Oil and Gas Industry Leadership Group minutes: September 2018

Attendees and apologies

Members present: 

• Paul Wheelhouse MSP, Minister for Energy, Connectivity and the Islands Scottish Government – Co-chair
• Melfort Campbell, Chief Executive, IMES Group – Co-chair
• Andy McDonald, Scottish Enterprise
• Ariel Flores, BP
• Audrey McIver, Highlands and Islands Enterprise
• Belinda Miller for Jim Savage, Aberdeenshire Council
• Colette Cohen, Oil and Gas Technology Centre
• David Rennie, Scottish Enterprise
• Deirdre Michie, Oil & Gas UK
• Esther Hayes for Peter Black, EnergySys
• Gavin Mackay, Highlands and Islands Enterprise
• Geir Tuft, INEOS
• Gordon McGuiness, Skills Development Scotland
• Hedda Felin, Equinor
• Jake Molloy, RMT
• John McDonald, OPITO
• Jon Bryce, Awilco Drilling
• Linsey Wilson, Scottish Government
• Lynn Carter, Scottish Enterprise
• Murdo McIver, Petersons
• Neil Gordon, Subsea UK
• Nigel Lees, Wood
• Paul de Leeuw, Robert Gordon University
• Phil Simons, Subsea 7
• Richard Knox, EC-OG
• Steve Phimister, Shell
• Stuart Payne for Andy Samuel, Oil and Gas Authority
• Terry Savage, Global Energy
• Tom Bryce for Ian Donald, Enpro
• Trevor Garlick, Opportunity North East
• Wullie Wallace for Tommy Campbell, Unite

Observers: 

• Andrew McCallum, Aspect Reputation
• Les Linklater, Step Change in Safety
• Jenny MacDonald, Skills Development Scotland

Apologies: 

• Andy Hogg, Scottish Government
• Scott Bradley, Scottish Government
• Grahame Smith, STUC

Secretariat: 

• Jan Peoples, Scottish Enterprise

Items and actions

1. Welcome, apologies and actions

Melfort Campbell welcomed all to the meeting and thanked everyone for their attendance.

Apologies noted as above.

The previous minute (ILG meeting 11 May 2018) was approved. Actions from the meeting were noted as complete.

Ministerial update

The Minister thanked everyone for joining and expressed his pleasure in attending the second meeting of the refreshed ILG, stating that ILGs play an important role for engagement between industry, government and the public sector. They continue to make a positive contribution to improving economic outcomes for the sector, addressing cultural and behavioural issues within the industry and ensuring awareness of the key challenges facing businesses and workforce.

The Minister believes that this refreshed group can lead the way in driving forward changes and opportunities in the sector, for example, subsea, decommissioning, diversification, international growth and future skills challenges. The Minister stressed that the Oil and Gas workforce is one of the strongest and most valuable and it is imperative that they are continued to be valued.

The Oil and Gas UK’s latest Economic Report indicates that there is an improved outlook for the sector since the oil downturn, however the report reinforces that there are still significant challenges surrounding the Supply Chain, increasing exploration (this year expected to be the lowest exploration activity since 1965) and the ongoing uncertainty surrounding Brexit.

The Scottish Government, through the Programme for Government published at the beginning of September, reiterates commitment to the sector, recognising both the significant opportunities remaining and their continued support of Maximising Economic Recovery from the North Sea.

2. Workforce engagement

The Minister expressed an interest in hearing from the group where they see challenges or examples of good practice which should be shared, and if there are initiatives which are currently useful, for example, the Workforce Engagement Toolkit, but which has not been widely adopted by industry.

There is a role for the group in workforce engagement as custodians of the EJTF workstreams, for example, workforce engagement transitions across talent and skills retention, supporting our people, culture change and leadership, and balanced messaging. It is up to the group to define where it can add value, acting within its remit.

Steve Phimister: a well engaged workforce will be a safe and effective workforce, and it is important to focus on lessons learned, both effective and not effective. Quality at senior level requires constant engagement and working together with workforce to ensure that all are aligned on intent.

Jake Molloy: agreed with Steve. Unions, as employee representatives, are in contact with various groups, for example, the Offshore Contractors Association, trade associations and the subsea diving industry group. However, the message in those forums differs from Steve’s perspective. Regarding workforce engagement, there is the feeling of tension between operators and the supply chain-undermining best practice.

In general, the workforce are uncertain about the future and unaware of Vision 2035. There is frustration that industry does not always grasp that effective workforce engagement is in the common interest.  Companies have different approaches and there was the need for a standardised approach, with the Norwegian approach being cited as an example.

Wullie Wallace: within the present climate there is little evidence of workforce engagement.  During the downturn, there were changes to employment terms but, as conditions improve, the workforce do not see an improvement to the amended terms causing hardship. Company response that this was continued efficiency measures was unhelpful. Health and safety is still a problem offshore. People are reluctant to raise safety issues for fear of being removed from installations. 

Deirdre Michie: Brief presentation on OGUK’s workforce engagement. 

Key points included:

• background to the OGUK Workforce Engagement Group and hub
  • talk specifically about engagement initiatives and ways of working
  • other areas discussed, including health and safety
  • onshore and offshore workforce engagement
  • sharing good practice
  • leadership initiatives, attended by OCG
  • providing materials, re economic report, together to use in a positive and constructive way
• OGUK and TU engagement
  • quarterly and 6 monthly meetings with trade unions
  • talk constructively and robustly about issues
  • now working together to remind people of guidelines 
  • culture and health and safety, need to get good traction.
  • draft terms of reference, need to work with unions to make sure it is effective  

Les Linklater: agreed with previous speakers, advising that the workforce was not a single entity. The downturn had impacted everyone and there was a need to deal with the hygiene factors of security and survival first. He emphasised that merely listening to people is not good workforce engagement and that there needed to be tangible outcomes. Conventional health and safety is good; however, the average worker has little concept of the wider environment, he also pointed out that mental health and wellbeing is also important. The workforce does not have the confidence to raise issues with supervisors.

Subsequent discussion included:

• the need for Vision 2035 to be understood
• how do we celebrate our successes better
• concern over competitiveness
• more investment in the basin
• challenge and opportunities in technology
• transition period for the way we work
• skill sets and training
• face to face engagement and feedback
• appropriate level of decision making

Action:

• 2.1 Ascertain current actions being taken – Linsey Wilson

3. Supply chain sub-group progress and update on late payment work

Supply chain sub-group progress update

The role of the Sub-Group was to allow supply Chain representatives from the ILG to have a dialogue and come forward with ideas to help strengthen the voice of the supply chain and to suggest ideas to strengthen relationships with the ultimate aim of helping MER. A number of potential actions and areas of focus were suggested:

• understand constraints/difficulties
• highlight case studies
• access and unlock future/new investment/capability
• increase awareness of Supply Chain capability

Deirdre Michie advised of the Sharefair Event in November which brings operators and the Supply Chain together to share what they do.

The Group discussed the following:

• maximising the Scottish footprint
• KPIs – are they needed
• investment in skills, upskilling and reskilling for the future
• competitiveness in the UK and in the continental shelf
• importance of cost, efficiency, Fiscal regime
• data not being used
• different technology for the future

Melfort requested that the sub-group concentrate on:

• how to make the supply chain more competitive
• how to interact with others, for example, the Technology Leadership Board
• how can to change the culture from ‘the way we have always done it'

There was an action upon David Rennie to come back to the next ILG to flsh out some of the ideas and to come up with a suggested action plan.

Deirdre Michie: brief presentation on late payment work.

Key points included:

• cash flow: not just operator issue; a range of influences
• operators response: 19 out of 35 replied; 85% of invoices paid; invoices being rejected due to minor issues
• Tier 1 response: 7 out of 35 replied; 15% of invoices not compliant; rejected due to minor issues
• conclusions and next steps: Tier 1s doing work on behalf of operators; looking at reference to payment terms within the Supply Chain Code of Practice (currently being revised) to make it meaningful                        
• 80% of T1 respondents was poor
• transparency; how can this be increased
• right to interest
• relationship problems and cultural issues
• legislative approach

4. Energy jobs taskforce, skills challenge and workforce dynamics: update

Summary papers previously circulated of the main actions and support currently being undertaken under the Post Taskforce legacy workstreams.

Three cohorts of the Future Industry Leadership Programme, now in its third year. Companies are finding the programme beneficial with unprecedented uptake.

Thanks to Subsea UK for promoting the programme.

SE are also involved in the OGUK Efficiency Taskforce, with a specific subsea event in November, developed in collaboration with Subsea UK and Oil and Gas UK, to raise the profile of Subsea Engineering. 

SE support of the supply chain projects through attendance at the Nippon Foundation event in Japan.

Workforce Dynamics Report- phase 2 of the work undertaken will look at the skills and training challenges from a strategic perspective. 

John McDonald- OPITO are working closely with SDS to support skills requirements, upskilling and re-skilling existing workforce. 

OPITO is also working with RGU and SDS to understand supply chain demand in terms of education and training.

Apprentice uptake this year was 95, up from previous years. However, compared to a previous high of 2000 applicants for 120 posts, this year there were 800. 

Oil and Gas Industry now must compete in a broader energy skills market. 

Transition Training Fund- The Fund is now in its final year. Customer feedback gave an overall satisfaction rating of 90%.

5. Sector deal update

Trevor Garlick updated the group on the Sector Deal.

Key points included:

• focus of the deal
• transformational technology (more automation)
• underwater centre
• decommissioning

Three trends are emerging:

1. domestic opportunities
2. outside oil and gas
3. internationalisation 

Decommissioning support is being funded from the Aberdeen City Region Deal.

Requirement to secure money and support from SE and Subsea UK to progress transformational technologies, underwater hub – which will go beyond oil and gas, for example, subsea, defence, mining. 

Trevor, with support from SE and other partners continuing to refine the business case and engaging with the UK Government to progress

Action:

• 5.1 Sector Deal update slide to be circulated to the group – Trevor Garlick
• 5.2 Scottish Affairs video link to be sent to the group

6. AOB, including future ILG agenda items

Future Agenda suggestions:

• Technology Leadership Group presentation
• Scottish Energy Strategy
• Brexit
• how we want to communicate Vision 2035
• key messages
• exports
• key events (SDI)

Date of next meeting: 11 December 2018.

Oil and Gas Industry Leadership Group