“Currently, each operator has their own set of energy services. If they can work together and share some of those logistics, certainly savings will accrue to each company and then the competitiveness of the local energy sector would be significantly increased. So we certainly want to encourage this type of sharing, from a logistic standpoint.”
Asked what else upstream companies can do to save money, Olivierre said sharing of logistics “really is one of the key ways to minimising your supply chain costs.”
The minister was speaking with reporters last Wednesday (August 3) during a break in the energy workshop, “Global Trends and Technology for Sharing and Collaboration in the Offshore Upstream Industry”.
The event was hosted by British High Commissioner, Tim Stew, in conjunction with Peterson Integrated Logistics (Peterson), at Stew’s Maraval residence.
During her address, Olivierre noted that the initial negative impact of sustained low energy prices “is forcing the industry to become more resilient, stronger and efficient...We are now seeing a new side of the oil and gas industry. Companies are resorting to innovation, collaboration and introduction of new technology with the objective of reducing unit costs of production and ultimately increasing unity margin and achieving higher return on capital employed.”
She lamented however that in an environment of growth, TT’s industry “has been less than prompt in managing costs, as generally efforts in the sector are focused on improving production and maximizing revenue generation. Consequently, producers only concentrate on managing and optimizing supply chains when prices fall.”
Olivierre added that optimisation of supply chains is not necessarily a core competence. As a result, it is an area open for several innovations that can have a significant positive impact on costs. One such is the sharing of services between companies, each using the same provider.
“The idea of shared services is not new, since I understand that it is one that has been practiced by Peterson Integrated Logistics in other jurisdictions. I view the introduction of such services in TT as a natural evolutionary step for our industry. For example, in the past offshore operators would optimize the use of expensive rigs through scheduling their drilling days to take advantage of the rig’s availability in TT.”
“It is my hope,” Olivierre said, “that the trend towards greater collaboration among companies to reduce costs continues. It ensures that TT remains competitive as a location for energy services globally by combining logistics and other services. Moreover, it will enhance the desirability of TT as a base for the provision of higher level energy services. For now, this may be confined to TT but in time, those services may extend to Guyana and other regional hydrocarbon provinces.”
Meanwhile in explaining why he chose to support the Peterson workshop, Stew reminded that the British High Commission is committed to supporting the industry and the main oil and gas players in TT, “not just because most are UK investors, with the largest acreage under lease from the Government but also because of the importance of the wider partnership between TT and Britain, and because of the centrality of this twin-island Republic to our relationship with the wider Caribbean.”
Stew encouraged local energy players to participate actively, to compare notes and identify options for closer collaboration because, “from the British perspective, we have seen the benefits to our own oil and gas industry from closer collaboration.”
He said Peterson was chosen because of its 15 years of experience in combining sailings using a pool of supply vessels and shared supply bases.
Stew noted the company has “an enviable track record, for example, receiving a prestigious ‘collaboration’ award at the 30th Offshore Achievement Awards in Aberdeen, Scotland in March this year. This was based on their success as the facilitator of the Aberdeen Marine Logistics Alliance – a vessel sharing initiative which maximises efficiencies and reduces marine logistics costs.”
“Established in 1995, this progressive idea was embraced by the industry in Aberdeen. Participating organisations save millions of dollars and significantly reduce CO2 emissions. Peterson was also commended at that awards ceremony for working with nine operators in developing a means of outsourcing their combined marine and aviation requirements,” Stew stated.
Peterson’s Regional Manager, Maarten Spiljard, spoke about how the company’s collaboration models have led to greater efficiency for participating companies while saving them 25 percent to 40 percent on service costs, depending on the range of services being pooled.
The main model discussed was the Southern North Sea (SNS) Pool, an integrated fourth party logistics concept (4-PL) where nine Operators outsourced their combined marine requirements and their helicopter requirements to one logistics facilitator; Peterson.
The SNS Pool website states that “the development of this unique and innovative concept was initiated in 1993 and started with various smaller scale arrangements which evolved in 2002 (with) the establishment of the SNS Pool for marine extended, with helicopter logistics since 2006.”
The SNS Pool has centralised its combined marine, air and supply base operations in Den Helder in the Netherlands, the geographically best situated location for the Southern North Sea.
Spiljard said there are three key objectives of the SNS model. To maximise efficiency by combining volumes, distance and capacity. Maximise safety by setting minimum quality standards and standardisation of safety rules and regulations, and minimise exposure to the environment by reducing sailing and flying distances.
Spiljard said creating a culture of collaboration takes time, trust, transparency and accountability. He gave the example of the SNS Pool in 1989 compared to 2016.
In 1989, there were nine operators, nine offshore supply bases and 8.7 supply vessels, supporting 60 locations. Whereas there are now 11 operators, one offshore supply base and 5.2 supply vessels, supporting 140 locations with annual savings of approximately US$23 million.