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Interview

with Matt Corbin, VP & Regional Leader UK and Continental Europe, VetcoGray

19.08.2008 / Energyboardroom

How would you describe the importance of VetcoGray’s UK operations for its global development?

VetcoGray, a GE Oil & Gas company, was one of the first companies to have surface and platform based wellheads and trees, but the Aberdeen operations really took off about 27 years ago with the boom of the subsea industry in the North Sea. VetcoGray in the UK, has been at the forefront of subsea technology for decades. Historically, VetcoGray has one of the largest installed bases in the North Sea, both in surface and offshore operations.

In the UK, VetcoGray has operations based in Aberdeen and Montrose but also important facilities near Bristol. About 20% of VetcoGray’s global operations have the UK Continental Shelf as the final destination, but the UK operations themselves also support about 40% of VetcoGray’s global activities. The UK is also a services hub for the entire company, and a great deal of engineering expertise is concentrated here.

What are the main trends and drivers of growth for VetcoGray today in the UKCS and internationally?

The oil and gas industry is changing very rapidly in different parts of the world. Globally, there is a big shift from the smaller developments to the large EPC type projects in places like West Africa, Brazil and Asia-Pacific. In the North Sea in particular, the main shift is with regard to the evolving client base. Though VetcoGray has long-standing relationships with the traditional majors and continues working with them, the majority of our current projects in the area are for independent oil companies and turnkey operators. We are also working more and more with consultant-type companies like ADTI, ADIL and Senergy, which work on behalf of the new operators in the UKCS.

How has this new landscape of operators and clients in the UKCS impacted VetcoGray’s approach to doing business?

It has certainly been a major change for us, after having worked for many decades and developed strong relationships with majors like Shell and BP. Indeed, VetcoGray still has agreements with these clients for whom we started supplying pioneering subsea technology over 25 years ago. So we still have these key partners but also have to be on top of the very fast turnkey operations arising with new players as well. Today, our list of clients is probably ten times bigger than before and regardless of project size, it is important to my team that we build solid relationships with each one.

In terms of numbers, how did VetcoGray perform in the UK in 2007 and what are the expectations for 2008?

Over the last three years, the company’s UK business has seen year on year growth of 9% to 12% on average. 2007 was a good year for VetcoGray in the UK, but not spectacular in terms of growth because the number of wells developed by the industry actually dropped compared to 2006. This was a result of many projects moving out, but already 2008 has recovered quite considerably. We are having a good year so far, winning several key subsea projects in the region.

Which are some of the main projects in which VetcoGray is currently participating in the UK, both in terms of the North Sea and in supporting global developments?

In the UKCS, VetcoGray recently secured an important contract with a turnkey operator to provide the subsea tree solutions for a six-well development in the North Sea.

Internationally, as VetcoGray’s centre of excellence for project management and engineering for all subsea projects, Aberdeen will be supporting Chevron’s Gorgon development off the western coast of Australia. The announcement last April confirming that VetcoGray had won this huge contract has been very significant for us as we had been working to secure this contract for almost three years. Chevron also selected VetcoGray for the Kizomba subsea developments in West Africa, which came on stream early 2008. In addition, we have been working on Shell’s Bonga development with 99% availability from commissioning to date.

As production in the UKCS steadily declines, will Aberdeen be able to maintain its position as a centre of excellence for the supply chain?

Even if overall production numbers go down in the UKCS, we are not expecting a drop on the supplier side of the business over the coming years. We will continue to grow because we have many dynamic independent companies investing in the UKCS. We believe that there is still a lot of development to be seen in the area for years to come.

Moreover, Aberdeen’s importance transcends the North Sea context as we have developed enormous subsea expertise here for a growing global market. Aberdeen is a hub from which VetcoGray manages key and complex subsea projects around the world. Just as importantly, Aberdeen is a true service centre for the entire industry, a place where people are often based or sent to train at some point in their career. On the manufacturing side, all of VetcoGray’s subsea trees are produced in a location near our Aberdeen headquarters.

How successful is VetcoGray in attracting and retaining the best human resources at a time of heated competition in the industry?

There are several things that are key to helping us attract and retain people at VetcoGray. Our office facility, Silverburn House, in Bridge of Don, Aberdeen was refurbished in 2007. Here,. our employees have access to a Starbucks cafe, as well as a great restaurant, learning centre and sports centre. The facilities here are VetcoGray’s best in the world, and also the best among the other service companies in Aberdeen.

Another element which is fundamental to VetcoGray’s appeal is our parent company – GE Oil & Gas. Ownership by GE has been a massive boost for us, in terms of new opportunities in all areas, from project management to commercial skills. And of course, as an engineer, it is particularly interesting to work with a company that makes some of the largest investments in R&D and technology in the world. VetcoGray can also tap into many resources in terms of training and development programs for its employees. The opportunities are endless, and this represents another key differentiating factor for us.

What has becoming a part of GE meant for VetcoGray in terms of its positioning on the market?

GE is particularly passionate about 3 things: building strong relationships, leading in terms of technology, and being a reliable partner. VetcoGray has been a very strong company in the past, but now with GE’s support and vision we aim to be number one in what we do in a few years’ time. A big part of our focus is delivering on-time to our clients.

VetcoGray has a ‘say-do’ ratio which we use to measure ourselves on what we actually do against what we commit to do. That applies to all our activities, from training people to delivering our products and solutions. Our full commitment is to make sure that we deliver as promised. Through GE’s expertise, we are implementing leaner process and learning lessons from other businesses which VetcoGray can apply to its own operations.

To what extent is VetcoGray focused on servicing clients’ aftermarket needs?

GE Oil & Gas has gone from having a $150 million service business several years ago to over $2 billion today. GE sees service as the key element to fully deliver what the customer is looking for. It is not just about hardware, but really being able to manage every aspect of the customers’ operations. VetcoGray is aligning itself with this approach, and our growth in the UK will surely be based to a large degree on services.

What is your main personal motivation in your current position within VetcoGray – GE in Aberdeen?

I come from a background in engineering work and project management, so I take great pride in delivering on time to clients. It sounds easy, but this focus is often lost within the industry. My main perspective is the customer relationship and ensuring that we meet our commitments. Internally, it is about driving a culture in which the customer’s needs are paramount to everyone. That is how I ask to be measured by my manager in Houston, and that is how I measure myself. I come to work with the objective of delivering what the customer expects, when the customer expects it.

What is your view on the coming years for VetcoGray in the UK?

VetcoGray has a big operation here in the UK, with about 900 employees between Aberdeen and Montrose, plus 375 employees at our Bristol, Great Yarmouth and London sites. We want to be number one in terms of delivery to clients. The company has an exciting batch of new products coming to the market over the next 2 to 3 years. Some are a result of cross-fertilization from other GE businesses, such as aviation, and we believe that some of these technologies will change the market. Towards 2010, there should be a major step change for GE and VetcoGray in the subsea industry. Until then, we want to be the reliable partner for our clients in the UK and beyond.

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