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Sustainable Local Content

The UK Experience

Sue Whitbread PWX Limited

Britcham International Energy Seminar Local Content in the Oil and Gas industry

Topics

• UK’s O&G Supply Chain • Dealing with Uncertainties• Developing a Competitive

Response

• UK’s Role in Local Content• Creating Partnerships • Technology Cooperation • Local Skills Development

The Local Content Opportunity and Challenge

19800

1000

2000

3000

1990 2000 2010

MB

D

UK

Oil Production

LimitedLocal Equipment

and Services

Birth of theNorth Sea Oil

Industry- a steep learning curve

UK Oil Production History

World OilPrice

$10/bbl

$30/bbl

$20/bbl

Using Traditional Skil , Resources - ‘Grow Capacity’capacity

Steel and Iron Manufacture

Mining

Power

Nuclear Engineering

Gas Processing

Refining

Ship Building

Construction

Agriculture

Food Processing

UK Industrial Centres 1970

Peak Employment

Direct +Indirect,275,000

Induced,700,000

Note: diameter of oil industry symbols are proportionate to number employed. Locations are approximate. Traditional manufacturing symbols are not to the same scale

Oil industry employment centre

Traditional manufacturing centre

Oil industry centres early 1980s

Supply base

EngineeringCommercial

FabricationAcademicManufacturing

Peak Employment

Direct +Indirect,275,000

Induced,700,000

Note: diameter of oil industry symbols are proportionate to number employed. Locations are approximate. Traditional manufacturing symbols are not to the same scale

Oil industry employment centre

Traditional manufacturing centre

UK Oil Industry ‘New’ Employers

Traditional Upstream Approach

ServiceCompanies

OilCompanies

Suppliers

Manhours

$$ OilSales

$$

ReplacementParts

$$

UK

Oil Production

UK

Oil Production

UK Oil Production -New Competitive Landscape

ChangeNeeded !Piper ‘A’

1990 2000 2010

$10/bbl

$30/bbl

$20/bbl

19800

1000

2000

3000

World OilPrice

MB

D

Motivate Everyone Towards One Goal

ServiceCompanies

OilCompanies

Suppliers

Manhours

OilSales

ReplacementParts

FrictionAlignment `understand each others

uncertainties’

Aligning Team Objectives

UnderstandEach OthersUncertainties

Same Goal

CAPEX $3 boe

OPEX $2 boe

UK Oil and Gas Industry Task ForceObjectives• Reduce UK operations cost, urgently• Extend UKCS O+G exploration, development, production

• Shared industry building blocks

• Compare best practices + integrate existing initiatives• Stimulate more UK industry cooperation overseas

• Submit industry representations to HM Chancellor• Simplify administration of O+G taxation

• Examine new ways of cooperation across license groups• Ensure UK regulatory system = best in class

• Identify process to develop workforce (skilled + motivated + flexible)

• Examine current practices develop transferable skills

• Make UK leader in innovative advanced technology solutions (development + implementation)

• Align environmental goals government industry• Find real environmental improvements at low cost• Export environmental technology + skills

Work Groups Sponsors

Vision

Competitiveness

Fiscal

Regulation + Licensing

Skills + Training

Innovation + Technology

Sustainable Development

IndustryLeadership

TeamGovernment

UK Oil and Gas Industry Task ForceUK Oil and Gas Industry Task Force

Work Groups Sponsors

Vision

Competitiveness

Fiscal

Regulation + Licensing

Skills + Training

Innovation + Technology

Sustainable Development

Objectives• Reduce UK cost• Grow UK production

Objectives• Reduce UK cost• Grow UK production

UK Oil and Gas Industry

Asset TradingAsset Trading

Safety Step ChangeSafety Step Change

• Supply Chain Efficiency• Supply Chain Efficiency• e-business• e-business

Technology FacilitationTechnology FacilitationNOVA £NOVA £

Technicians TrainingTechnicians Training• O+M• Well Support• O+M• Well Support

• Drilling• DrillingSatellite Field AcceleratorSatellite Field Accelerator

Small Company MentoringSmall Company Mentoring

Fallow Fields FocusFallow Fields Focus

Regulations UpdatedRegulations Updated

Share Fairs WorkShare Fairs Work

UK Learning Arena

UKOil Production

TraditionalContractorServices

Piper ‘A’

ChangeNeeded !

AlliancingPerformance Based

Risk RewardOutsourcing

UKOil Production


Piper ‘A’

ChangeNeeded !



Integrated ServicesSeamless Organisation

Shared ServicesCampaign O&M

$10/bbl

$30/bbl

$20/bbl

1000

2000

3000

19800

1990 2000 2010

NOVALIFT

World OilPrice

MB

D

• 3000 MBOED Production

O&GIndustryTask Force

• UK Self Sufficiency

• $4.5 billion/year investment

• 100,000 extra jobs

• $1.5 billion/year extra business

• 50% more exports

• Safest O+G workplace 2010: UK


ChangeNeeded !



Integrated ServicesSeamless Organisation

Shared ServicesCampaign O&M

NOVALIFT

• UK Self Sufficiency

• $4.5 billion/year investment

• 100,000 extra jobs

• $1.5 billion/year extra business

• 50% more exports

• Safest O+G workplace 2010: UK

Procurement

Communication

SMEsRisk/Uncertainty Management

Collaboration

StandardisationContracts…

e-businessGlobalisation

Coaching

Share FaresLiabilityAssessment…

UK Oil + Gas Supply Chain ‘Cluster Map’ includes over 15,000 SMEs

Drilling Equipment Supply

Production Facilities

Operations &Maintenance

Exploration& Appraisal

Value Chain

Specialists

System Integrators

Product Suppliers

Major Services Companies

Specialist Services

Training

R&D

Supply C

hain

Concept Development

Detailed EngineeringProject Mgt.

Procurement

FabricationConstruction

E,I&TM, L,A

LogisticsCoatings/ NTD etc

Fabrication

OEMs

Maintenance & Modifications

Support to OEMs

Integrated O&M

Logistics & Supply

Chain Mgt.

Tools Equipment

Supply

Workover & Maintenance

Well Engineering

Drilling Technology

Seismic Reservoir Specialists

Equipment & Models

Consultancy

Skills & Resource Development

Technology Applications – harsh environment , H2S, Gas monetisation, Wells

UK Role in Assisting Local Content

• Supply Chain Partnership Initiatives - 2009- 2011

•Nigeria with Shell, NNPC •Kazakhstan with Shell, British Gas, KMG

•Russia with Shell, •Iceland with the Ministry of Energy •Cyprus with the Ministry of Industry

Partnership Facilitation

Joint Industry Projects Technology

Advancement

Training and Development

UK - Recent Local Content Success

•UKTI Energy Technology Supply Chain Partnership Initiatives - 2009- 2011

Partnership Facilitation

Joint Industry Projects Technology Transfer

Training and Development

• The Out come:•Over 60 new partnerships, more than US$ 400 million in new business including direct investment, in excess of 25,000 new jobs created.

•Oilfield Fixtures

•Equipment & Services

•Clie

nt C

hoic

es•Local R

esources•Reservoir

•Area•Character

•Pressure•Temperature

•Location•Onshore•Offshore

•Weather•Terrain•Production Facilities



•Clie

nt C

hoic

es •Local Resources•Natural Resources

•Industries

•Materials

•Population Demographics

•Education

•Professions •Crafts

•Reservoir•Area

•Character•Pressure

•Temperature





•Client Choices

•Local Resources

•Experiences •Uncertainties

•Natural R

esources•Industries

•Materials

•Population D

emographics

•Education

•Professions

•Crafts

•Reservoir•Area


•Temperature



•Reservoir•Area


•Temperature





•Clie

nt C

hoic

es•Local R

esources•Wells •Oil •Gas •Water •Power •Export

•Exp

erie

nces

•Unc

erta

intie

s•N

atural Resources

•Industries

•Materials

•Population D

emographics

•Education

•Professions

•Crafts

•National •Local•International

•OM

L C

ontra

ct O

ptio

ns

• Build, own, operate• Facility tariff• Oil production tariff• Gas compression tariff• Water injection tariff• Power generation tariff• Lifting cost reward• Production volume reward• Facility performance• System performance• Equipment performance• Target bonuses• Supervised manpower• Manpower• Facilities administration• Supply chain• Warehousing

•Assurance

•Standards •Competence

•Reservoir•Area


•Temperature




•Supply & Services

•Clie

nt C

hoic

es•Local R

esources•Wells •Oil •Gas •Water •Power •Export


•Exp

erie

nces

•Unc

erta

intie

s

•OM

L C

ontra

ct O

ptio

ns

• Build, own, operate• Facility tariff• Oil production tariff• Gas compression tariff• Water injection tariff• Power generation tariff• Lifting cost reward• Production volume reward• Facility performance• System performance• Equipment performance• Target bonuses• Supervised manpower• Manpower• Facilities administration• Supply chain• Warehousing

•Integration

•Natural R


•Materials

•Population D

emographics

•Education

•Professions

•Crafts

•Assurance

•Standards

•Com

petence

•Equipment•Consumables

•Services •1200•Mech

•400•Inst

•800•Elec

•300•Weld

•200•Plan

•Interfaces •Uncertainties•Partnership Agreements

•Suppliers •Subcontractors

•Reservoir•Area


•Temperature





•Clie

nt C

hoic

es•Local R

esources

•Wells •Oil •Gas •Water •Power •Export•E

xper

ienc

es•U

ncer

tain

ties

•Natural R


•Materials

•Population D

emographics

•Education

•Professions

•Crafts


Con

tract

Opt

ions

• Build, own, operate• Facility tariff• Oil production tariff• Gas compression tariff• Water injection tariff• Power generation tariff• Lifting cost reward• Production volume reward• Facility performance• System performance• Equipment performance• Target bonuses• Supervised manpower• Manpower• Facilities administration• Supply chain

•Assurance

•Integration

•Standards

•Com

petence

•Equipm

ent•M

aterials•S

ervices •120

•Mec0h

•400•Inst

•800•E

lec•300

•Weld

•20•P

lan

•Interfaces •Uncertainties•Partnership

•Suppliers •Subcontractors

•Invitation to Tender

24

UK Energy Sector Partnership Opportunities

Non Renewable Power Nuclear Power

Small Scale Renewable Power

T&D & Storage Oil & Gas & Coal Gas Utilisation & Refining

Transportation Fuels

CHP Co Generation

Cleaner Coal

Coal Super Critical Boilers

CCS Carbon Management

New Build

De commissioning

Asset Management

Protection & Control

Renewable Distributed generation

Energy Storage

Advanced Metering

Regulation

Project Asset Management

Drilling /Well

Engineering Excellence

Advanced Wells

Unconventional Oil & Gas

LNG

GTL

Other derivatives

Refining

Hydro-electric : Consultancy/ management

Tide Stream

Advanced Metering / Control

Advanced Materials

Advanced Materials

Solar Photovoltaics

Solar Thermal

Ground Storage Pumps

Fuel cells

Small Wind

Small scale Biomass

Biofuels Fuel Cells

Hydrogen

Brazil's Contribution to Increasing World Oil Production

•Source IEA World Energy Outlook : ‘New Policies Scenario’

Millions of Barrels of Incremental Oil Production

Interfaces

The UK is Committed to Partnership

Uncertainties

Relationships

Understanding

Partnershipfor Sustainable Local Content

Thank You

Sue Whitbread PWX Limited

Britcham International Energy Seminar Local Content in the Oil and Gas industry

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