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Interview

with Rod Buchan, Managing Director, Aker Solutions

13.11.2008 / Energyboardroom

Aker Solutions has fairly diversified interests; to begin would you please introduce the focus of the Aberdeen operations?

Aker Solutions has various companies in Aberdeen. The company I run is Aker Offshore Partner, a major contractor in terms of front-end engineering, detailed design modifications, offshore construction, maintenance, operations, through to decommissioning and abandonment. The company provides a comprehensive scope of services. In addition, the Aberdeen Aker Solutions group has major presence with Aker Solutions Subsea, Aker Solutions MH and drilling manufacture, process systems, and most recently QServ, a well services company just been acquired in 2008. In total, Aker Solutions employs over 2,500 people in Aberdeen, of which 1,100 are in Aker Offshore Partner.

What synergies do you count between the various business groups, and to what degree are they run autonomously?

We’re run autonomously, but increasingly focused on working across business areas opportunities both within the companies in Aberdeen and with sister organizations in Stavanger and Oslo. In Aberdeen, Aker Solutions does a lot of work together with subsea, focusing on developments where there are existing Aker Solutions Subsea controls trees and where we are the incumbent topsides contractor. The company is looking to get those kinds of synergies into new developments or tie-back opportunities.
QServ is now being integrated into Aker Solutions, and we are utilizing their specialty in bolt torquing, tensioning, and leak-testing type services, while increasingly leveraging existing technology coming out of Norway, particularly Oslo, into the UKCS. It has been a feature of Aker Solutions to continue committing a lot of resources to R&D, developing new technology, and we’re trying to bring a lot of that into the UK.

Just over a year ago, you said “Aberdeen has played a central part in the performance of the Aker Solutions Group overall.” Given that it’s so close to the headquarters in Norway, what do the Aberdeen operations represent in the overall company picture?

In terms of turnover and financial contribution, it’s between 10-15% of the whole group, representing a significant hub within Aker Solutions. Along with Houston, KL, and Norway, Aberdeen is up there as one of the four major centres.

What is Aberdeen’s contribution to R&D, being so close to Norway HQ?

Most of the technology tends to be developed in Norway, although on the subsea side a number of products have been honed in Aberdeen. Some won’t come to market until the mid-2010s, but they are already being worked on.
Aker Solutions is in a relatively mature sector that may be considered low-tech, but we are still very innovative in our own right, not only with high technology but skills to come up with new and innovative ways of doing things. We recently won the OCA award for technology and innovation, for a low-tech idea but one of great benefit in cost and safety. This particular award was to do with the decommissioning of Total’s Frigg field, and lowering a deck onto a barge. Normally, this would be a labour-intensive activity in a dangerous environment. With a barge on rough seas, Aker Solutions simply affixed pre-fabricated sea fastenings onto the deck to stabilize it on the barge, and come up with a method of grillage whereby rubber mats and metal spikes were brought together to affix the deck onto the barge. This was done without any labour requirement, making a safe, simple, yet innovative operation; hence the award.

With the price of oil falling to under $50, how has this affected Aker Solutions in the North Sea?

It’s too early to say. Getting to $50 per barrel confounded many predictions, even with a strong belief in the medium to long term fundamentals of the oil and gas industry. $50 per barrel is a significant milestone, and Aker Solutions is waiting to see if certain developments the company is involved in will continue to go ahead next year. It’s a slightly uncertain time.

Given this uncertainty, what are your biggest priorities?

The biggest priorities are to keep close to customers, so we understand the issues they’re facing, and how we can help them deal with those issues. Aker Solutions has been working with a lot of the smaller independent companies who have many ongoing developments, and will be working with those under scrutiny, to ensure they can go ahead in the current climate.

What makes Aker Solutions, as a large international, the partner of choice for a smaller independent?

In 2004, Aker Solutions was looking at the marketplace, and I remember Bruce Dingwall, then head of UKOOA and Venture Production, predicted that in three to four years, 50% of the UKCS production would be in the hands of independents. Aker Solutions took this prediction seriously, focusing the company’s new business development almost exclusively on that sector. It didn’t come to pass that 50% transferred, but a significant proportion has from majors to the smaller companies, and Aker Solutions was there waiting for them. 80% of Aker Solutions’s business comes from that sector: Maersk, Nexen, OilExco, Talisman, Hess, and Fairfield most recently. Aker Solutions has honed its business model to meet the needs of those smaller companies, who place greater reliance on the contractor, because they don’t have large in-house technical organizations. They are looking for Aker Solutions to add a lot of value from a technical perspective, with streamlined, fit for purpose delivery mechanisms, processes, and controls we have in the way we do our business. Aker Solutions has also been very good at listening to requirements and adjusting the way we do our business to fit their needs, becoming the preferred partner for that specific sector.

What is the most common response to working with Aker Solutions from these companies?

The most recent feedback would be the example of Fairfield, who came to the market looking for something specific. The feedback they gave us was that out of all the companies they spoke to, Aker Solutions was the one who listened and tried to then deliver back to them exactly what they were looking for. Other companies just want to tell you the way they do it and what you’re going to get. Aker Solutions is flexible in that respect, and was consequently jointly nominated for supply chain innovation award at the Oil & Gas Awards.
Fairfield also selected AMEC, as the duty holder for the Dunlin asset, and Aker Solutions has been very flexible and cooperative in forming a tripartite relationship between Fairfield as a relatively small operator with strong expertise in reservoir and finance, using AMEC as the duty holder. That takes an extra bit of flexibility, and it has worked very well, in putting in a lot of effort into to make sure it does work, and creating a good model for other operators entering the market.

What is it about your management stile and approach that allows this listening, flexible approach to be undertaken successfully?

Aker Solutions has a strong set of values, which other companies may only have up on the wall. Perhaps with its Scandinavian influence, Aker Solutions stresses that values are paramount over all other considerations, and we really do live to them. One of them is customer drive, and I think we’re unique in our sector in having a customer relations function, which is not something you’d expect in a hard-nosed contractor environment. But Aker Solutions actually has a specific function reporting to myself called customer relations and service, acting as an almost independent function of the business, which goes around supporting contracts and projects and managers sitting in meetings with clients, and follows up to make sure the commitments happen. It’s an extra attention to details like this that has paid dividends.

You mention one of your top priorities was getting closer to customers. How has been the growth trajectory for Aberdeen in getting closer to them, and to what degree is there an international component in terms of running projects from Aberdeen that have expanded abroad?

Aker Solutions has probably benefited relative to other companies in Aberdeen, which are trying to grow international business in Aberdeen from an Aberdeen base. Their top guys are often in far-flung locations trying to develop business, whereas Aker Solutions has a slightly different approach by putting people in-country in major hubs around the world, from which we develop business, rather than sending armies back and forth in airplanes. From a local perspective, our playground is the North Sea, and we’re here 24/7 to serve our customer base. If they need to get ahold of us, Aker Solutions is there and can be with them in a short time. That has helped our reputation, and as a result Aker Solutions is seen to be more responsive than other companies. That’s not to say Aker Solutions doesn’t have international aspirations, but rather that Aker Solutions can support, via existing communications infrastructure, projects in India, Canada, or offshore Greenland, all out of Aberdeen. The engineering and technical aspects of the work can be done here, and basically it’s a trip and a kickoff meeting at the start, and a report at the end of the session to the customer in-country. This has been a good model for Aker Solutions.

What’s the vision for Aker Solutions’s growth over the next five to 10 year time horizon?

Aker Solutions believes there’s still a lot more value to be had in the North Sea. Changes of ownership will continue to happen, and from those changes the company expects to pick up more than our share, because we are leaders for that niche. The more assets handed over, the more opportunity for Aker Solutions. For one, parts of the market that were previously not open to us have opened, and not only that, but the market increases in a funny sort of way because the new companies coming in tend to want to spend more to develop the assets than previous incumbents. Aker Solutions is getting access to more market, and the size of that market is actually increasing for our specific services. Aker Solutions is also seen as the market leader in decommissioning, having done the likes of Phillips Mooring in the UK, and most recently the major abandonment of the Frigg field for Total. Decommissioning is always moving to the right, and that’s understandable, and we’re doing a lot in terms of mature fields and helping customers extend the life of existing assets, which is a key part of our business. Aker Solutions is also moving into the likes of taking over duty holdership at the end of the life of those fields, and preparing assets for their inevitable decommissioning. With BP coming to the market with Miller, Shell with the Brent Delta over the coming year, and the experience Aker Solutions has on Frigg, particularly in terms of the different HSE focus needed in the decommissioning environment, the company is well-placed to capture a large part of the emerging decommissioning market as well. From Aberdeen, through changes in ownership and the onset of decommissioning, Aker Solutions will continue to have a strong growth trajectory here. In 2008, the business increased by 20+%, and we expect to see a similar increase in 2009.

How is Aker Solutions positioned compared to its local competitors?

I think the market sees us as a company with a model that’s fit for purpose and aligned to the businesses of independents. Companies see Aker Solutions as having an easily accessible and huge backup technical capability, particularly from some of our sister companies in Norway, which is key. Aker Solutions was recently asked by customers, and took them over to Norway to see the latest subsea compression technology being developed there. Those sorts of things are interesting in the long term, so they see us as having a lean, fit for purpose model here, but also a big technology backup within the group, which together is a good combination and covers what they’re looking for.

How would you rate Aker Solutions’s positioning as a Norwegian company compared to an Aberdeen-based Scottish company?

Aker Solutions has been in Aberdeen since the early 1980s, so we’re long established and a major employer, with over 2,500 people in Aberdeen alone. Aker Solutions has been particularly acquisitive in the past year, with QServ, and my company bought a fabrication facility in the south side of the city. That to me reemphasizes our commitment to Aberdeen as a real, important global hub for the group.

What is your final message to OGFJ readers?

In recent years, Aker Solutions has reawakened the company in Aberdeen, and our profile is higher than it has ever been. In the most turbulent times in the labour market, our staff retention ratios have been outstanding. We’ve also got one of the largest graduate development programs around, and this year we were able to select our first choice in every discipline in graduates which says to me we are very much an employer of choice, taking the cream of the graduates both technical and business into the company. It’s a very strong picture for us moving forward, and probably the strongest we’ve ever been in the UK. This is 2008, and we already see that, subject to the market, 2009 will be even stronger.

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