Few prob­lems, more an­swers from Hous­ton

Tex­a­sis truly the land of op­por­tu­nity for Scot­tish com­pa­niesinthe­grow­ing en­er­gy­sec­tor, writes An­drewCol­lier

The Herald Business - - Going global -

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

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