How the Norwegian Service Industry was developed -Competence and Capacity

Sjur E Bratland Regional Director, INTSOK, Norway

Willy H Olsen

www.intsok.com

The presentation
1. What were the instruments used? Policies, legislation and external factors 2. The role of people, technology, research and development 3. Where is Norway today?

Willy H Olsen

Legislation approved before oil was found

The Petroleum Law is the foundation

1. 2. 3. 4. 5. The petroleum resources shall be managed with a long term perspective The whole society shall benefit from the resources Resources shall be managed to secure revenues to the country Oil and gas shall contribute to welfare, employment, improved environment and industrial development Take care of regional interests

We wanted to develop a oil and gas service industry

Source: The Petroleum Law of 1965 paragraph 1A

Policies were adapted to national traditions

Sharing of technology and creating a local working environment

The government worked deliberately to Norwegianize the oil sector US and French domination in the first decade Labour relations were built on strong trade union influence Worked in favour of domestic firms relative to foreign firms But did not jeopardize economic efficiency Ownership no issue Environmental friendly take care of the resources The Ministry monitored the tendering process and bid evaluations Norwegian based firm got early access to all tendering information

Willy H Olsen

Using Norways competitive advantages

1.
2. 3. 4.

Harsh environment - taking care of the environment Deep water Technological challenging Expensive labor cost

1. 2.
3. 4.

Innovative an risk willingness Established yards could convert to oil and gas industry Willing to use the Norwegian continental shelf as a test bench Deep fjords allowed building of concrete substructures

Source:

Cornerstone in developing the Norwegian Oil industry Predictability Risk reducing

BP production mill b/d oe

Source: BP

Established a competitive and transparent environment Concession rounds every year, based on nomination from oil companies Ownership not important Today 60 active oil companies many independents A lot of the service industry are owned by non Norwegian companies External factors worked in the favour of Norway IOCs were looking for new opportunities after the nationalisation Quite willing to accept tough terms Transfer of knowledge and experience to Norwegian firms Stick and the carrot used

Willy H Olsen

Taxpaying oil workers in every community

More than 1300 companies

But clusters established

Maritime

R&D

Operators Subsea
Willy H Olsen

Drilling

Have to follow EU rules and regulations

No preference to Norwegian firms

Norway joined the European Economic Area Had to introduce EU regulations The legislation from 1972 on in-country value had to be scrapped Legislation is based on competition as the key principle Predictability, transparency, traceability Prohibited to discriminate on the basis of nationality and to use standards and specifications to obstruct competition
Infant industry argument no longer applicable

Willy H Olsen

The government stimulated technology partnership

Fiscal incentives and financial support

The oil and gas industry

The operators

Universities and R&D centers

Willy H Olsen

The tax system made fields into laboratories

Testing and verifying new solutions

Troll Oil Kristin Tyrihans Tordis IOR

Tapping a thin oil layer Drilling systems Advanced software

High pressure High temperature Advanced wells

Record long pipeline heating Subsea raw seawater injection

Subsea separation boosting and injection system

Willy H Olsen

Government top priority - EOR

Squeeze out the last barrel adds value

MBOE/D

500

Revitalizing and extending the life of the Ekofisk field

450

400

350

300

250

200

150

100

50

The initial plan

1970 1980 1990 2000 2010 2020

The Ekofisk field, Norways first oil field, began production in 1971 Was hoping for 20% recovery ConocoPhillips is now aiming for 50% Field life extended to 2050 Norways average recovery factor is now close to 50% The government aim is 55% Huge R&D program to succeed 1%-point increase in recovery represents $35 billion in additional revenues to Norway
2030

Willy H Olsen

Statoil is the dominating player - operating 80% of new projects The CEO will always be under pressure to add in country value

Willy H Olsen

INTSOK was a new government initiative

Stimulating international growth

Willy H Olsen

Total Oil & Gas Expenditure for 2012-2015

180 160

140

120

Billion USD

100

80

60

40

20

Source: INTSOK Annual Market Report - Rystad Energy (2011)

Norwegian Oil & Gas World-class Clusters

Catalogue presenting Norways world class capabilities

Minimizing discharges and emissions

Solutions for cleaner production

Capabilities in the Norwegian oil and gas industry for reducing energy consumption and minimizing discharges and emissions

Catalogue presenting industrys IOR capabilities

Delivering increased oil recovery

Solutions for increased recovery

Capabilities in the Norwegian oil and gas industry for solutions that can increase oil recovery

Rogaland Training & Education Centre - Local skilled workers are the fundament for local content

Certified provider to the Oil & Gas sector in Norway and Denmark

Achilles ID # 26088

Colleges

Regional development

RKK

Companies

Samples of content skills training for the Oil & Gas sector
Training and continuing education for the offshore and mechanical industry:
Subject areas:

Rules & regulations Health, environment and safety Economics and management Petroleum technology Drilling and well technology Automation Electro and electronics Heating, ventilation and sanitation Valve technology Mechanical processes Pressure testing

RKK
Oil & Gas
Certified provider to the Oil & Gas sector in Norway and Denmark

Hydraulics and pneumatics Scaffolding and rigging Surface treatment Welding and plating Flanges and gaskets Isolation and casing Chemistry and processes Materials administration Sub sea technology Instrumentation Safety and emergency preparedness Navigation

Achilles ID # 26088

Kvaerner Caspian -Vision

Vision Create a top class Kazakhstani contracting company through technology transfer and training of employees. Execution of Oil & Gas projects with the maximum possible workload inside Kazakhstan Kvaerner Caspian Group is jointly owned by KGNT and Kvaerner AS This is a true Kazakh company - Shareholding and Board representation are equal Initial activities are targeted towards fabrication and engineering Kvaerner Caspian aims to be the first full fledged EPC offshore contractor in the Caspian Region
21 Kvaerner 2011 20.03.2014

Kvaerner Caspian -Capabilities

Kvaerner Caspians business model is to deliver Offshore EPC Contracts. This is achieved through the following capabilities: Fabrication Kvaerner Caspian currently building a new offshore module fabrication yard in Aktau. Engineering Kvaerner Caspian have engineering offices in Atyrau and Aktau. Training Kvaerner Caspian is the largest shareholder in the Aktau Training Centre (ATC) - be closely associated with the Aktau fabrication yard

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Kvaerner 2011

20.03.2014

Thank you for your attention

Looking forward to the B2B meetings