with Tore Lea, Managing Director, GL Noble Denton Norway
Why is 2012 the right time to be significantly investing in operations in Norway?
To start with, the GL group has had an ambitious growth strategy over the last 5-6 years, with several acquisitions in the oil and gas segment, where the latest was the acquisition of Noble Denton. Through these mergers we are building a stronger presence than our group companies have had in various markets over the years, Norway included. As a result of the further consolidation of its total activities, GL Noble Denton is now looking at a more group-based approach, and asking itself where resources and competencies can be most efficiently distributed and utilized.
The GL Group is located in 84 countries worldwide with nine thousand employees, of which over four thousand are in oil and gas. We also have a renewables and maritime division. Europe is by far our largest region in the oil and gas activity.
When talking about Norway, about two thousand experts are located around the North Sea Basin. We can therefore make use of our combined services for the Norwegian market. Additionally, the company can pool resources from other parts of the group, for example by utilizing the design resources in other overseas regions like the Middle East as well as the Far East.
Of course, the main motivation for such expansion in Norway is that over the last year or two Norway has enjoyed its second oil boom since the 1970s. The one significant difference is that today Norway already has existing fields, fields experiencing depletion, and many brown field projects, as well as the new discoveries with new field development projects. With our enhanced portfolio of services, GL Noble Denton will therefore be able to provide for many of the activities along the value chain, from the wellhead throughout all assets to the marketplace. From that perspective Norway is very interesting since the country has a need for competence and resources in all parts of the value chain.
What are the expectations being placed on Norway as a market for your services amongst your European operations?
Norway is attractive for having a stable fiscal regime and is a safe financial haven. Disadvantages include high cost and a lack of qualified people. In a stable and growing market, competence and resources will become a priority.
In terms of how activities are split up across the value chain, where do you see the principle growth drivers of your company over the next couple of years?
Drivers will be in the typical areas of GL Noble Denton’s core services, like oil and gas consulting, safety and risk, verification, and technical assurance. The business offers a wide range of services that can help our clients select the appropriate concept in the early stages and operate safely. Integrity management of aging assets is an example of this. Overall, GL Noble Denton can provide for everything from a fixed structure or a hull of a vessel to the topside, from structural design and analysis to the system side. We have software tools that can identify and plan the status of assets and how to handle the life of an installation, to digest and identify what parts of an installation should be renewed and when.
The reimbursement umbrella for oil companies is another important feature of the Norwegian market, whereby newcomers are being treated as if they were in tax position. In practical terms this implies the incentive of the Norwegian government paying for 78 percent of the exploration costs. The number of newcomer oil companies has overwhelmingly increased from about 20 to 80 since 2005, when this initiative was passed. Many of these companies have small organizations in Norway and some of them have even moved from the exploration stage as a typical geology and geophysics company into the next stage with field development, either as a licensee or an operator. However, often they do not possess local integrated organizations as the super majors, like Exxon, Shell and BP who have the main disciplines in-house. Smaller companies are looking for professional service partners and GL Noble Denton wants to be perceived as a key partner for them.
GL Noble Denton has a long tradition of working with British companies in this market given that our company also has a British legacy, tied to old British Gas. The R&D arm of British Gas was called Advantica, which later became a part of our company. Now one of our most important clients in Norway is typically BG Group.
DNV is a Norwegian company offering similar services – does the Norwegian market make it difficult to differentiate yourself from companies like DNV or are these newcomers providing enough of a market opportunity?
Many companies are focusing on the Norwegian market these days, as the lack of resources and competence is widely acknowledged as the single most limiting factor for the planned activity growth over the next coming years. We believe there is a place for all companies which have a sufficient competence base and resources to support the oil and gas activity in Norway. We believe this naturally also includes GL Noble Denton.
We look upon ourselves to be a truly independent player. We focus much of our attention on design and conceptual studies. We do not construct, or enter into EPC contracts, but we can do the independent assessment of multiple concepts on behalf of our clients before concept selection. That differentiates us from many pre-feed consultancy companies who are traditional EPC contractors. If you are going to select between different pieces of advice among competing concepts, we believe that independence is an advantage.
Previously you have been using your European assets to synergize and work with Norway to direct their attention here; but you are also growing your local presence. How are you managing this transition to build up this footprint within Norway?
We opened our new head office for oil & gas in Stavanger two years ago and most recently an office in Bergen, where we are doing explosion and safety risk analysis. We possess the advantage of having two thousand skilled engineers across the North Sea countries. Some of our clients have assets in Norway, the UK and Germany, so to be present around the North Sea is an advantage for us in that we can serve clients in different locations. We also have the benefit of existing resources and competencies in neighboring countries upon which we can draw as part of the ramp-up strategy for Norway in combination with organic growth. We will also be looking at inorganic opportunities as well, pending on growth strategy in specific segments.
We also saw the partnership with Xafe, what does that add to your positioning?
That is another way of enhancing our scope of delivery because through this cooperation agreement with Xafe we have access to a qualified team of about twenty engineers within a core area of safety and risk competencies. We have a significant team in UK within this segment, and as part of this GL Noble Denton has the world’s largest test site for full scale explosion testing of oil and gas installations in Spadeadam. We recognize this combination to be unique, at least in the European market. The cooperation with Xafe will contribute to the overall capabilities and with specific knowledge of Norwegian requirements, such as NORSOK.
The company has the mantra of “smarter, greener and safer” on its global operations. Do you think that Norwegian operations can become smarter, greener and safer?
I think they can. Even though the standards in Norway are high, there is always room for improvement. You can look at the example of carbon capture concept of Sleipner, the biggest carbon deposit in Europe, which was kicked off many years ago. Since then we have seen the electrification of offshore installations, radical technologies being implemented as well, such as the Ormen Lange onshore / offshore plants and the Snøhvit LNG plant where the well streams are being brought directly to shore for processing, with no visible surface installations offshore.
We have seen several leaps into “smarter, greener, safer” with the conceptual development being designed for different challenges, like those on Sleipner and Snøhvit. I believe that the history of the Norwegian oil and gas industry is looking at a curve of incidents; the world will see accelerated improvement compared to the past forty years. That kind of focus and constant improvement with innovative concepts will contribute to future developments in sensitive arctic areas like the Barents Sea.
Looking in five years time in terms of what Norway is contributing to GL Noble on a global level, what would you have like to have achieved by then?
I would like to see GL Noble be a player who has contributed to development in both frontier and mature areas, and that we have actually meant something to the prolonged life of existing installations, enhanced safety, as well as being able to confidently say that our company is in line with our ambitions of being “smarter, greener and safer”.
The oil and gas industry is a very interesting one. In some ways it is quite traditional, but in other ways it is innovative and very dynamic. You will always find challenges in this business; and using years of knowledge and experience to solve these challenges is the most fun part of working in the industry. The North Sea is an environmentally sensitive area, and even more so farther north, so it is very important that safety and design requirements are maintained, in which GL Noble Denton excels beyond the best.