Time for a sea change

Andrew Cavenagh talks to the new president of the UK Offshore Operators’ Association

Steve Suellentrop has assumed presidency of the UK Offshore Operators’ Association in a challenging year. Oil companies face serious threats from the chancellor’s review of the North Sea tax regime and a worsening shortage of key engineering skills. Both are issues on which the industry needs to be united, though he is well aware that UKOOA’s stance has not always had the unanimous support of its members.

Given that the members range from integrated multinationals to small exploration companies, Suellentrop says it is not surprising that their interests clash on issues such as infrastructure, gas competition and fiscal details.

He believes UKOOA should focus on those where there is consensus. ‘We must try to recognise issues that are of a competitive nature and not touch too much on those,’ he says.

As managing director of Arco British, Suellentrop can devote one or two days a week to UKOOA business and says the responsibility for developing this strategy is one he shares with the full-time executive officers. ‘As president, I think my primary responsibility is to speak on issues of policy and set the agenda.’

A restructuring of the way the organisation operates should sharpen this focus. Each big common issue is assigned its own task force headed by a member of the UKOOA council.

The issue at the forefront of members’ minds is the review of the whole North Sea tax regime, whose outcome will be revealed in the approaching Budget. UKOOA has made an extensive case for not altering the existing arrangements.

Suellentrop reiterates that any change would ‘send the wrong signals for sure’ to operators in what remains a high-cost region and – by inhibiting further innovative developments in the North Sea – would jeopardise a potentially huge export business in engineering expertise. ‘I think the kind of technology being developed in the UK is incredibly exportable.’

The growing shortage of engineers with the requisite skills for offshore projects is a dangerous development, he says. Pierre Jungels, chief executive of Enterprise Oil, even suggested at the end of last year that the shortfall would soon start holding up projects.

Suellentrop says that 10 years of ‘light recruitment’ has coincided with early retirement programmes to produce a dearth of young engineers in the industry. Rival industries such as information technology and aerospace also attract more graduates at present. ‘I think the oil and gas industry has an image crisis with respect to engineers,’ he says. ‘I’m not sure we are doing enough to address it as an industry.’

He remains convinced that the offshore industry still has the scope to offer exciting careers. ‘I still think the North Sea has some incredibly challenging engineering projects that will attract people to work on them.’

Safety is also high on Suellentrop’s agenda. His presidency coincides with the start of a three-year industry initiative to halve the number of serious offshore accidents (involving three or more days off work) in the North Sea from the level now of about 400 a year.

‘In the past two or three years, we’ve noticed that safety performance across the industry has sort of plateaued,’ explains Suellentrop.

He believes it is a matter of instilling a different safety culture in the workplace – as a father of two, he says workers’ duty of care to each other should mirror that of parents to their children in potentially dangerous situations.

After spending several billion pounds on safety improvements recommended by Lord Cullen’s report into the 1988 Piper Alpha disaster, oil companies may think further expenditure takes them past the point of diminishing returns. But Suellentrop is undeterred. ‘We’re talking about changing attitudes. That takes a lot of communication but not a lot of money.’

He adds that any additional cost will more than pay for itself in improved morale and productivity.

Another issue for UKOOA members in the coming year will be the introduction of formal environmental impact assessments for North Sea developments – and in some instances exploration wells.

While the requirement will not significantly change the procedures, he considers the statutory consultation periods should bring benefits in image terms. ‘It will subject what we’re doing already to the public focus, so it will be welcome.’

He believes oil companies continue to be ‘tarred by the brush of history’ on environmental issues, and that the industry should do more to promote the extensive measures it now takes to minimise the damage its operations cause – such as phasing out oil-based drilling muds and reducing the oil content in discharged water wherever possible to below the statutory limit of 40 parts per million.

Suellentrop accepts there are limits to the positive contribution that the oil industry – being in the business of extracting fossil fuels for others to burn – can make to the environmental debate. ‘I’m not sure we’re going to be able to successfully address the broader issues about global warming.’

{{Steve Suellentrop: at a glance