharging of supplies from the supply boats and the transfer of equipment on board the offshore installation.

• Basic entry requirements are experience and knowledge of operating large cranes, preferably offshore, a Banksman certificate of expertise, the offshore survival certificate and the offshore medical certificate. Risk assessment and safety qualifications may also be desirable.

• Average salary for a Crane Operator is around £45,000.

• Average age of crane operators in 2010 was 47, with the majority distributed between 40 and 54 years old.



Market Review – Production Services



Production Services

Support Services

• UK production in decline but investment in production services to remain relatively constant.

• Offshore production services include those market sectors that are directly involved in either the production or the enhancement of production of offshore oil and gas reserves.

Production services is segmented by the following sectors:

• Power generation: Includes the cost of energy involved in the lifting and processing of hydrocarbons and all other auxillary aspects of production platforms including the support of the offshore workforce, re-injection of produced water and all onboard drilling and well servicing requirements when needed.

• Produced water: Water is the single biggest product of the oil and gas industry. Produced water costs vary by region but can be extensive with the requirement to first separate out water than either treat it to an acceptable level for discharge into the ocean or to be re-injected into the earth via purpose drilled injector wells.

• Wireline Services: Wireline is a method of deploying a variety of tools to perform work on producer wells several thousand metres below sea level. The market includes production logging services and re-perforation services which involves the re-puncturing of the production casing of a well to provide additional production channels.

• Stimulation Services: Pressure pumping stimulation services are used to enhance production by either fracturing a wellbore to create additional production channels or by pumping acid to unclog blocked up production channels.

Overview


• As UK production is in decline investment is being made in services to enhance production and prolong the life of fields.

• A number of rejuvenation projects are underway such as BP’s $3 billion Schiehallion development in the West of Shetlands area.

• Therefore, there will likely be an increased demand for personnel in skilled sectors such as wireline and stimulation services.

Opportunities

UK Production Services Expenditure by Component 2007-2016


• Production services expenditure is forecast to remain level in the UK at approximately $1.5 billion until 2016.

• As fields mature in the UK oil as gas production declines, by 53% from 2007 to 2016. However, the cost intensity per barrel increases, explaining why expenditure in production services remains constant.

• The majority of forecast expenditure is to be accounted for by power generation services. DWL estimate that 75% of forecast expenditure in the production services sector will be invested in the procurement, maintenance and powering of power generation systems required for offshore operations.

• The stimulation market, including fracturing and acidization services, is expected to see the most growth over the forecast period. Currently stimulation represents 2% of the market, growing to 7% in 2016. This growth can be attributed to the attempt to enhance production from mature fields.

Market Analysis

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Supply Chain Production Services

OPERATORS

Development Wells

Production Platforms Produced Water Management

Power Generation

Stimulation

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Production Services Market Segment Produced Water Management Services

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TIER 1) OPERATORS: Production of oil & gas is the primary revenue source for operators therefore the maximisation of output from each well is of considerably importance. In order to ensure optimal production rates wells and reservoirs must be monitored and action such as re-perforation or fracturing taken if need be. Operators must also deal with the vast quantities of water that are lifted as a by-product of oil extraction as well as provided the considerable amounts of power required to run production platforms.

TIER 2) OILFIELD SERVICE COMPANIES: Tier 2 service companies contract directly with the operator to provide a range of services when there is no in-house capability. There are a number of very large integrated OFS companies such as Schlumberger that offer the majority of production related services required by operators. These companies will either buy equipment outright or rent/charter them from Tier 3 companies

TIER 4) YARDS: Vessel and steel yards provide the base goods required to support the stimulation market and cost inflation (generally with regards to steel) can have a significant impact on contract values further up the supply chain.

TIER 3) SUPPORT, SUPPLIERS & SUB-CONTRACTORS: will manufacture the equipment required for Tier 2 companies to provide their contracted services to the operator and can range from single component manufacturers to original equipment manufacturers (OEMs) providing entire mechanical systems such as wireline skids and fracturing pumps to service companies.



Contractor Landscape – Production Services Competitive Review

• The main contractors in the Production Services market are Siemens for power generation and Schlumberger for all other related production services.

• Production Service companies are typically the largest offshore Contractors.

• They are usually contracted directly by the Operator and are often favoured for subsequent well intervention services.

• The main contractors in the Production Services market are Siemens for power generation and Schlumberger for all other related production services.

• In 2010, Schlumberger acquired Smith International, including PSN, making it the largest contractor in its field.

• There is an expected increased opportunity for contractors in stimulation and boosting services in the UK’s mature fields.

• Recruits are typically taken on at internship level and benefit from development programmes and specific training over a period of many years.

Key Points

Recruitment

Market Outlook


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Siemens 75.9 405,000 Germany

GE 14.7 300,000 U.S.

ABB 31.5 116,500 Switzerland

Schlumberger/MI Swaco 27.4 113,000 U.S.

Halliburton 18 70,000 U.S.

Baker Hughes 14.4 53,100 U.S.

Weatherford 10.2 50,000 U.S.


Aker Solutions 7.71 19,000 Norway


FMC Technologies 4.13 13,500 U.S.

Company Services Production Services




Market Review

• Responsible for maintaining all production related systems and instrumentation on the platform.

• The requirements for a job as an electrician on an offshore platform are a CompEx certificate, field experience with similar electrical installations, preferably on an offshore platform, and the offshore survival and medical certificates.

• CompEx certifies electrotechnical and mechanical craftspersons working in potentially hazardous or explosive atmospheres.

• Average salary is £47,000 for a chief electrician

• Average age in 2011 was 43, although the age range was fairly evenly distributed between 24 and 54 years old.

Electrical Work


Well Service Personnel

• Well Service personnel perform stimulation work such as perforation or production logging.

• Unlike most of the other jobs survey by Oil and Gas UK, well service personnel tend to be younger than other offshore personnel with the majority being between 24 and 39 years old. Average age in 2011 was 34.

• Charged with developing and monitoring production strategies. The job involved technical evaluation of proposals, engineering design and evaluation of control and process schemes.

• An engineering degree will be required, alongside the offshore survival certificate and the offshore medical certificate. Relevant industry and offshore experience may also be desirable.

• Salaries can range for £40,000 to £60,000

• Average age in 2011 was 42, although the age range was fairly evenly distributed between 24 and 54 years old.

Production Engineer






Market Review – Platform Drilling



Platform Drilling Services

Support Services

• Drilling is often regarded as a Capital Expenditure and whilst the majority of offshore drilling activity is performed through Mobile Offshore Drilling Units (MODUs) a significant proportion is carried out from the actual production platform. By its very nature platform drilling occurs after hook-up and production has commenced and as such it has been included in our Operational Expenditure forecast.

The drilling and well service sectors are split as follows:

• Rig and Crew: Many platform rigs are owned by third party contractors.

• Well Construction and Integrity: Once a well is drilled it requires construction services such as cementing and casing and completion services such as well cleanout, fishing, gravel packing and artificial lift before production can commence. Older wells may require re-cementing or re-casing work to repair damaged segments.

• Consumables: Products such as bits and fluids are vital in the drilling process and must be chosen carefully to optimise drilling efficiency and minimise costly downtime.

Overview


• Although the number of wells drilled is forecast to decline, there will continue to be a constant requirement for crew in the platform drilling sector.

• The drilling sector requires highly skilled personnel who are expected to have extensive offshore experience. Compared to other sectors such as support services, there is less opportunity for skills transfer from other industries.

Opportunities

UK Platform Drilling Services Expenditure by Component 2007-2016


• The market for UK platform drilling is recovering from the effect of the 2008 recession and growth is forecast to continue to $837 million in 2016. This is an increase of 32% from the low of $632 million in 2009.

• This growth is attributed to cost inflation rather than an increase in the number of wells drilled.

• The vast majority of expenditure can be attributed to rig and crew, this accounts for 67% over the 2012-2016 period.

Market Analysis

• Platform drilling market increasing over the forecast period despite a decline in the number of wells drilled.

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Key Market Driver

Production Services Market Segment

Oilfield Equipment Manufacturer

Tier 3

TIER 1) OPERATORS: Operators have responsibility for existing wells in addition to making decisions over the drilling of new production wells from the platform. The drilling of sidetracked wells from existing completions has become an increasingly popular method for operators to enhance productivity from maturing fields, particularly in Asia-Pacific, the Gulf of Mexico and the North Sea, due mainly to the rapidly rising costs of MODUs over the past five years.

TIER 2) PLATFORM RIG CONTRACTORS: Operators who lack in-house drilling capability must turn to contractors to perform production-related drilling activities. Rig contractors will often leave a rig on platform semi-permanently on a dayrate basis providing drilling crew as and when needed according to the operator’s drilling plans.

TIER 2) OILFIELD SERVICE COMPANIES: Perform completion related services such as cementing, casing, gravel packing & artificial lift in order to transform an open hole into a functional production well. Larger OFS companies such as Weatherford and Halliburton will have in house manufacturing capability.

TIER 3) OILFIELD EQUIPMENT MANUFACTURERS: These companies design and manufacture platform drilling rigs along with associated equipment such as top-drives, BOPs, mud pumps and drilling valves. These companies may also sell straight to Tier 2 OFS companies and Operators.



Contractor Landscape – Platform Drilling Competitive Review

• The main contractors in the Platform Drilling market for well construction & integrity are Schlumberger and Halliburton.

• The main contractors in the Platform Drilling market for well construction & integrity are Schlumberger and Halliburton.

• Platform Drilling Contractors either offer construction services and consumables or chartered rigs.

• Contractors in the well construction and consumables market are significantly bigger employers than rig owners.

• Schlumberger Artificial Lift and Schlumberger Completions have recently been awarded work for their expertise in heavy oil and unique solutions.

• Demand for staff in the platform drilling sector will remain constant.

• Skilled engineers are trained within these companies over many years and typically enter employment as new graduates on graduate training schemes.

Key Points

Recruitment

Market Outlook


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Maersk 48.6 110,000 Denmark



Weatherford 10.2 50,000 U.S.

Saipem 13.64 40,000 Italy


Transocean 9.6 18,000 Switzerland


Company Services Platform Drilling




Market Review – Platform Drilling

• The derrickman works under the supervision of the driller and is responsible for the maintenance and smooth operation of the mud pumps and mud holding pits among other machines in the mud pump room. Typical duties include: handling and stacking sections of the drill pipe, maintaining the derrick, operating the lifting and hoisting machinery to position the drill, controlling and maintaining mud pumps and supervising mud pump operators.

• A derrickman is usually expected to have around two years experience in the industry as a roustabout or roughneck.

• The entry salary for a derrickman is £25,000 - £30,000.

• The average age for drilling staff in 2011 was 39.

Derrickman

Roustabout and Roughneck

• Roustabouts complete basic labouring tasks to help keep the drilling area in good working order. Responsibilities include moving supplies and equipment, using lifting gear and winches to load and stack equipment, helping to repair pumping equipment and mixing the 'drilling mud' to lubricate the drill bit.

• A roughneck is a promotion from roustabout. Duties for roughnecks include carring out more skilled duties as part of the actual drilling operation, such as adding fresh lengths of drill pipe as the drill moves deeper into rock, inserting and extracting the whole drill, cleaning, maintaining and repairing the drilling equipment.

• No formal qualifications are required, however if entering the industry through an apprenticeship scheme four GSCEs will be desirable. The offshore survival certificate and the offshore medical certificate are required to work offshore. Work based qualifications can be gained including the SVQ Level 1 in Offshore Drilling Operations and the SVQ Level 2 in Offshore Deck Operations.

• Salaries for roustabouts and roughnecks range from £18,000 to £25,000.

• The drilling engineer is responsible for planning the drilling programme, designing the well, co-ordinating the work of offshore drilling teams and analysing drilling performance.

• Necessary entry requirements include a relevant degree in science or engineering, the offshore survival certificate and the offshore medical certificate.

• Starting salaries for drilling engineers is £25,000 - £30,000 and average salary once experienced is £40,000 - £75,000.

• The average age for drilling staff in 2011 was 39.

Drilling Engineer






Market Review – Asset Services



Asset Services

Support Services

• Asset services cover the costs associated with the day to day maintenance of offshore structures to ensure that the vitality of the hull conforms with both company HSE policy and regional legislation. The market for floating production system (FPS) units is differentiated as given their mobile nature operators can choose between buying them outright or leasing them on a dayrate basis.

Fabric Maintenance: The principal services include:

• Mechanical Maintenance: includes bolting and torquing services as well as the maintenance of rotating equipment and key integrity inspection such as fireproofing and vibration testing.

• Painting/Blasting Services: maintenance of protective coatings are essential in preventing corrosion of internal piping as well as protecting the outer structure from the effects of weather and the sea.

• Specialist Cleaning: the use of chemicals to treat and clean onboard process equipment.

• Scaffolding & Rope Access: In order to perform fabric maintenance services, scaffolding or ropes are often required to reach elevated areas or to access sub-platform areas such as legs or other support structures.

Overview

• As the UK basins are relatively mature there is not expected to be a large increase in the number of new offshore platforms.

• However, the installed base of platforms will continue to require fabric maintenance into the future. The majority of platforms in the UK were installed more than ten years ago and will require increased maintenance as they age.

• Fabric maintenance requires a number of specialist staff. Nevertheless, as with the support services sector, there is potential for personnel transfer from relevant industries onshore. Personnel with existing skills in construction, scaffolding and building maintenance may be able to migrate offshore to work in the fabric maintenance sector.

Opportunities

UK Asset Services Expenditure by Component 2007-2016


• Expenditure for fabric maintenance will grow from $385 million in 2012 to $468 million by 2016 – a compound rate of 7.3%.

• The market for asset services is closely linked to the population (installed base) of offshore production platforms. Fixed platforms on the UKCS are expected to increase from 274 to around 300 by the end of the forecast period. However, the number of floating production platforms is likely to decline as units come off contract.

• The UK is a mature market and production from the UK continental shelf is now in decline. The size and age of UK platforms combined with local regulation and weather conditions makes the UK a very maintenance intensive market.

Market Analysis

• The asset services market to grow over the forecast period, though there is only a small increase expected in the platform population.

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Production Services Market Segment

OPERATORS

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TIER 1) OPERATORS & DUTY HOLDERS: The Duty Holder of the platform is responsible for the contracting of asset services and whilst the responsibility for the day to day running of offshore platforms generally lies with the operator, in recent years this “Duty Holder” status has been outsourced to integrated service providers such as Petrofac, Wood Group and Aker Solutions. The outsourcing of Duty Holder status is a potentially attractive offering to smaller operators who may lack the resourcing capability to deal with all aspects of running an offshore production platform.

TIER 2) FABRIC MAINTENANCE CONTRACTORS: These companies can range from single service suppliers to large multiservice providers. Tier 2 companies will contract with the duty holder of the asset or they may be contracted by the leasing company in the case floating production platforms.



Contractor Landscape – Asset Services Asset Services

• Asset Services Contractors are not typically the largest service companies and are often sub-contracted.

• The main contractors in the Asset Services market are Wood Group and Aker Solutions.

• Wood Group acquired PSN in 2010, expanding its production services offering.

• The installed base of platform in the UK will continue to require fabric maintenance into the future.

• Most of these contractors offer apprenticeships, internships and graduate schemes.

Key Points

Recruitment

Market Outlook


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Aker 7.71 19,000 Norway

Cape 2.55 19,000 UK

Stork/RBG 1.9 14,500 Netherlands

Hertel 1.13 13,000 UK

Deborah Services n/a 1200 UK

BIS Salamis 0.16 1,140 UK

Enermech 0.09 1,000 UK

Hydratight n/a 1,000 UK

Company Services Asset Services




Asset Services

• Contracted to provide scaffolding and roping for other teams to perform maintenance work on hard to reach areas of offshore platforms.

• A scaffolder is required to have a NVQ Level 2 in Access and Rigging Operations, the offshore survival certificate and the offshore medical certificate. It may be desirable to have a NVQ Level 3 in Access and Rigger Operations and relevant experience offshore or as a general labourer.

• Average salary of £16,000 to £20,000+

• Average age in 2011 was 44, the more experienced workers within this sector taking on supervisory roles.

Rope and Scaffolding Services


• Provide both bolting and other maintenance services on the main infrastructure of the offshore platform.

• Would also need to be able to interpret technical drawings and have a strong practical ability as well as a good knowledge of the industry.

• Qualification in mechanical services provides a worker with a varied skillset which can be used within the offshore and onshore industry.

• Average age in 2011 of 44 years , although an even distribution between 24 and 59 years old.

• Average salary between £25,000 and £50,000.

• Typical progression would be to supervisory and management roles, or Offshore Installation Manager position.

Mechanical Services






Market Review – Subsea IRM



Subsea Inspection, Repair and Maintenance

Support Services

• Subsea Inspection, repair, and maintenance (IRM) refers to tasks carried out on offshore infrastructure below the water line in order to maintain production and ensure suitable HSE standards are met.

• IRM is driven by a combination of legal, economic, and technical factors that lead field operators to develop production and facility maintenance strategies.

• The IRM strategies employed, and regularity of inspection in particular, depend on a variety of factors: principally, the type of structure/equipment, the ease of access, availability of vessels, the cost of inspection, technical maintenance expectations and legal obligations.

Market demand has been split out by the following segments:

• Inspection, repair and maintenance of Pipelines, Fixed Platforms, Floating Platforms and Subsea Hardware

• Subsea Well Intervention which involves any logging and intervention required to maintain optimum production levels.

Overview


• IRM will continue to be required on the installed base of subsea infrastructure although this activity is not expected to rise into the future.

• A growing demand for specially trained ROV operators is expected as the use of ROVs is increasingly favoured over divers for subsea IRM.

Opportunities

UK IRM Expenditure by Component 2007-2016


• The market for UK IRM is driven by the population of subsea infrastructure, fixed and floating production platforms and offshore pipelines that may need to be inspected or repaired.

• The IRM market is set to decline post 2014 due to a decline in well intervention as fields mature and are brought offstream.

Market Analysis

• Inspection, repair and maintenance to continue to be required on existing infrastructure but an increase in future IRM activity is not expected.

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PipelineFixed PlatformFloating PlatformSubsea HardwareWell Intervention



Supply Chain Subsea IRM

OPERATORS

Fixed Platforms

Subsea Wells

Pipelines

Subsea Field Inspection

Subsea Well Intervention

Pipeline IRM

Asset Integrity

Subsea IRM Contractors

Subsea Well Intervention Contractors

Specialist Sub-Contractors

Vessel Owners

Well Intervention Equipment Providers

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Tier 4 Company Type


IRM Market Segment

TIER 1) OPERATORS: Responsible for the maintenance of subsea infrastructure used in the production and transportation of hydrocarbons. Regular maintenance of this infrastructure is essential to avoid costly downtime in production and any potential environmental liabilities. Subsea well intervention activity is a valuable method of boosting production and (therefore revenues) from existing wells. Whilst the outsourcing model is almost unanimously subscribed to by Western style E&P companies many National Oil Companies (NOCs) may well have internal service capability and may contract directly with Tier 3.

TIER 3) SUPPORT, SUPPLIERS & SUB-CONTRACTORS: Will manufacture the ROV units used in subsea IRM work, provide innovative equipment for subsea intervention work or own the vessels used by service companies to perform work. Some larger Tier 2 companies such as Oceaneering will also have in-house ROV manufacturing capacity.

Vessel owners allow smaller Tier 2 companies to mitigate some of the inherent risk of owning capital intensive assets. Also included in Tier 3 are specialist sub-contractors that will be hired by Tier 2 companies that are at full capacity or do not have the specific competence required.

TIER 2) SUBSEA IRM AND WELL INTERVENTION PROVIDERS: There is considerable overlap between these two categories with basically all well Intervention providers being having the capability to provide IRM services. These companies generally charter vessels (although larger companies may own vessels outright) in order to perform services for the operator. The dayrates received by the service companies forms the basis of the expenditure for the DWL Subsea IRM market.

TIER 4) YARDS: Vessel and steel yards provide the base goods required to support the IRM sector and cost inflation (generally with regards to steel) can have a significant impact on contract values further up the supply chain.



Contractor Landscape – Subsea IRM Subsea IRM

• The largest providers of well construction services are also the largest providers of well intervention services, however pipeline and field related IRM services are undertaken by a different set of Contractors.

• The main providers of Subsea Intervention Services are Schlumberger and Halliburton.

• Technip and RBG are the largest providers of Subsea IRM relating to pipeline and field work.

• Saipem and Fugro TSM are integrated providers of various subsea services.

• The largest companies provide very similar sets of services and will often be chosen for intervention work if they carried out the original well construction.

• Subsea Contractors carry out very specialised and sometimes high risk operations, particularly regarding diving activity.

• ROV’s are used frequently for this type of work and require trained technicians.

Key Points

Recruitment

Selected Key Competitors 20

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Saipem 13.64 40,000 Italy

Technip 8.06 30,000 France


Stork/RBG 1.9 14,500 Netherlands

Fugro-TSM 3.02 13,500 Netherlands

Subsea 7/Acergy 2.02 12,000 UK

Oceaneering 1.92 8,200 U.S.

Company Services Subsea IRM




Market Review – Subsea IRM

ROV Pilot

• ROV pilots use remotely operated vehicles, which are underwater robot vehicles connected to a mother ship by some form of umbilical. Such vehicles are widely used for a broad range of activities, in many cases instead of divers. Some of their uses are: inspection and monitoring of underwater equipment; operation and maintenance of valves and other moving parts on subsea manifolds; trenching for submarine cables and pipelines; video observation of divers and inspection of underwater equipment and pipelines. Considerable technological and engineering challenges are involved in operating them.

• Generally there are no statutory requirements for ROV personnel to have particular qualifications. The offshore survival certificate and the offshore medical certificate are required to work offshore and there are entry level training courses available, suitable for those who have a background in electronics or hydraulics.

• Salaries cover a wide range from £20,000 for a trainee ROV technician to £60,000 or more depending on responsibilities and experience.

• Provides technical support for activities related to integrity management of offshore structures and subsea pipelines. Plans inspections and recommends repairs and maintenance of all offshore structures and Subsea pipelines. Leads in developing standards and procedures for the inspection of all offshore structures and subsea pipelines.

• A degree in mechanical engineering or equivalent and experience in the oil & gas industry is required, with employers requiring proof of extensive knowledge of subsea integrity engineering and management.

• Average salary is £60,000 - £80,000

Subsea IRM Engineer

Please note: Subsea IRM engineers and ROV pilots are not on-platform staff.






Market Review - Logistics



Logistics

Support Services

• The transportation of both personnel and cargo to and from offshore oil and gas platforms is carried out by helicopters and platform supply vessels.

• Due to environmental conditions crew must be transported by helicopter in the North Sea.

• Helicopters are used during the drilling and production stages when sea conditions, time and/or the distances involved preclude transport by sea. Their key role is to fly crews and light cargo to production platforms and offshore drilling rigs. Helicopters are generally classified as small (four to eight passengers), medium (12 to 16 passengers) and large helicopters (18 to 25 passengers), each serving a different logistical need of the offshore oil & gas industry.

• Platform supply vessels (PSV) are used to transport drilling and other supplies to offshore platforms and to bring back waste and materials to be recycled.

Overview


• With no forecast growth in fleet numbers of helicopters or platform supply vessels in the UK, it is unlikely that there will be an increased demand for staff in the offshore logistics sector.

• The current staffing levels are likely to be maintained and so there may be employment opportunities for pilots, crew and support staff with prior experience on helicopters or vessels.

Opportunities

UK Logistics Expenditure by Component 2007-2016


• The UK logistics market is forecast to see increased expenditure from $854 million in 2012 to approximately $1 billion in 2016.

• As the UKCS is a mature region, much of this growth is due to price inflation rather than an increased demand for helicopters or supply vessels.

• The demand for transportation by helicopter is high in the UK in comparison to other regions due to legislation meaning crew ships cannot be used to transport personnel.

Market Analysis

• Rise in costs to drive a growth in the logistics market over the forecast period.

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Supply Chain Market Review – Logistics

TIER 1) OPERATORS: As the ‘duty holder’ operators have total authority for the day to day running of offshore oil & gas platforms and are therefore responsible for supporting offshore logistics operators who bring both personnel, supplies and sometime equipment to offshore facilities .

TIER 2) Offshore Logistics Operators: These companies are contracted by the ‘duty holder’ to transport both personnel and supplies to the offshore platform. Logistics contracts can be on a dayrate or long-term basis depending upon the frequency of use. It is not uncommon for a number of operators to use the same logistics operator.

TIER 3) Specialist Sub-Contractors: These companies provide a wide range of services to the logistics operator covering training, maintenance, HSE, offshore survival and fire safety.

TIER 4) Helicopter Manufacturers: These companies manufacture and develop aircraft used by offshore logistics companies.

TIER 4) Supply Bases: Vessel and steel yards provide the base goods required to support the manufacturing PSVs and crew boats.



Contractor Landscape – Logistics Competitive Review

• Logistics providers offer fewer employment opportunities with-in the North Sea than other types of contractors.

• Maersk and Tidewater are the main providers of Platform Supply Vessel -related logistical support.

• CHC Helicopter and Bristow Group are the main helicopter services providers.

• Tidewater has one of the largest vessel fleets serving the offshore energy industry while globally Bristow has the largest private helicopter fleet globally.

• The installed base of offshore platforms will continue to require crew and supply transportation by helicopters and vessels into the future.

• North Sea career opportunities with international vessel providers are almost exclusively marine based rather than onshore or platform based.

• Helicopter providers are predominantly hiring for administrative or ground staff positions.

Key Points

Recruitment

Market Outlook


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Moller-Maersk 48.6 110,000 Denmark 60

Tidewater Inc. 1.17 7,900 U.S. 350

CHC Helicopter 1.3 4,300 Canada 233

Vroon BV - 4,000 Netherlands 150

Bristow Group 1.17 3,410 UK 570

DOF Subsea 0.48 3,100 Norway 24

EMAS 0.5 3,000 Malaysia 65

Farstad Shipping ASA 0.57 1,900 Norway 64

Seacor Marine 2.65 1,780 U.S 100

Company Services Logistics




Market Review – Logistics

• Oil rig helicopter pilots transport personnel and cargo to and from offshore oil field drilling and production platforms and survey vessels. They are called upon to fly in extreme and potentially hazardous weather conditions.

• Employees will require a minimum of 1000 hours pilot-in-command time and may desire 1500-2000 hours. A private pilots licence is also required, as is Joint Aviation Authorities Class 1 medical.

• Salaries for helicopter pilots range from £45,000 to £60,000.

Helicopter Pilot Platform Supply Vessel Engineer

• Responsibilities include: management of the engine department, maintenance and repair of all machinery and electrical items onboard and training of engine room staff.

• A STCW 95 certificate of competency will be required. The STCW 95 course is a statutory requirements and a globally recognised qualification for working afloat on boats over 24m. The offshore survival certificate and the offshore medical certificate are required to work offshore.

• Starting salaries range from £20,000 - £35,000 and can increase to £45,000 - £100,000 once experienced.

• The average age for maintenance staff in 2011 was 40.

Please note: Helicopter pilots and platform supply vessel engineers are not on-platform staff.






Appendices



Douglas-Westwood Recent Credentials


P775 Invest NI O&M Markets Appendices

Douglas-Westwood Standard Terms & Conditions

We will be entitled to submit invoices for services provided and disbursements incurred on completion of the transaction, or when the transaction is aborted. Invoices are payable upon presentation. We shall be entitled to charge monthly interest at a rate of 2% above the base rate for the time being of Natwest Bank plc on all invoices which remain unpaid 28 days after presentation. We reserve the right, where fees have been invoiced and payment is outstanding to us, to exercise a lien in respect of those outstanding fees over any documents belonging to you which may be in our possession.

3 Commissions

Where commissions are payable to us as a result of this engagement we will notify you of the amounts at the time the transactions concerned are carried out. We will not be liable to pay to you any such commission paid to us but we may take it into account in determining our fee.

4 Our responsibilities to you

We will provide the services described in our engagement letter (or such variations as may subsequently be agreed in writing between us) with reasonable skill and care and in a timely manner. The nature and content of any advice we provide will necessarily reflect the specific scope and limitations of our engagement, the amount and accuracy of information provided to us and the timescale within which the advice is required. If you ask us to provide our advice in an abbreviated format or timescale, you accept that you will not receive all the information you would have done had we provided a full written report or had been able to perform the work without an abbreviated timescale.

We are providing specific advice only for this engagement and for no other purpose and we disclaim any responsibility for the use of our advice for a different purpose or in a different context. If you plan to use this advice on another transaction or in another context please let us know and provide us with all material information so that we can provide advice tailored to the appropriate circumstances.

The following terms of business apply to engagements accepted by Douglas-Westwood Limited. All work carried out is subject to these terms except to the extent that changes are expressly agreed in writing.

1 Douglas-Westwood Limited

We are Douglas-Westwood Limited, a limited liability company incorporated under English Law with registered number 2551677. Our registered office is at Whitebeams, Woodgate, Pett Bottom, Canterbury CT4 6EH, and our principal place of business is St Andrews House, Station Road East, Canterbury, CT1 2WD. References in these terms of business to “we”, “us”, “our” or “our partners” shall be construed accordingly. References in these terms of business to “you” or “your” shall refer to each and every party to this engagement letter (other than us).

2 Our fees and invoicing arrangements

Unless otherwise agreed in writing, our fees will be based on the number and seniority of staff required, the degree of skill and responsibility involved, the resources required to complete the engagement and the fee rates for the appropriate personnel. Our fee rates will be reviewed from time to time. We will also charge for any disbursements incurred during the engagement and we will add VAT to charges and disbursements if chargeable. Any fee estimate we may provide is not an agreement to perform the services within a fixed time or for a fixed fee.

Any fee estimate agreed with you is necessarily based on the assumption that the information required for our work is made available in accordance with agreed timetables, and that your key executives and personnel are available during the course of our work. If delays or other unanticipated problems which are beyond our control occur this may result in additional fees for which invoices will be raised.




Subject to our duty of confidentiality, you agree we may act for your competitors or for other clients, whose interests are or may be opposed to yours. The reports, letters, information and advice we provide to you during this engagement are given in confidence solely for the purpose of this engagement and are provided on the condition that you undertake not to disclose these, or any other confidential information made available to you by us during the course of our work, to any third party (being a party other than those to whom the report, letter, information or advice is addressed, or a potential or actual counterparty to a transaction, or your or their other advisers) without our prior written consent.

Neither we nor you will be prevented from disclosing confidential information:

a) which is or becomes public knowledge other than by a breach of an obligation of confidentiality;

b) which is or becomes known from other sources without restriction on disclosure; or

c) which is required to be disclosed by law or any professional or regulatory obligation.

You agree that, for the purposes of carrying out our responsibilities in this engagement, we shall not be treated as having notice of information which may have been provided to individuals within this firm who are not involved in this engagement. Notwithstanding the restrictions on disclosure contained in this section, where we provide any oral or written statement to you as to the potential US federal income tax consequences that may result from a transaction, we expressly authorize you (and each employee, representative or other agent of yours) to disclose to any and all persons, without limitation of any kind, the US federal income tax treatment of the transaction, any fact that may be relevant to understanding this, and all materials of any kind (including opinions and other tax analyses) provided to you in relation to these. However, because our advice is solely for your benefit and is not to be relied upon by any other persons, as part of any such disclosure made by you, you must inform all such persons that they may not rely upon our advice without our prior written consent.

Unless otherwise agreed with you, we may correspond by means of the Internet or other electronic media or provide information to you in electronic form. Because of the inherent risks associated with the electronic transmission of information on the Internet or otherwise, we cannot guarantee the security and integrity of any electronic communications or information sent or received in relation to this engagement. Whilst it is our policy to check our e-mail correspondence and other electronic information with anti-virus software, we similarly cannot guarantee that transmissions or other electronic information will be free from infection. You acknowledge that if we are working on your premises we may need to connect to the Internet through your internal network in order to access our systems.

5 Your responsibilities to us

In order to enable us to fulfill our responsibilities you agree on request, to provide us with complete, accurate and timely information and to carry out any obligations ascribed to or undertaken by you or others under your control. You agree that any commercial decisions that you make, are not within the scope of our duty of care and in taking such decisions you must take into account the restrictions on the scope of our work and other factors, commercial and otherwise, of which you and your other advisers are, or should be, aware from sources other than our work.

6 Information and confidentiality

Where we receive confidential information we shall take such steps as we in good faith think fit to preserve confidential information from unauthorised disclosure or other misuse both during and after termination of this engagement. If, despite taking such steps, we disclose without authorisation or otherwise misuse the confidential information, thereby causing you loss, we shall be liable to you. Save where there is specific agreement to the contrary, our client relationship with you shall not be treated as confidential information and we may disclose this fact to clients, prospective clients, or other third parties.




11 Cap

Our liability to you in respect of breach of contract or breach of duty or fault or negligence or otherwise whatsoever arising out of or in connection with this engagement shall be limited in total to £700,000 (approximately €1,000,000) to cover claims of any sort whatsoever (including interest and costs) arising out of or in connection with this engagement. This provision shall have no application to any liability for death or personal injury nor to any liability arising as a result of fraud on our part (or for which we are vicariously liable) nor to any liability which cannot lawfully be excluded or limited.

Where there is more than one party to this engagement letter (other than us), the limit of liability will have to be allocated among you. It is agreed that, save where an allocation is expressly stated in our engagement letter, such allocation will be entirely a matter for you and you shall be under no obligation to inform us of the allocation. If (for whatever reason) no such allocation is agreed, you shall not dispute the validity, enforceability or operation of the limit of liability on the ground that no such allocation was agreed.

12 Proportionality

Our liability to you in respect of breach of contract or breach of duty or fault or negligence or otherwise whatsoever arising out of or in connection with this engagement shall be limited to that proportion of the loss or damage (including interest and costs) suffered by you, which is agreed between us or ascribed to us by a Court of competent jurisdiction allocating proportionate responsibility to us having regard to the contribution to the loss and damage in question of any other person responsible and/or liable to you for such loss and damage. This provision shall have no application to any liability for death or personal injury nor to any liability arising as a result of fraud on our part (or for which we are vicariously liable) nor to any liability which cannot lawfully be excluded or limited.

For the purpose of assessing the contribution to the loss and damage in question of any other person pursuant to the preceding paragraph, it is agreed that no account shall be taken of any limit imposed or agreed on the amount of liability of such person by any agreement (including any settlement agreement) made before or after the loss and damage in question occurred.

7 Intellectual property rights

We retain all copyright and other intellectual property rights in everything developed, designed or created by us or any predecessor firm either before or during the course of an engagement including systems, methodologies, software, know-how and working papers. We also retain all copyright and other intellectual property rights in all reports, written advice or other materials provided by us to you, although the fees you pay us allow you to use those materials for the purposes for which they were created under this engagement.

8 Health and safety

We acknowledge our statutory responsibility to co-operate with your health and safety requirements, provided we are given notice of these. Whilst on your premises our partners, staff, agents and sub-contractors shall be afforded by you the same protection for health and safety purposes as is due to your employees. If we are required by you to enter the premises of a third party you will use reasonable efforts to ensure that the third party also affords such protection to our partners, staff, agents and subcontractors as is due to its employees.

9 Our liability

By engaging us you agree that any claim of any sort whatsoever arising out of or in connection with this engagement shall be brought only against Douglas-Westwood Limited and that no claims in respect of this engagement will be brought personally against any other persons involved in performance of this engagement, whether actual or deemed servants or agents of us or not.

10 Limitation of liability

You agree that our total liability in respect of any loss shall be limited to the lower of the figures produced by the operation of the following two sections.




16 Our staff

You undertake that during the course of this engagement and for a period of one year following its conclusion you will not: a) solicit or entice away (or assist anyone else in soliciting or enticing away) any member of our professional staff with whom you have had dealings in connection with this engagement during the 12 months immediately prior to your approach; or b) employ any such person or engage them in any way to provide services to you.

This undertaking shall not apply in respect of any member of our staff who without having been previously approached directly or indirectly by you responds to an advertisement placed by you or on your behalf.

In the event of a breach of the terms of this undertaking which leads to the departure of an individual, you will pay to us, on demand, a sum equivalent to 100% of the total annual remuneration package paid by us to the individual prior to his or her departure. You acknowledge that this provision is a fair and reasonable term intended to be a genuine assessment of the likely consequential loss to us.

17 Force majeure

Neither we nor you shall be liable in any way for failure to perform, or delay in performing, our respective obligations under this engagement if the failure or delay is due to causes outside the reasonable control of the party which has failed to perform.

18 Duration

Unless otherwise agreed with you, the terms of this engagement will apply from the commencement of our provision of the services outlined in our engagement letter.

13 The time for bringing any claims

Any claim for breach of contract, breach of duty or fault or negligence or otherwise whatsoever arising out of or in connection with this engagement shall be brought against us within six years of the act or omission alleged to have caused the loss in question.

14 Third party rights

As provided in section 6 above, the reports, letters, information and advice we provide to you during this engagement are not to be disclosed to any third party (being a party other than those to whom the report, letter, information or advice is addressed or a potential or actual counterparty to a transaction, or your or their other advisers) without our prior written consent. Before we provide such consent, we may stipulate terms regarding such provision or require the third party to enter into a direct relationship with us. We disclaim all responsibility for any consequence whatsoever should any such third party rely upon any report, letter, information or advice without our first having given our written consent that such third party may do so. Our only responsibility is that which is owed to you in the context of this engagement as at the date on which our report or other advice is given to you. Save as aforesaid, and save as provided in section 9 above, a person who is not a party to this engagement shall have no right to enforce any of its terms. If requested by you we will enter into a direct relationship with any counterparties to the proposed transaction which will confirm their ability to rely upon our report as if it had been addressed to them, but on the basis that our aggregate liability to you and to them shall be no greater than the liability we would have had to you alone had we not done so.

15 Data Protection Act 1998

We confirm that we will take appropriate technical and organisational measures against unauthorised or unlawful processing of personal data and against accidental loss or destruction of or damage to personal data and comply with any other obligations under the Data Protection Act 1998 (the “DPA”). All terms used in this section shall have the same meaning as in the DPA. You will not by any act or omission put us in breach of the DPA.

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