Succeeding at the front end

With a series of North Sea contracts under its belt, project management company EPC Offshore is on track for £6 million-plus turnover in only its second year of business. In the first of OE’s reports on some of the people and companies illuminating today’s Aberdeen offshore scene, Meg Chesshyre talks to EPC co-founder Keith Wallace.

Launched in July 2009 by CEO Keith Wallace, COO Peter Kirkbride and finance director June Bremner, EPC Offshore has expanded rapidly to a 50-strong team of oil & gas professionals.

Wallace himself has been in the industry since the 1970s. His first job was with Shell, as a student, well logging. The first time he went offshore aged 19, he recalls standing on Brent Bravo watching Brent Charlie being installed. Now he is working on a project to redevelop Penguins, because Shell wants to take Brent Charlie out!

EPC Offshore works from the front end – preparing companies for all the gates they go through during the approval process – right to the delivered facilities at the end. What sets them apart from their competitors, in their view, is that they come from a foundation of project management skills rather than engineering houses, with the aim of maximising value for their clients and optimising the use of resources.

Wallace and Kirkbride met 25 years ago when they were both project engineers for Coflexip in London, delivering firstgeneration flexible risers to North Sea projects including Balmoral and Ivanhoe/ Rob Roy. Their friendship continued and after working independently for a number of operators and contractors over the years, they believed they could provide a service, particularly to smaller operators, by pulling together the right sort of project teams to turn opportunities into assets.

‘It’s been quite an aggressive start,’ says Wallace. ‘We focus on two major milestones for our clients, getting projects to sanction and getting hydrocarbons flowing. We have all the processes, systems and rigor to form a very clear roadmap through the process of getting a project sanctioned by DECC, by the operators, partners and stakeholders and onwards to delivery. We sit down and we agree very clear objectives for the project. We engineer everything to the appropriate level required at each stage to continue on the road to the ultimate goal.’

He adds: ‘The other key area that we focus on is the supply chain. We do a lot of the conceptual work ourselves at a higher level on the screening side – what will work, what will not work. On the more detailed investigation of each concept we generally engage with some of the reasonably well-known organisations around Aberdeen and the UK, and with specialist organisations, if there is a specific aspect that a project needs.’

According to Wallace, EPC Offshore communicates with the supply chain in a way the supply chain understands, giving a very clear definition of the end objective, and what the scope of work will look like. ‘A lot of the projects we work on are quite challenging and involve a lot of creative contract and procurement solutions. A specific example is where we have to involve the clients and the contractors in co-investing in facilities aspects of the project.’

Many vendors and suppliers have difficulty in funding facilities, particularly FPSO units. They have the know-how, they have the assets. These assets need further investment to bring them to a stage where they can actually be deployed on a development, explains Wallace. A situation then emerges, where the only way forward is to set up a special-purpose company that will own the asset in a joint arrangement, then lease it back to the operating entity.

‘We are central in making that happen,’ he says. ‘Fundamentally these things come down to the clear scoping of services, the responsibilities of each party within the arrangement, or within the pyramid of arrangements. Our strength is the ability to scope the requirements in each tier of these documents to protect the entities that require protecting. You need to be able to walk into a room and wear three different hats depending which particular contract, which level, whether you are in the special-purpose company or whether you are in the operator’s arrangement, or whatever.’

The contracts and procurement supply chain management is key, he adds. ‘Basically, you buy, you execute, you sell. It’s all transactional processes. You have to be able to manage your risks. You have to be able to get the right arrangements in place depending on the clients. We have to be quite flexible, robust and inventive in our ways of dealing with this.’

Wallace says EPC Offshore’s core business is definitely the North Sea (see panel). The plan is to focus and stay focused on Aberdeen, perhaps expanding a little more in the London area. The company is also beginning to look at the Norwegian market. It has done work on the proposed re-development of Frøy, and has also been advising clients internationally.

Initially the clients have been small to medium-sized companies – Endeavour, Ithaca, Premier – but the next two companies – CNR and Shell – are in a completely different space to the first three. ‘I see a model evolving that could be of interest to more than the small- to medium-sized guys,’ declares Wallace. His vision for the future is that the company could be responsible for managing single projects of a value of $1 billion for clients. ‘It is conceivable that we will be in several locations and have 500 colleagues!’ OE