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Interview

with Neil Poxon, Managing Director, ITF

30.06.2008 / Energyboardroom

To begin with, could you briefly present ITF, its members, and the vision behind its creation in 1999?

ITF was established in 1999 as one of the initiatives that came out of the Oil & Gas Industry Taskforce Report of the same year, and it began operations in 2000. ITF was founded by 17 North Sea operators, and was therefore very North Sea centric in its origins. The organization was established following the Taskforce’s conclusion that the UK sector of the North Sea should maintain a production target of 3 million boepd to the end of 2010. It was recognized that in order to address the production gap, technology would have a major role to play. So, based on past experiences with other facilitator organizations, ITF was born.

ITF’s initial role was to address our members’ technology challenges – it was purely operator based at that time – by feeding them into a system where we could gather the information, analyze the specific needs, and from there produce technology themes to address each year. We developed a thematic process, for example subsea challenges, or environmental issues, asset integrity, ultra-deepwater, etc. These would be the high-level themes identified, and then ITF would launch them throughout the year to work with experts in those fields in order to look for innovative solutions to the challenges. Concretely, we use the information produced from facilitated workshops to actually issue calls for proposals, which go out to the global development community.

After screening the proposals in the system and carrying out due diligence for those projects chosen, we move into the most important stage for us today which is the implementation of the technology. This concept has evolved, and today, implementation is the focus of ITF’s work because we are not in the business of researching for the sake of researching, and it is also pointless to develop and commercialise technologies if they are not adopted or applied in the industry.

What are the main transformations that ITF has undergone over the last several years?

When I joined ITF about two years ago, it was clear to me – based on the industry’s own feedback – that the organization needed to adopt a global remit in terms of membership. Just as the development community for our projects was global, I believed that it would be in ITF’s interest to open its doors to companies which didn’t necessarily have operations in the North Sea. The board adopted this vision, and ITF began admitting new, global operators for the first time, regardless of their geographical areas of activity. This was a fundamental step which has helped ITF have access to international support, allowing us to take on more projects, secure more funding, and also satisfy one of the UK’s strategic objectives which is to export technologies.

This new approach helped ITF to increase its credibility which had been waning for several years, and in turn to raise its profile. In addition to bringing new operators from overseas into the organization, we took another bold step by opening the membership door to service companies for the first time. In this day and age, everyone recognizes the growing link between operators and service companies, not to mention the fact that now we see many cases of contractors like Wood Group or Petrofac operating fields on behalf of the oil companies. In this context, the contractor is often given the responsibility of optimizing the production process and of determining the most suited technology for the tasks at hand. The contractors also often take the field trial risks.

What are the main implications to date of ITF opening up its membership to these new types of companies?

The response has been very positive. Over the last couple of years, ITF’s profile has risen considerably, as attests our first ever invitation to attend a PILOT meeting coming up soon. Our goal is to build on the momentum in order to eventually get ITF a seat at the main table and to securely place technology on the PILOT agenda. We are now in this privileged position thanks to the trust we have from people like Malcolm Webb of Oil & Gas UK and other industry leaders who recognize our performance and ability to deliver. ITF is also developing relationships with other key associations like OPITO and Subsea UK, further increasing our visibility.

The changes have not only been about the global remit and service company engagement though. ITF is now really focusing on listening to its members’ needs and addressing their global technological challenges. ITF was run and managed for a while with more of an academic culture, and it was accused of leaving technology sitting on the shelf. We very quickly listened to this and made it our key goal to focus on the implemention of technologies being developed and delivered by ITF. Now the focus is on launching projects in which there is a clear route to market implementation visible from the very beginning of the process. We are proud to say that last year 7 technologies that received ITF funding were implemented , something unprecedented and very important.

This new approach has meant changing to a great extent the way ITF works. We have to remain in permanent touch with the project, stay involved with the steering committee, and offer project management services, for example, in order to work towards implementation. One of the reasons that service company engagement was seen as a pivotal and important step for ITF, was because this is also key to driving that implementation forward. Many of the developers that come to ITF are small, and don’t always have the potential to actually deploy the technology once it has been completed. The service companies can help make this happen.

ITF is really an industry-led and demand driven organization today; it’s about meeting the actual needs of companies’ and not just R&D for its own sake. We have developed a formal process each year in which we interview our members on a confidential basis to obtain and understand their technological needs and drives in detail. Another crucial aspect of ITF is that we do not recieve any operating funds from government, so we are not formally committed to the UK, which is allowing us to emerge as the only organization of our kind which has no geographic restrictions in terms of where the development work takes place and is ultimately deployed. This has helped us secure an unprecedented meeting in late 2008 in Aberdeen with the other main facilitator associations from other countries. The goal is to hold workshops and discussions in order to ensure that there is no duplication of effort and we are working together to address the main challenges faced by our industry and members, many of which are common. It is very telling that this will be happening in Aberdeen and that ITF will be hosting the event on behalf of these organizations, reflecting our success and our emergence as an international player capable of bringing other national facilitators together.

To what extent are record-high oil prices encouraging companies in the industry to invest more in technology through ITF projects?

In 2007 ITF secured the largest amount of project funding and launched the highest number of projects since its establishment.. Building on this, we have already achieved that same level this year, so 2008 will be another year of record growth. I believe that this is a result of both the good work we have done in revitalizing ITF and the favourable context the industry is going through. ITF’s successful transformation earned us valuable recognition by the industry, which allowed us to grow from 13 members to 21, and therefore to secure more funding for projects. On the other hand, we have to accept that the mood for investments in the oil and gas industry in general is very positive at the moment, and this is also sparking interest in new technologies and helping bring investment into ITF projects at an unprecedented level.

Now that ITF has raised its profile and visibility internationally, what are you aspiring to achieve with regards to new members over the coming years?

From my perspective, I can easily see a membership of around 40 companies a few years down the line. At the moment, membership consists of major operators and several service companies. For ITF it would be interesting to attract the smaller operators, and in a bid to progress this, we have spoken to the Oil & Gas Independents’ Association (OIGA) to find mechanisms suited for these types of players. In addition, the organization is still looking into incorporating more of the major service companies. In general we would like to have members that could contribute to ITF’s objective to implement new technologies, and there is still room for growth. On the other hand, fast growing membership means more work for ITF and its members in terms of managing the flow of information between the increasing numbers of proposals in the system and companies, and this is one of the challenges we are currently facing.

How would you describe Aberdeen’s place on the global oil and gas arena in terms of technology?

There is no doubt that Aberdeen is recognized as an international centre of excellence for oil and gas, with a particular leadership in areas like subsea. One of the things that the industry and organizations like PILOT or Subsea UK are focusing on is to develop skills and new projects in this area in order to maintain this position. Both the government and private sector need to ensure that there is enough investment in research to maintain Aberdeen’s reputation for having the technological edge in the subsea sector.

With regard to ITF’s role in the picture, we are in a unique position in which we work collaboratively with the technology drivers from the industry, allowing us to feed it back to universities which sometimes struggle to come up with topics for Masters and PhD programmes. ITF provides them with current and relevant information on what the industry really needs, and this can lead to projects which in theory can make it all the way to the implementation stage if successful. This also helps to send out a positive message about our industry to students, who become aware about all the interesting technology which surrounds us. It’s all about linking research with the real needs, and using that program to develop talent and interest in the industry.

Which are the main technological challenges which ITF’s members are interesting in addressing at the present time?

The main issue at the moment is improving the recovery factor, and in fact everything that ITF does can be linked to this broad heading. In particular, there is a big interest in themes such as subsea, EOR, and anything to do with having a better understanding of the reservoirs like seismic and high resolution imaging. Decommissioning has also become a hot topic nowadays due to the number of platforms reaching the end of their lifespan.

The UK has developed the subsea sector and become global leader in this field, but the Norwegians seem to be getting the upper hand these last several years. What is it going to take for the UK to retain its leadership in subsea?

The UK needs a more coordinated approach, because there are many ongoing initiatives and a lot of work being done, but in a fragmented way. It is for this reason that ITF is partnering with Subsea UK and the Northern Research Partnership (NRP) to establish the NSRI, the Northern Subsea Research Institute, which will essentially mean Aberdeen is home to a subsea centre of excellence that can deliver a framework for subsea technology development and implementation.

How would you rate Aberdeen-based companies’ ability to succeed internationally?

Aberdeen’s oil and gas operators and service companies have gained very valuable experience in the North Sea, but curiously enough in many cases the service companies are achieving success overseas faster than at home due to the traditional risk-adverse nature of the environment. UK companies have entrepreneurial spirit and a long tradition of exporting technology, and the government is actively promoting and supporting the internationalisation process.

Is ITF involved in projects for renewable energies?

We have discussed the issue, but for the time being the decision is to remain focused on upstream oil and gas. However, there are some overlaps in technology and we have been involved in carbon capture projects. There are also many links ro renewable projects in areas such as subsea. Inversely, our members are very keen on integrating technologies developed for other sectors into the oil and gas industry. In fact, one of our themes this year is cross-fertilization between sectors.

What are the main challenges and opportunities for ITF over the coming years?

ITF is currently going through a very strong period, growing and generating a high level of interest, and we are keen on continuing to demonstrate our value not only to the UK but to the industry worldwide. There are certain challenges to overcome, such as securing field trials which is always a battle and, and adapting our organization to the growth and new international dimension of ITF. More generally, I think that it is important to revisit the PILOT Taskforce plan which was issued 8 years ago for 2010. It is now time to look towards 2025 and get strategic help from those who can help address some of the major challenges in terms of technology that the industry is facing for the future.

What is your final message to the readers of OGFJ on Aberdeen?

There are huge innovative skills in Aberdeen, and it is important to communicate this because it is not as widely appreciated as it should be. Aberdeen is a centre of excellence and will remain as so for many more years.

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