Oceaneering

Source: Energy Digital

Date :20/04/2007 00:00:00

Oceaneering: A new generation of oilmen

Founded in 1964, Oceaneering has grown from an air and mixed gas diving business in the Gulf of Mexico to a diversified, advanced applied technology organization operating around the world. Oceaneering achieved this growth by executing a plan of both internal research and development augmented by strategic acquisitions and is now a world leader in deepwater oil rig support services. By placing training facilities in key markets is facing up to a widespread industry shortage of skills

Written by John O’Hanlon & produced by Glen White

The sea, they say, is the last wilderness left on earth. It also covers the greater part of the earth’s remaining oil reserves, and Oceaneering’s services are needed wherever these reserves remain. As the oil runs out, the search for new supplies gets more intense, and that has meant a rapid change in the company’s global footprint, says Alex Westwood, the company’s Senior Vice President Eastern Hemisphere’.

Based in Dubai, Westwood is responsible for global operations outside of the Americas – a market that accounts for much more of the group’s activities than it did. “By the latest reckoning, a little under 50 percent of our business is generated outside of the Americas. Five or six years ago you could have taken the map and placed a small coin on the Gulf of Mexico and that would have covered where the vast majority of our revenues come from.

It’s still a key market of course – just on March 8th it was announced that Oceaneering International, Inc. had secured a contract from BHP Billiton to supply umbilical distribution and connection equipment for the initial Shenzi field development in the Gulf of Mexico. Nevertheless the other Gulf, and the offshore oilfields around the expanding economies of the Far East and India, are occupying more of Oceaneering’s attention these days. “West Africa is far and away the biggest market in my territory – all the way from Mauretania, round the coast to Nigeria and all the way down to Angola,” Westwood explains. “Certainly our biggest markets in Africa are Nigeria and Angola, and we have a lot of resources dedicated to those.”

Just for the record

In 2006, the entire Oceaneering Group earned $1.3 billion. As T Jay Collins the group president and CEO observed when the results were announced in February, “Results for the fourth quarter and the year were exemplary, as we achieved the highest net income in Oceaneering’s history in both periods. For the third consecutive year we achieved record earnings, just about double those of 2005, on a 28 percent growth in revenue. We continued to benefit from our strategic focus on deepwater and subsea completion activity.”

About twenty percent of Oceaneering’s revenues come from its Inspection Division, which provides non-destructive testing as well as monitoring and control services. Oceaneering has two UKAS accredited laboratories in the UK, and these provide a service that has radically changed over recent years from a focus on detecting defects arising during the manufacture of new products, to detecting process induced integrity problems. Last year the company gained its largest ever inspection and corrosion management contract, a $90 million, three-year deal with BP, covering all BP’s upstream oil and gas facilities, both onshore and offshore, in the U.K. and Norway.

I asked Alex Westwood to unpack these outstanding results. A lot of the credit, he says, comes from focusing on the utilization of Oceaneering’s fleet of remotely operated vehicles (ROVs), the largest in the world. “If you can increase your margins and your utilisation most of that flows straight to the bottom line, and that really showed up in our performance with our ROVs last year.”

The tools that the ROVs deploy and the ROVs themselves are controlled by ‘umbilicals’ that snake between the vessel or installation and the ROV, carrying electrical, fibre optic or hydraulic lines and is such a specialised and transferable technology division that it has its own subsidiary company. Oceaneering Multiflex is a world leader in the design and manufacture of subsea control umbilicals. Established in 1977 and acquired by Oceaneering in 1994, it manufactures umbilicals using thermoplastic hoses, electric cables, high collapse resistant flexible pipes, steel tubes and hybrid combinations for all types of subsea systems.

Every time an oil rig is sent to drill a prospect for an oil company, it requires at least one ROV on board. Oceaneering has enormous expertise in the deep water oilfields of the Gulf of Mexico (the seabed in the Green Canyon area of the Shenzi field, for example, lies at approximately 4,300 feet). “With the price of oil and gas as high as it is the oil companies are drilling as quickly as they can to try to find and develop more fields,” Westwood says. “You cannot put a man much more than 300 metres under the water, and in West Africa you are dealing with thousands of metres. You simply have to use an ROV. With the immense upsurge in drilling activity in West Africa, we’ve been fortunate enough to have the ROVs to meet the demand and improve our overall utilisation as a result.”

Bigger and stronger

ROVs have developed a lot, and are developing fast thanks to Oceaneering’s innovations. For a start, they are a lot more powerful than they were. “I can remember when 25 HP was a powerful ROV – now we are building 150, 170, even 200 HP vehicles!” says Westwood. The newer vehicles are designed with a bolt-on power source under the ROV –various work packages can be added. “As you can appreciate,” he explains, “to put a piece of electronic equipment like an ROV down to 3,000metres underwater requires power, and it can take an hour to get down there. You have a suite of tools that you have to use on some subsea architecture; you want to carry as many of those as you can at the one time so you require more power for bigger subframes that can carry more equipment. That’s why we have to put more power into ROVs.”

The Hydra Magnum represents the backbone of Oceaneering’s deepwater ROV fleet. It is a 100 hp, high-thrust, cage-deployed, but the guts of any ROV is the software system that controls its actions and relays photographs and data back to the surface. The vehicles themselves are manufactured by Oceaneering at its facility in Morgan City, Louisiana, however last year it has started to make the vehicles in Aberdeen as well, says Westwood. “We don’t have anything like the same throughput of new equipment as we have in Louisiana, but it augments our requirements. We can be very flexible in Aberdeen. Basically, if Morgan City runs out of capacity, we can build them here.

This was one spin off from the consolidation of facilities in Aberdeen., where three or four separate sites were consolidated in 2005 to one central office building in the town, and at the same time the new manufacturing capacity installed in a newly built factory and warehouse.

Solving the people problem

A perennial problem for the industry is that of keeping the expanding business populated with skilled and committed staff. Alex Westwood first expressed his concerns to me over six years ago, and the problem remains, though it is very pleasing to be able to report that Oceaneering is now taking a very proactive approach to the problem. “There does not seem to be the same interest and enthusiasm from the next generation to move into this industry, and it does put constraints onto us,” he admits. “The problem is that with an aging workforce, and not able to encourage youngsters in, we are all dealing with the same pool of people.

“To address this, last year we set up a training school here in Aberdeen and we were able to bring electronic technicians, hydraulic technicians, electronics graduates from university and put them through what might almost be described as a crash training programme so that it could give us the people we need to operate our equipment”

A ‘significant amount’ – close to $1.5 million – was invested in the new training facility, which was set up in new leased premises and fully equipped with computer terminals, training modules, demonstration ROVs and the like just to give the trainees practical hands-on experience. “If we had not done that we would have been struggling to man the projects we have been able to win. We would be in serious trouble!”

As a global operator, Oceaneering has adopted a strategy of setting up similar training schools in its growing markets. A training facility has been set up in Luanda, Angola, to train personnel for the West African region. “A similar one has been established on Batam Island off Singapore and we are training Malaysian, Indonesian, and Filipino people there.” Westwood adds. “We are about to set up a similar place in India because we have the same problem in the Indian market. Remember we have a lot of pressure from local governments to indigenise the workforce and that does have a bearing on your success or otherwise when you come to tender for contracts. That is a fact of life. Where we see there is a workforce that is both capable of being trained and is interested in being trained we will certainly go down that route locally.”

Global demand for oil will continue to rise – that is one statement that needs no justification these days. And the sources of oil that are close to the booming economies of China and India will attract the greatest interest. “We are establishing a presence on both the east and west coasts of India. The west coast is probably more about the development and maintenance of the offshore fields – the Bombay High field in particular – that the Indians already have. But a lot of new exploration activity is taking place off the east coast.”

Oceaneering is the global benchmark for umbilical structures and ROVs. It is also uniquely placed to support its customers in the far flung locations they increasingly have to look at. “We don’t profess to be the cheapest, but our customers know we are the best,” says Alex Westwood. “If our expectation regarding price can be met by the customer, we will work anywhere.”