Pete Jones, Managing Director, TAQA UK
Pete Jones, Managing Director of TAQA UK, discusses his main priorities since taking over the reins last year, TAQA’s strong commitment to and investment in the North Sea, and the effects of the recent development of the Morrone field.
What have been some of the main milestones of 2013?
The main achievement has been the acquisition of the BP assets. We obtained operated interests in BP’s Maclure, Harding, and Devenick fields and its non-operated interest in Brae complex and Braemar field.
The acquisition gave us a core area in the Central North Sea, an operating platform in Harding, and a growth project, which is a very significant gas cap. We will work with Maersk Oil as our partner to develop those significant gas resources, which are obviously extremely important for the UK energy market in the future.
TAQA has a very focused portfolio in addition to these new acquisitions and a strong position in both the Northern and Central North Sea. Moreover we are adding value to our business through development. Development is what we bring with our people, what we bring technically, and how to sustain the business further.
Ongoing operations were also successful. We hit record production of 85,000 barrels a day for a number of days at the end of last year, which was a major milestone and certainly solidified us in the top 10 operators in the North Sea.
Another achievement was that we celebrated our fifth year as an operator in the North Sea last December. The North Sea is a challenging environment and one in which TAQA is extremely proud to be operating. In five years’ time, we have basically gone from no operations in the North Sea to operating record productions and being a top 10 producer.
You were appointed your position in mid-2013. What were the priorities you set when you took over the reins at TAQA in the UK?
I came in right after the acquisition and transition of the Harding assets. TAQA has a very focused portfolio. However, we need to work on consolidating these assets, so that we deliver on their value. This means a relentless focus on safety, production, and production efficiency, which is key in the North Sea. In addition, we are focusing on operating costs, and executing and drilling projects to be in the best of our class.
If we do this, we will have the competitive edge that we need. If we acquire something, we can extract more value than anyone else can. If we explore and have success, we can tie it back quicker, more safely, and cheaper than anyone else. My priority is to make sure that we hone that competitive edge for this next phase, which will make TAQA sustainable for the long term in the North Sea. TAQA is focused on this long-term view.
You highlighted the speed with which the approval to develop the Morrone field was achieved. Were you surprised you received approval so fast?
No, not really. Thanks to good relationships and a lot of technical work, we made sure we were well organized. Bringing people along with us was also critical to this achievement.
When we took over Harding, our first well had the longest reservoir section that had been drilled from the Harding platform at that time. Morrone is an even greater step out from the Harding platform, but that delivery of our first well has given us great confidence for the Morrone project, which we expect to start soon.
The first oil is expected in the third quarter of 2014 for the Morrone field. Are you still targeting 3,000 barrels of oil equivalent per day?
Yes, we would be expecting that order of magnitude of production. Production would be towards the end of the year, as we will start drilling shortly and are currently working on the conductor.
In 2013, you reached 85,000 barrels a day. What are your production targets for 2014?
TAQA is looking to sustain that 60,000-barrel a day range over the next few years, which is between our operated and non-operated production. We see this as a good size business and one that will allow us to maintain our focus on the Northern North Sea and Central North Sea.
Will we see TAQA continuing to grow its business in the UK by making selective acquisitions in the near future, or are these times of consolidation?
It is a period of consolidation. I would say if there is a right fit, we would consider it since we always look to where we can add our technical competence and add value. However, our key priority is consolidation via delivering the value that we saw and the acquisitions that we have made. We want to make sure we have that consistency and that edge. Obviously, we will not let things pass by that we see as key.
Do you see any challenges in the near future in achieving this goal?
I think it is a constant challenge. The North Sea is a tough, competitive environment.
The supply chain is global, which is good for Aberdeen, but it can also be quite challenging for developing the UKCS—projects are becoming more and more marginal. Drilling costs and access to subsea costs are rising, which makes project execution more and more challenging. It is an area of focus for the whole industry.
TAQA, jointly with Oil and Gas UK, is leading the Northern North Sea rejuvenation project under PILOT. I am sure this will be an area that we will try to focus on to make sure that we are getting value versus costs. This and production efficiency are key areas of focus to make sure that the Northern North Sea is sustainable. The longer this sustainability is ensured through those two metrics, the more opportunities there are for good things and other projects to happen. You have to get that balance right since it is a challenging environment. There are no silver bullets out there; it is down to focus and hard work.
It is interesting to see that an UAE company is so focused on one of the oldest regions in the world. In fact 30 percent of its output is coming from the North Sea. Can you elaborate on TAQA’s strong belief in the mature region?
Our acquisitions and strategies have been successful. As an Abu Dhabi based energy company, we have a good position as we can take a very long-term view, which I think is necessary for the UKCS.
As we are also keen to be operators, there is no better place to prove your capability as an operator than offshore UKCS. For example, people are moving from the UK to Kurdistan, to support our growth there and our entry into the region. My predecessor Leo Koot is a notable example, with other very good technical specialists from our UK business also going to Kurdistan. The UK has become a very important region to support our global business.
From a managing point of view, what are the challenges behind leading a change such as, “spearheading the ambition of TAQA to shift from being a portfolio investor, to becoming an operator”?
It has been an evolution of operatorship. Five years ago, we had a non-operating position in the UKCS. Then we stepped into the Northern North Sea. Next, there was a lot of investment to make it safe, make it work, and make the assets grow—a mantra that has been followed very effectively. We have effectively gone from a non-operating to an operated position.
Since our first operatorship we have been building operating capability stronger and stronger. Now we can attract the best in talent. We have a great company, a great portfolio, and a great place to work.
From a more personal point of view, why did you decide to take the risk of a career change after many years spent at Marathon Oil?
A key factor in my decision was the company’s culture. TAQA is a dynamic and people-oriented company that works hard on developing capabilities and on supporting each other. I certainly got a sense of that from my due diligence and this made it an easy transition and a good fit for me personally.
Furthermore, I was excited about the shape of the business, which I think is one of the best in the North Sea in terms of ongoing production, ongoing development opportunities, and a willingness to continue to invest. The company invests not only in acquisitions but also continues to invest in the order of $700 million as a kind of base level, which is very significant. These factors all made for a quick conversation.
Much like TAQA’s internal culture, we look to have good strong partnerships with the people that we work with. The industry is challenging, and there are areas that we really have to work together on, whether it be with our partners at Harding or the Sullom Voe Terminal. We work to have good strong relationships and to get the best value for everybody. This is true for TAQA both internally and externally, since we are taking the lead on the Northern Sea rejuvenation project. We need that new level of cooperation that cannot be just talk. It has to be living it and delivering it. I hope that the perspective from the outside is similar to mine: that TAQA is an excellent partner who is willing to work hard and work together to create value and make the UKCS sustainable for a long time.