Few problems, more answers from Houston
Texasis truly the land of opportunity for Scottish companiesinthegrowing energysector, writes AndrewCollier
IN the 19th century, Scotland was a global power in tobacco trading. During the 20th, it was ships and locomotives. In the 21st, it is set to be something different again: energy. It all started some 40 years ago. The discovery of almost embarrassingly large amounts of oil and gas in the North Sea suddenly turned Aberdeen from a provincial fishing city into a frenzied, bustling international centre of exploration and production.
It wasn’t all plain sailing. Cyclical downturns, notably in the mid 1980s, combined with a recognition that the riches flowing from under the seabed couldn’t last forever. But these setbacks turned into advantages when they enticed the industry into building its own dynamic, creating new products and processes and selling them into overseas markets.
It was inevitable that in expanding its energy sector into global markets, Scotland would develop close links with the United States. Historically, our fortunes in transatlantic trade have been somewhat mixed – the mention of the word Darien, for example, still sends a shudder down many Scottish spines.
Since those disastrous times, trading opportunities with the Americas have been rather more considered, and generally much more successful. Houston in Texas, which has been the world’s oil capital since the 1900s, now has extremely strong links with Scotland in general, and the north-east in particular.
All the big American oil companies – Marathon, Chevron, Apache, Transocean and ConocoPhillips to name but a few – have a presence in Aberdeen. At present, Apache is putting in a second platform next to the old Alpha BP platform in the Forties field, an investment of some $350m. This sort of spend by American companies is not unusual, making them a major contributor to the Scottish economy.
The oil and gas sector in Scotland continues to prosper despite the downturn and, to an extent, the same is true in the US, although the sinking of the Deepwater Horizon in April and the subsequent oil spill has led to a moratorium being imposed on further exploration in the Gulf of Mexico, probably until about the end of the year.
Despite this, the atmosphere in Houston remains buoyant, and there are plenty of opportunities for Scottish companies who are either already in or seeking to enter the US market. They include Wood Group, DPS Offshore, Micron Eagle Hydraulics and OEC Offshore.
The city’s can-do attitude was exemplified when its baseball team, the Astros, completed a 5-1 series sweep against the St Louis Cardinals last Wednesday.
The tie-up between the energy sectors in Texas and Scotland is a long standing one and has been hugely successful. Given the common interest, this is hardly surprising.
Scottish accents are commonplace in the streets of downtown Houston and the shopping malls in the suburbs, and there are always lots of kilts on display at the industry’s local corporate dinners. Scots have even followed the locals in learning to negotiate the Byzantine highway system in a city which stretches 70 miles both from north to south and east to west.
There is nother reason for the strong link between the two energy centres: the tenacity of Scottish Development International in helping our companies penetrate the local marketplace. SDI has offices in a number of North American cities as well as Houston – they include New York, Boston, Chicago, San Jose in California and Toronto in Canada – with the Texas operation focused primarily on energy.
One of the organisation’s biggest successes in Houston has been its local incubator unit, which helps companies from Scotland arriving in the US to settle in to the new marketplace with a minimum of problems. They benefit from stateof-the-art telecoms, flexible terms on rent and support staff as well as mentoring if they need it.
“All the majors are here on the so-called Energy Corridor in Houston, and they’re almost within walking distance of our office,” explains Tim Coolman, Vice President of SDI’s US Central region and a senior figure in the running of the operation. “In the last 13 years, we’ve had 22 Scottish companies though the incubator. There are five there now and another four have expressed a commitment to taking a unit. That shows what a powerful magnet it is,” he says.
Energy businesses from Scotland are well received in Houston: they have a track record of bringing innovation into the sector which can be applied locally. For instance, Aberdeen-based ISI’s flange separation technology which unlocks rusted pipeline sections has caused interest, as has EV Offshore’s downhole digital devices.
Over the decades, a strong network of Scots has built up in the Houston area, including SDI’s much-vaunted GlobalScot network, which calls on the services of Scottish expatriates working locally to help others. Wood Group is among the Aberdeen companies which are long established and prepared to provide mentoring help.
One initiative which has been particularly successful is the cocalled Learning Journey – a weeklong programme put together by the organisation which deals with doing business in the US.
As well as dealing with establishing a company, it provides practical advice on everything from immigration to getting a social security number. Other highlights are meetings with Global Scots and, potentially, attendance at local industry conferences where, as Tim Coolman puts it, “they usually fit like a glove.”
He adds that the US is receptive to small and medium sized companies as well as large corporations. “Other energy companies are often very happy to talk to Scottish companies with new technology to offer. The procurement process is sometimes different to that found
in the UK, but we do work hard to integrate them.”
Compared to other overseas markets, the US in general and Houston in particular is a relatively easy place for Scottish firms to move into and do business.
There are two advantages in particular – both countries share a common language, and a lot of American executives working in the oil and gas sector have spent time in Scotland and know and understand the business culture here.
‘There’s a natural connection”, says Coolman. “ We don’t have bureaucracy, rules and regulations here which will be unfamiliar to Scots. There’s also a strong Scottish old boys’ network – if we can get people plugged into that, then doing business is pretty straightforward.”
What, though, about the perception that post 9/11, America is a country which is hostile to foreigners and which has introduced impossibly tight restrictions on immigration and doing business?
‘In my experience, there really isn’t any interest in excluding people from Scotland and the UK from coming here to do business. I don’t think it’s a problem – it’s really just a formality and we have immigration attorneys who can help with the process.”
Even the Deepwater Horizon disaster, Coolman points out, has opened up opportunity for Scottish companies. They are regarded as being extremely strong on health and safety issues, and the tougher regulatory environment which will follow that particular accident will benefit from the sort of expertise they can provide.
There’s another area too, where Scottish businesses are set to do well: renewables. Only now is the US starting to move seriously into large-scale green energy, and there are major prospects in offshore wind, for instance, which are just starting to be exploited,
Scotland, with its experience in this as well as other renewables technologies, could well stand to benefit. “The technologies which Scottish companies have are set to be in demand here,” says Coolman. “It’s definitely a major opportunity for the future.”
The skyline of Houston, which has long been a magnet for international oil and gas deals. Below, the Astros sweep the board