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Interview

with David Smith, Managing Director, IOS Intermoor AS

28.03.2013 / Energyboardroom

You have been managing director of IOS InterMoor since 2007; when we met you in 2009, the industry’s perception of the Norwegian Continental Shelf (NCS) was notably different. How do you see the impact of these changes on the company’s activity?

Norway’s local market has certainly evolved over the last three years. In 2009, IOS InterMoor was looking internationally, as many Norwegian companies were, to expand its business. At that time most Norwegian companies started to think that the industry’s end was in sight.

Then suddenly in 2011 Lundin and Statoil made some very exciting oil discoveries thanks to technology that was not available forty years ago. Therefore, if there is a benchmark year in Norwegian oil history, it would be 2011 when these seismic and drilling technologies allowed for the discovery of vast new quantities of oil in what was thought to be a depleted area.

A year after those huge discoveries, most Norwegian companies’ target market is now domestic. Oil companies have signaled that the Norwegian market will continue to produce over the next forty years. In fact, I find it almost unbelievable that, through better technology, companies like Conoco Phillips are now able to continue to extract oil from fields like Ekofisk, which first hit oil in 1969, for several decades to come. Like every other supplier in the industry, IOS InterMoor sees a future in Norway for easily another 20 to 40 years.

The number of rigs has grown in the last couple of years, and there will probably be a mini-boom in the next two to three years in Norway. IOS InterMoor is responding to that; this year we have pledged orders and signed long-term framework agreements with our key suppliers for growing our business and enlarging our inventory in order to tackle an expanding market.

We see a lot of companies pushing farther north into the Barents Sea. What is your perspective on this movement to the North and what effect will this have on the business?

Developing business in the North is not easy due to the extremely long distance from southern Norway to the Barents Sea. Hammerfest has little infrastructure. At the moment Tromsø has much more established infrastructure to develop a supply base for the North. I believe Tromsø will develop into what Stavanger was originally for activity in the Ekofisk field, Mongstad is for the Troll field and what Kristiansund is for mid-Norway. Tromsø is already constructing a deepwater offshore facility in an old military base just outside of the city. This facility will handle all rigs and their requirements for inspection, maintenance and repair work. Norwegian businesses should and will try to increase their capacity so that they do not lose their work to neighboring countries. Tromsø will develop as a major base in the North, and Hammerfest as well of its close proximity to Goliat.

There are 42 wells planned in the Barents over the next couple of years. There are at least five rigs qualified to work north of the Arctic Circle, with more on the way. The Norwegian sector has its opportunities but there is also the Russian border, where there have been some interesting finds and will certainly be development and exploration. I expect that the increase in rigs will resolve the present capacity shortage in this country. Ultimately, every rig that comes here will have to follow the same high-standards, prerequisites and criteria. The Macondo incident really changed the global industry, but Norway was always forward looking in creating a technologically advanced offshore industry. These developments all represent good opportunities for IOS InterMoor over the coming years.

What have been some of your recent milestones for IOS InterMoor in this market?

In 2010, Norse Cutting and Abandonment (NCA) sold the IOS InterMoor business to the Acteon Group. I think NCA were happy about the sale, as they had owned IOS InterMoor for two and a half years; the company had huge growth from 2006 to 2008 due to NCA’s willingness to invest in the business and help develop the product line and volume of equipment delivered.

Most importantly to me as managing director, we currently have a staff that has stayed with us continuously throughout this change. It is certainly a good signal that every employee stayed with the company in an extremely competitive job market during the ownership transition. I think IOS InterMoor provides a very good working environment and is focused on health and safety. Not only is the company ISO 9001 and 14001 but it is also entering its fourth year without any occupational injuries, which is extremely important for the business. IOS InterMoor has grown with more equipment and personnel, and despite a difficult market, our workforce will continue to grow.

Logistics plays a very important part in our operations given the challenges of Norwegian geography. Along with the head office, workshop and operating base in Stavanger, the company’s most active base is in Mongstad, and earlier this year IOS InterMoor committed to building a facility that incorporates a 100m2 office space, alongside a 1000m2 indoor storage and maintenance facility, and presently there is already 15,000m2 of outdoor storage space. Logistically this creates an extremely good working relationship between the base facilities such as crane hire and spooling facilities to handle equipment from shore to the vessels and back. Most importantly this allows us to create added value to the clients by reducing cost.

Additionally, the company’s product development has had a high focus on safety and efficiency, so InterMoor has been looking at ways of improving the supply of moorings. IOS InterMoor is basically a rental business for mooring equipment with expertise for pre-lay mooring systems. We sometimes refer to ourselves as the “Hertz of the mooring gang”, but we deliver so much more, such as engineering design, offshore supervision, and inspection. We strive to be the top supplier, with a focus on quality and delivering 100% of all required parts of a system on time.

I believe that our dedication to efficiency has been rewarded by clients because they know InterMoor will follow through. That is a commitment of which the company is very proud. Our slogan is “The Reliable Link”, and it is self-explanatory: clients can rely on InterMoor to provide the connection or system they are after. The motto is there to foster pride in InterMoor’s employees in what they deliver and their importance throughout the entire process.

Does the name change from IOS Offshore to IOS InterMoor reflect a more specific rebranding of the company’s image?

The transition from IOS Offshore to IOS InterMoor was in line with a global rebranding. The new name better reflects the company’s focus of mooring. Looking at Acteon’s ownership of 17 businesses, one will find a much broader base of companies which perform a variety of services. IOS InterMoor functions as a specialized mooring company within the group and we can draw resources as necessary from our sister companies with which we meet regularly to discuss ideas and opportunities.

How are you positioning IOS InterMoor in Norway and how do you see the competition?

I think in any market around the world, there is always a need for competition, through which companies will grow and benefit. Having competitors here is good for InterMoor and presents opportunities for us to expand and be more creative. Having strong competitors has been very good for IOS InterMoor’s business in Norway and for the industry as a whole. We bid against each other on every job that comes up; they win some, we win some.

IOS InterMoor’s focus has been notably more on the quality aspects of products and commitment to clients to deliver on time. We have won our business based on our attention to quality, and our experienced personnel more than on any other factor like price. I think that this is a sign that our business is respected and our record stands to prove that.

We have heard from other service providers that Norway’s traditional E&P companies have been forward looking in trialing new technologies. Do you expect the same to continue as the NCS opens up to newer and smaller companies?

I believe that it will. I agree that Statoil has been a major driver of innovation and committed to R&D, indeed the company funds some development through its own technology department. However, in Norway there is also a funding institution, Innovation Norway, which looks at innovation across all industries. Specifically in oil and gas this is represented by Demo2000 and Petromaks who joint fund the development of new technologies with E&P operators. Norway realized many years ago that without innovation its industries would become non-competitive on the global market.

I am confident that new E&P companies coming into production will also understand that innovation and R&D is important to hold pace with the leaders in the production business, where Statoil is undoubtedly the dominant player. If regulatory authorities see that there are areas for improvement in HS&E, they will add regulations to ensure the highest safety standards are carried out. This will also drive innovation in the market.

What do you see as the full potential for the Inter-M Pulse technology, and over the next few years what are some of the innovations or investments we can expect to see from InterMoor?

The Inter-M Pulse is a revolutionary technology, which was presented at the ONS and nominated for the Innovation Award;. The company is planning to test the Inter-M Pulse with an oil company working in Norway relatively soon in order to get a local test and domestic data. We have already successfully tested the Pulse in the UK, and the test in Norway should take place in the next few months, which I am confident will also be successful and consequently be a confirmation for our clients here that the product actually delivers what we promised, and is a very valuable add-on to any mooring system.

The Inter-M Pulse, which provides a way of monitoring the tension of the mooring line and as a result the performance of a mooring system,by providing real time data on inclination, orientation, and the curvature of the mooring line allows the user to continuously monitor the mooring system. I The driving forces behind innovation in Norway deal with health and safety, the environment and efficiency. The Inter-M Pulse is a way of delivering on these factors in the field of mooring. If done right, it will improve a company’s operations financially.

Is there anything else you might like to share with international companies seeking to do business in Norway?

Franklin Roosevelt once said during World War II, “Look to Norway”. I think he recognized that there was enormous potential in Norway, not in terms of oil and gas which was undiscovered at the time, but more in the heart of the people. If there was a message to give to potential customers, it would be a similar statement. I think IOS InterMoor brings sincerity, professionalism, and experience in all facets of what we do, as well as a thirst to further develop. I truly believe we have the dedication, focus and expertise to be the number one mooring equipment supplier worldwide.

Having been in the industry for 30 years, what keeps you motivated in this business?

I enjoy what we do in the mooring business. I have been working in the business since 1978, when I started my career in Houston working for an American manufacturer of mooring equipment. At the time, oil and gas was an exciting business, and was often referred to as a “cowboy” industry because of the way it was run. When I worked in Houston, the company for which I worked had an office in Aberdeen and we exchanged with them, and began to get some exposure with regard to what was happening in the North Sea at that time.

For myself, getting an opportunity to travel was also exciting, first in the U.S. and then in Europe. Through the years, I have been motivated by the fact that the industry literally continues to evolve. I have seen a lot of product development throughout the years, particularly detailed design. My personal satisfaction comes from working with a great team of people at InterMoor, and my inspiration often comes from them. I enjoy watching my employees succeed and I think I have helped them to reach their goals and objectives. We are not finished, either. The motivation each day is that there is always room for improvement. Furthermore, it is still very exciting to travel and meet new individuals in the industry. It is a global business and I think one can definitely learn from experience and develop a great network anywhere in the world.

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