Activity Survey 2015

The UK upstream oil and gas supply chain can be split into five broad areas of activity: reservoirs, wells, facilities, marine and subsea, and support and services.

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Figure 41: UK Upstream Oil and Gas Supply Chain Sub-Sectors

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Tier 1: E&P Companies (End User)

Integrated Majors Large/Small Independents

Energy Utility Companies

Non-Operating Companies

Exploration Companies

Supply Chain Categories

Reservoirs

Wells

Facilities

Marine and Subsea Support and Services

Tier 2: Main contractors and consultants

 Seismic data acquisition

 Well services contractors  Drilling contractors  Well

 Engineering, operation,

 Marine/subsea contractors  Heavy lift/pipe lay contractors  Floating, production, storage units

 Catering/facility management  Sea/air transport  Warehousing/ logistics  Communications  Recruitment  Training  Health, safety and environmental services  Energy consultancies  IT hardware/ software

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and processing contractors

maintenance and decommissioning contractors

engineering consultants

 Engineering consultants  Structure and

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topside design and fabrication

Tier 3: Product and services suppliers

 Geosciences consultancies  Data

 Drilling

 Machinery/

 Subsea

and well equipment design and manufacture

plant design and manufacture

manifold/riser design and manufacture  Marine/subsea equipment  Subsea inspection services

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interpretation consultancies

 Engineering support contractors  Specialist engineering services  Specialist steels and tubulars  Inspection services

Components

 Seismic

 Laboratory services

Sub-contractors and sub-suppliers

instrumentation

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Source: EY

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The following considers some of the broader impacts of current market conditions on each of these sectors. Clearly, many companies are already adjusting their businesses to accommodate the current outlook; many are looking to make operating efficiencies, reduce headcount or, at the least, rebalance the mix between staff and contractors within their workforce. Whilst this has led to concerns about the risk of losing skilled personnel, employers are seeking to balance near-term action with mid-term expectations for the UKCS. Supply chain confidence in the sustainability of the UKCS and its ability to attract new investment funds in the current environment will be crucial. In the meantime, for those companies that can do so, geographic and technical diversifications are being used to offset the impact of reduced business from the UK offshore oil and gas industry. Reservoirs This is a small, but nonetheless critical, segment of the industry. Activity within this sector is dominated by demand for their services from E&P companies, particularly from the UKCS and North Sea, which are their core markets. The need to deploy high quality seismic data using the latest 3D techniques is crucial both to improve recovery from existing fields as well as to promote fresh exploration activity, but demand for services from this sector are under pressure at this time. A number of companies report that they have not yet been affected by the current decline in oil price due to ongoing seismic work. However, these companies anticipate their order books to decline later in 2015, and, in anticipation, have halted all non-essential spending. Importantly, a number of industry initiatives to mitigate the fall in demand within the sector are being progressed with government. These include the preparation of a 21st Century Exploration Roadmap to encourage fresh exploration and more targeted seismic surveys in under-explored areas of the UKCS.

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