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New technology - 'come back in 3 years'

Thursday, October 2, 2014

When engineers ask Robert Faulds, project director of Total UK's Laggan Tormore project, to implement technology, 'they tend to not be very pleased when I tell them, come back in 3 years and I'll think about it'

Robert Faulds, project director of Total UK's Laggan Tormore project, believes that new technology can be very valuable in complex projects, 'but not every 5 minutes.'

'Engineers are bred and designed to come up with new ideas. Even today, I've got a stream of engineers come to my office with new ideas. They tend to not be very pleased when I tell them come back in 3 years and I'll think about it,' he said.

He was speaking at the Oil and Gas UK London Breakfast Briefing on May 21 2014, 'Planning for success: Managing complex projects' (see end of article).

'Lots of people talk about standardisation,' he said. 'I think it's great, it does drive down cost, cut and paste and all the rest of it, fantastic. 'In my view, standardise, do what you know you do well.'

'You need to find a way to get your technical [experts] in the company to agree to that, not very easy.'

[but] 'Do not use new technology unless you've got absolutely no choice, and if you do use new technology, make sure you fully understand it, you understand all the risk you're taking. And make sure it adds value.'

'Sometimes new technology is unavoidable. Maybe the only way to render your project economic. But it does bring additional risk.' 'If you're buying new technology for the sake of new technology, [well] we're not in the research business we're in the project business.'

Big drop in UKCS
Due to a growth in project costs, the UK Continental Shelf is likely to see a big drop in investment over the next 3-4 years, he said.

'I read a recent note which said that in 2013 the UK's investment peak was something like £14bn, they reckon by 2017 - 2018 it would get to £7bn,' he said.

'Personally I think you're going to be lucky to get 2 [billion pounds in 2017-2018], especially if the costs don't correct.'

'My personal view is we've experienced a boom and the bust is going to come.'

'I personally think we're heading towards another fall in the oil and gas UK, I think the oil industry in the UK is about to go through an extremely lean time. I think that a lot of yards will close a lot of people will move overseas.'

'Why? Wood Mckenzie figures from May 2014 - 74 per cent of projects in the UK and Norway are over budget. Average overspend is 18 percent.'

'Why? Prices are going up all the time.'

'We recently finished a tender for a project called Edradour, going for its final investment decisions. It cost nearly three times what it would have cost in 2010.'

'Industry capacity to deliver these projects is not keeping pace, and that's leading to overspend and delay.'

'For me the question is, we've had the boom in the UK, when the bust will arrive, not if it will arrive. Is it 6 months, 12 months, is it 18 months. It ain't 2 years.'

'In 6 days time, I am going to be bidding to try to make sure I secure part of my company's investment budget for this year to do a project. 'It is a competition, that's what people don't get.'

'Everybody says, 'It's oil and gas'. [but] if you've got £10bn to invest 2015 or 2014, the company is going to put that money where it gets the best return on its investment.'

'I think that the IOCs with this [UK] trend [of] increased cost, smaller field size, are going to invest their money elsewhere.'

'The market doesn't show any sense of slowing down internationally, that means the money we have as IOCs are more likely to be going overseas with higher returns.'

'Future major projects in the UK are being revisited today. It is already here, it is starting to happen now.'

Super contractors
'The international oil companies have created their own nightmare. We've allowed and encouraged the creation of giant super contractors,' he said.

'I think now the tail has been wagging the cost and schedule dog. They don't even talk to me as if I'm the client any more apart from when I refuse to sign their invoice.'

'This is not new. I looked at papers from 1990 [about] the CRINE initiative, basically they could have been written yesterday. It hasn't changed. We need to find a way to work with our contractors.'

'Any every contractor is different. Every contractor has got its own risk profile and values its risk independently.'

'Whatever we do, I don't actually believe in industry initiatives. I've seen too many of them. CRINE, we've had other ones.'

'Frankly they've never worked. The only thing they've done is make consultants richer.'

'I know people who've retired on CRINE. We didn't make any money out of that.'

People
'You can't do anything without people, you can't do everything yourself,' he said.

'Just to give you an idea of Laggan Tormore, at our peak we had 20,000 people working on the project worldwide. I had something like 7 offices with my name on the door. I have more air miles than Richard Branson.'

'In year one, we had 22 per cent [staff] turnover. Why? Because lots and lots of people have got used to working in this country 9 to 4 - having a 1 hour lunch break working at a nice pace.'

'Projects don't do that. We work until the job is done. If that means we're working until 9
10 o'clock at night, weekends, public holidays, that's what we do. If people don't like it, don't join a project.'

'Year two this [staff turnover] dropped to 10 per cent. We weeded out the weaker members of our team. At the end of the day the strong will survive.'

'Keeping people is not easy. Why is it not easy? 80 per cent of project team in general is on a short term contract.'

'Why? Because we never know when the next project is coming. Industry changes, investment profiles change, attitudes change.'

'Job opportunities at the moment are seemingly limitless, and day rates every day seem to go up.'

Mr Faulds quoted figures from a supplier saying that (April 2014) the cost of an engineer per day in Norway was £1400, compared to £1000 18 months ago. 'And they might not even be any good,' he said.

'High turnover rate of the wrong people kills your project quicker than anything else,' he said.

'Finding people in the UK who are driven to deliver projects, is harder and harder. There are less young people motivated to work the extra hours.'

'I hear a lot about work life balance, I think we have become too rich, it has gone too far.

I've heard about 9 day fortnight, 9 to 4 working 1 hour for lunch.

Finding better people
'[the key to] getting better people is not education,' he said. 'We need to find a way to make people more driven, and look at different sources for people,' he said.

Mr Faulds said he is particularly keen on recruiting from the military.

'I've been trying to teach engineers how to become leaders for years and largely failed, with some successes,' he said. 'I'm wondering if I can teach leaders to become engineers.'

The British military in general is looking to reduce its numbers of non-commissioned officers (NCOs) and young officers, he said.

'So we're looking at a training program which I am sponsoring to try to get the people into our industry.

'They seem to be brilliant project execution people.

'So I think that's a real source for future talent.'

View Mr Fauld's talk on video at http://bit.ly/mcpoguk

Which directs to www.oilandgasuk.co.uk/news/Managing_Complex_Projects.cfm



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