RGU Aberdeen Business School Journal 8 Sept 2015

ABERDEEN BUSINESS JOURNAL 2015 • Page PB ABERDEEN BUSINESS JOURNAL 2015 • Page 1

Issue 8

Aberdeen Business

JOURNAL50th

Anniversary issue

Aberdeen Business School 2015

ABERDEEN BUSINESS JOURNAL 2015 • Page 2 ABERDEEN BUSINESS JOURNAL 2015 • Page 3


Contents Page EDITORIAL 4 The Dean’s Report

Professor Rita Marcella, Dean of Aberdeen Business School BUSINESS PERSONALITY PROFILE 6Malcolm Webb, Former Head of Oil & Gas UK Interviewed by Hayley Lockerbie, Research Assistant, Aberdeen Business School MANAGEMENT THEORY AND PRACTICE 10Forecasting Oil Price Volatility Xin Zhang, Lecturer in Accounting and Finance, Aberdeen Business School BUSINESS BASICS 14 Taxation of UK Oil and Gas Companies Professor Alex Russell, Head of Department of Management, Aberdeen Business School and Chair of Oil Industry Finance Association SPOTLIGHT 16 50 Years of Economic Development in Aberdeen and the North East Gordon McIntosh, Former Director of Economic Development, Aberdeen City Council THE ENTREPRENEUR’S SKILL 22 The Career of Peter Bruce as Chief Executive Officer of Entier Hayley Lockerbie, Research Assistant, Aberdeen Business School ABERDEEN BUSINESS SCHOOL TIMELINE 26 PRACTICE OF ENTREPRENEURSHIP 28Decommissioning in the North Sea Nigel Lees, Head of Decommissioning, Wood Group PSN MULTINATIONAL MIRROR 34 50 Years’ of North Sea Oil and Gas Activity at BP Trevor Garlick, North Sea Regional President, BP E-BUSINESS 38 Billion Dollar Matchmaker Jacqueline Christie, Communication Manager, Thorpe Molloy Recruitment Ltd STATISTICAL CORNER 42 Overview of the Offshore Wind Industry Professor Paul Mitchell, Offshore Renewables Institute ABERDEEN BUSINESS SCHOOL ALUMNI 46 Dean Hunter, Founder of Hunter Adams Ltd Dean Hunter, Founder, Hunter Adams Ltd ABERDEEN BUSINESS SCHOOL PLATFORM 50 The Role of the Alumni Office of Robert Gordon University Claire Shaw, Head of Alumni Relations, Student Services, Robert Gordon University


Writing the editorial for the annual Aberdeen Business Journal this year is a particular pleasure as 2015 marks the 50th Anniversary of the Aberdeen Business School. In 1965 a Head of Department was appointed to the Department of Business Management Studies, a three year full-time undergraduate course was established and the department for the first time had its own premises. These three actions consolidated work which had been ongoing for more than a decade to establish the institution now known as Aberdeen Business School.

In 1980 the Business School moved from the King Street buildings to the Hilton Campus, sharing the accommodation with Aberdeen College of Education, and in 1991 some staff and students moved to Viewfield Road in Kepplestone. In 1994 the Head of School, David Sagar, adopted a strategic focus on oil and gas related business – a focus which continues to this day.

On 3rd April 1999 the current Aberdeen Business School building was officially opened by Sir Ian Wood and the Garthdee campus continues to develop; with the official opening of the new Sir Ian Wood building earlier this year by HRH The Princess Royal.

2015 is also of course significant for the oil and gas industry; the first British gas was found in the West Sole field by the BP jack-up drilling rig Sea Gem 50 years ago in 1965. Each year the Aberdeen Business Journal presents a business personality profile and it seemed more than appropriate this year to speak with Malcolm Webb, the former Head of Oil and Gas UK. As the representative body and trade association for the offshore oil and gas industry, Malcolm has steered Oil and Gas UK through periods of both boom and bust, overseeing an increased membership and significant profile raising of the industry in the UK and globally. Malcolm shares with us his approach to management during his career and his plans for retirement since handing over the reins in May this year.

In 2015 the oil and gas industry has experienced more challenging times with a fluctuating oil price and downward trends in investment levels to match. Aberdeen Business School Lecturer in Finance, Xin Zhang, explores the effect of this on China, with interesting consequences from both economic and political perspectives.

Professor Alex Russell, Head of Department of Management at the Business School, offers a history of oil and gas taxation. The complexity of the system is highlighted, along with the staggering contribution the industry has made to the UK Government over its lifetime. Additionally Alex contemplates the role of taxation in securing the future of the UK Continental Shelf [UKCS].

With both Aberdeen Business School and the oil and gas industry celebrating their 50th anniversaries, Gordon McIntosh, former Director of Economic Development for Aberdeen City Council, takes a retrospective look at the past 50 years of economic development in Aberdeen and the North East in this year’s ‘Spotlight’. Both oil and gas and education of course play a prominent role in this, but Gordon highlights the diversity and resilience of the area over the period, emphasising also the role of the food and beverage sector, textiles and paper production. Gordon speculates on the next 50 years of economic development in the North East, suggesting that with careful management the area can have an economy focussed on its land, rivers and sea.

The enterprising nature of the North East is exemplified in an article on Peter Bruce of Entier. Also celebrating a special birthday this year, Peter has displayed his Entrepreneur’s Skill in the founding of the successful catering and hotel services company supplying the global offshore industry. From modest beginnings as a ‘simple chef’, Peter, originally from Fraserburgh, has taken Entier to an impressive place. In 6 years the business has achieved an annual sales revenue of £46 million and employs 750 people. Peter shares this success both with his employees and the wider community, with the pioneering apprenticeship competition of ‘Fresh Olives’ for school leavers, and engagement with many local charities.

Nigel Lees of Wood Group PSN writes on offshore decommissioning in the Entrepreneurship Practice section of the Journal, setting out the current climate of this significant opportunity for the UKCS, whilst highlighting Wood Group PSN’s approach. Collaboration is essential to ensure the opportunities of decommissioning are maximised by all in the UKCS; by both importing and exporting talent globally to protect the longevity of the basin.

Trevor Garlick, North Sea Regional President of BP, reflects on 50 years of BP North Sea Oil and Gas activity. The company’s history in the North Sea has run in parallel to that of Aberdeen Business School and the two organisations have developed a close working relationship over the years. BP has harnessed the power of technological innovation to break new ground and maximise recovery from the diverse fields of the UKCS.

This year’s Journal includes a contribution from Paul Mitchell, Founding Director of the Offshore Renewables Institute, which is a tripartite organisation comprising the universities of Aberdeen, Dundee and Robert Gordon. The three institutions work together to focus on the development and delivery of solutions for the offshore wind industry. Paul offers an overview of the UK offshore wind industry, the role of the institute and the future of wind, wave and tidal resources in Scotland.

EDITORIAL

The Dean’s Report Professor Rita Marcella, Dean of Aberdeen Business School


RGU is renowned for its successful graduate employment rates and employability and recruitment is an area of working life which has not been left untouched by the ‘digital transformation’. Jacqueline Christie, Communication Manager at Thorpe Malloy Recruitment, considers the recruitment process in the new digital age. E-recruitment has brought to the forefront the recruiter’s required capacity to analyse data and manage information, both key to identifying candidates and making the right match.

We hear from one of our Business School alumni, Dean Hunter, Founder of Hunter Adams Ltd, who reflects on his journey to found a company listed as the top Scottish Company in the ‘Times Top 100 Best Small Companies To Work For’ in 2015. After graduation Dean’s career began by following a childhood dream of working in the police force. He then moved into Human Resource management utilising the skills he developed both during his degree at RGU and work experience. An approach of continual learning and development led Dean to excel and eventually become a member of the executive committee of one of the leading oil service companies before founding Hunter Adams Ltd.

Claire Shaw, Head of Alumni Relations at RGU, describes the role of the Alumni Office. Students nowadays have high expectations of their universities and, as well as having modern buildings, placement opportunities and professional accreditations, students seek direct engagement with alumni. As mentioned RGU has an enviable graduate recruitment rate and the Alumni Office do a great deal to ensure that a connection between students and graduates brings benefits to both.

We have included a flavour of the past fifty years in a picture spread in this years journal. This has been a year of celebrations at Aberdeen Business School in recognising the achievements of the past 50 years and we have in this Journal sought to recognise and commemorate some of those – in particular to recognise our debt to current and former students and to current and former staff. This year a particular thank you must be given to the organising committee of the 50th anniversary celebrations, with a special mention for Edward Pollock, our Undergraduate Governor and President (Communications and Democracy) for the 2015-2016 academic year. Congratulations also to the student Aneliya Kalcheva, designer of the winning logo to brand the celebrations for 50 years of ABS. Thanks to Hayley Lockerbie for all of her work in bringing together this issues articles. Finally a thank you is given to Brian Scroggie as a member of staff for his significant contribution to the Journal – from having the initial idea 10 years ago and for his efforts in bringing together and editing the content for every issue.

Here’s to the next 50 years!

“THIS HAS BEEN A YEAR OF CELEBRATIONS AT ABERDEEN BUSINESS SCHOOL IN RECOGNISING THE ACHIEVEMENTS OF THE PAST 50 YEARS AND WE HAVE IN THIS JOURNAL SOUGHT TO RECOGNISE AND COMMEMORATE SOME OF THOSE.”


BUSINESS PERSONALITY PROFILE

Malcolm Webb Malcolm Webb is the recently retired

Chief Executive Officer [CEO] of Oil &

Gas UK, the leading trade association

for the UK offshore oil and gas

industry. A graduate of Liverpool

University and a solicitor by profession,

he has extensive senior management

experience in both the upstream and

downstream oil industry.

“I AM PRETTY OUTGOING IN NATURE AND I ENJOY ENGAGING WITH PEOPLE, BOTH INDIVIDUALLY AND IN GROUPS. THAT SIDE OF MY CHARACTER HAS BEEN USEFUL, BECAUSE SUCCESS DEPENDS UPON TEAMWORK.”


Malcolm began his oil industry career with Burmah Oil in 1974 and went on to work in a series of senior roles for the British National Oil Corporation, Charterhouse Petroleum Plc and PetroFina SA.

Immediately prior to joining Oil & Gas UK in February 2004 (when it was called the UK Offshore Operators Association, or UKOOA), Malcolm spent three years as Director General of the UK Petroleum Industry Association, representing the UK oil refining and marketing sector. At Oil & Gas UK he led the organisation through a major process of change to make it the leading and only trade association open to all companies working in the UK offshore oil and gas industry.

In 2012 Malcolm was awarded an honorary Doctorate by Robert Gordon University in recognition of his services to the UK oil and gas industry and in 2013 he received an award for Significant Achievement from the Society of Petroleum Engineers.

Malcolm is married to Lesley. They have three grown up children and two grandsons. Since retiring Malcolm has wondered how he found the time for work.

Which personal qualities and skills have been significant in your executive roles in industry? “I have tried to be circumspect and appreciate that the question is as important as the answer. In other words you have to have a clear idea of why you are trying to progress, and what the challenges might be before you put a plan into place. I would like to think that I have always been circumspect in what I have done in my career, however I know I have not been so all of the time. I know I have a tendency to be impetuous and to charge ahead and so it has been important for me to try to restrain myself and better understand the context within which I was working.”

“I think the legal training helped. You have to be logical to be a reasonable lawyer. I don’t think I was a brilliant one but I was a reasonable one. It also does teach you something about the importance of precedent and context. Maybe its downside is that it can trap you too much in history and not allow you to be as ambitious as you might be. You have to make sure that precedent and circumspection don’t make you too conservative with a small ‘c’.”

“I am pretty outgoing in nature and I enjoy engaging with people, both individually and in groups. That side of my character has been useful, because success depends upon teamwork. It is extremely important that you don’t delude yourself into thinking that you’ve got all the answers and that you don’t need other people’s complementary skills to help you achieve your commercial goals. Teamwork skills are immensely important.”

Have you had much introspection since retirement? “Like anybody who is honest about it, when thinking back over their career, I can see that mine is just littered with mistakes. Now I don’t think that’s a problem, as long as you learn from those mistakes and don’t go on repeating them. Many of the mistakes I made along the way turned out to be great learning experiences for me and also led me to be more reflective as I moved forward.”

How would you describe your management style? “I hope I have been straightforward, open, understanding and inclusive. However, at the same time, I do understand that I have a slightly adversarial nature. If I believe in a cause then I will push the door quite firmly. In turn I expect other people, if they disagree with me, to be equally resolute in their argument as I believe honest debate can be a very useful and productive way of making progress. Provided everyone is open and honest in expressing their views about things, it is possible to get a broader inclusivity through such a process of debate.”

“Having said that, I can appreciate that it’s all fine and well for me, as a CEO, to say that but it can be quite daunting and take an awful lot of courage for the other people in an organisation to speak up and disagree with the Chief Executive. Therefore you have to be very careful that you are allowing people the right to disagree with you and to express their own views. A CEO is in a very powerful position and needs to be careful not to go on a massive ego trip. The members of a team should be working in harmony with the CEO, toward an agreed goal, not just following on behind without thinking or because they are afraid to do otherwise.”

Do you have an inspirational figure? “Very many. I’ve been inspired by lots of people throughout my career. I can think of a whole host of people I have taken inspiration from and for all sorts of different reasons. Many people have had a school master or mistress who has inspired them and I was no exception, but in truth, the most inspirational people in my life were my parents, Ronald and Isabella, who died many years ago but who were both very remarkable people from whom I still draw great inspiration. A loving home in childhood provides the very best of foundations for life.”

“I think you’ve got to keep your eyes and ears open. Great people are all around you. Equally I have also come across people whom I have really not enjoyed working for or being in the company of. Mercifully they have not been many nor lasted too long and they have certainly been far outweighed by the positive influences I have been lucky enough to encounter throughout my life.”

In terms of your own career, has there been a tipping point? “My career had three main tipping points. The first came when I was working as a young lawyer in the oil industry. It was the near collapse of my employer, the Burmah Oil Company, and the acquisition of its North Sea assets by the new British state oil company, called the British National Oil Corporation (BNOC). That plunged me into a whole new set of professional experiences which were probably premature for me, as I was very young and inexperienced at the time. In its first couple of years BNOC found it difficult to attract people from the industry to work for it. I suddenly found myself doing some high level and really quite exciting legal work, including drafting pro forma operating agreements for the North Sea and the like. “


How do you think skills are best acquired at different stages in a person’s career? “I think it’s good to acquire skills through learning on the job. If I think back across my career I have been learning in every job that I’ve done. Having said that, it is necessary to have some “academic” knowledge too. I think that, in a number of the jobs I had, it would have been a good idea if I had been given a little bit more training before I went into the role. That might have avoided some of the sillier mistakes which I made. However, whilst some preparatory training is a very good idea I still think the most powerful way of learning is “on the job”.”

On a personal level, where do you see your own future and how would you like to spend your retirement? “Mostly in the garden, and with my family and friends. I had a great working life, I was fulfilled by it, but I don’t want to be finally defined by it. It’s for others to take the torch on now. Luckily I am an active 66 year old but let’s face it I haven’t got that many decades left and I would now like to spend those which remain in somewhat more self centred pursuits. So it’s a thankful goodbye to the executive world as I look to spend my time with Lesley, my family and my friends, if they can put up with me.”

Do you still have any other aspirations relating to non-industry? “Besides being a better husband and father, getting my garden up to scratch, going to the theatre, the opera and lots of cricket and rugby matches, I think I would probably quite like to write. But what? Well I like reading poetry. So I think I’m going to spend some time writing poetry, which I’ll be too embarrassed to show anybody but might just be good for my soul. Maybe I will also pen some more reflective pieces upon work and maybe even the industry and its management but if so, the emphasis will be on personal reflection rather than instruction.”

How important is it to relax and escape from pressure and how did you cope with periods of stress? “It’s very important indeed and I’ve not always coped with it very well. My wife and my family have been hugely important in helping me realise that it is important to see things in a broader context. Sometimes in business we become too fixed on the commercial problem at hand and fail to put things into a proper context. That sort of a fog can lead to bad decisions being made. So it’s very important to be able to switch off, step back and look at things in a broader context. I wasn’t always good at that, particularly in my younger years. I’m something of a worrier by nature and could become overly engrossed in the issue or the problem of the moment. It’s hugely important to appreciate life outside of business and that you make the time to enjoy it. As the saying goes - “All work and no play makes Jack a dull boy” - and to that I would add, “and an unhappy one too”.“

“The next big tipping point came two employers down the line when my then employer was taken over by a large European integrated oil company, and that company decided to develop my career experiences away from law and into general management. That was a fascinating period for me. It was uncomfortable at times as I found myself dealing with matters not within the realm of my professional experience, and I had to learn very fast on the job. Actually it led to me entering the field of HR and eventually becoming the group’s director of HR, which was a very interesting and somewhat unusual development for a lawyer.”

“My last big tipping point came when that company itself was taken over. There was a huge amount of corporate consolidation going on within the industry at the time and I took the opportunity to strike out in a different direction and I ended up finding the world of trade associations! I was very fortunate to be asked to take the lead at the UK Petroleum Industry Association (UKPIA), where I found that my very mixed bag of qualifications and experience fitted rather well. I certainly enjoyed the public speaking and, as I’m very enthusiastic about the oil industry, I was enthused to be an advocate for that industry. Furthermore I had acquired a wide range of business skills and so it was fun to be able to put those all into practice in order to manage and develop the business of the trade association itself. When a couple of years later the bigger UKOOA (now Oil & Gas UK) job came along I was a very eager applicant for it, as it was a bigger job and my main passion was for the exploration and production side of the business.”

To what extent did you make your own opportunities and to what extent were you lucky? “Luck or chance and circumstance, comes into it a lot. It seemed bad luck when the Burmah Oil Company hit such troubles (and it was bad luck for an awful lot of their investors) but for me it turned out to be extremely fortunate to have my career pushed forward in that unexpected way, working at the really sharp end of the industry in the new NOC.”

“I was propelled along by the second ‘tipping point’ due to a corporate acquisition and found myself in an entirely new industrial environment that I liked and could respond to. It was a good sort of challenge but not one that I had planned.”

“As for the trade association work, whilst I had determined it was time to do something very different, I had no idea what that should be. Then an old business acquaintance asked me to do him a favour and put my name into the hat for the UKPIA job and without much thinking, I did. At the interview I found myself confronted by the prospect of a new role which I suddenly realised could be very interesting - and indeed it turned out to be so. It also led on to the very best job I had in the whole of my career, the last one, at Oil & Gas UK. I’d love to say that I had planned it all but I didn’t. It was really just chance and circumstance.”

“But I have no doubt that my luckiest experience was in meeting and eventually marrying Lesley, who gave me a real purpose to try and succeed and who has been the most important and influential figure in my career, and indeed my life.”


Where are you on the calm and volatile spectrum? “I can be pretty volatile. Not volatile in the sense of completely losing the plot but I do feel quite passionate about the oil and gas industry. One of the reasons I was attracted to the trade association side was that I believe our industry is pretty poorly treated in politics and the media. That might seem an odd thing to say about an industry as big and strong as ours but I do think it is misunderstood and I did enjoy being an advocate for it, and at times being pretty forthright in that advocacy. Again, acknowledging my tendency to take an adversarial approach, that could make me somewhat fiery at times but I was never intentionally rude or aggressive.”

What is the most important lesson you have learned in your career? “In the final analysis it doesn’t come down to money, to plant or to machinery and in the oil business it doesn’t even come down to oil and gas bearing strata. I remember someone very senior once telling me that in the end it all comes down to tax. How wrong can one person be? It seems very clear and apparent to me that in the end it all comes down to the one magic ingredient without which nothing happens - in the end it all comes down to the people. Unless you get the people issues right you might as well forget it.”

What advice would you give to someone entering the oil and gas industry today? “Enjoy yourself and look forward to a long and fulfilling career, because you are joining a fine industry which has a truly great history behind it and a vitally important future ahead of it.” “IT SEEMS VERY CLEAR

AND APPARENT TO ME THAT IN THE END IT ALL COMES DOWN TO THE ONE MAGIC INGREDIENT WITHOUT WHICH NOTHING HAPPENS - IN THE END IT ALL COMES DOWN TO THE PEOPLE. UNLESS YOU GET THE PEOPLE ISSUES RIGHT YOU MIGHT AS WELL FORGET IT.”


MANAGEMENT THEORY AND PRACTICE

THE OIL PRICE CRASH AND CHINA

INTRODUCTION

On 14 August 2015, the price of oil future contracts [September 2015] on the New York Mercantile Exchange fell to $41.88 a barrel and the global price benchmark of Brent crude oil futures [September 2015] dropped to $49.32 a barrel on London’s International Commodity Exchange. A similar price was last seen six years ago on 4 March 2009, when the world economy was struggling in the deepest financial crisis since 1929.

The oil price crash started in June 2014, when the benchmark Brent crude oil futures contract [July 2014] was traded at $114 per barrel in the market and reached a trough of $46 per barrel by January 2015. This collapse was widely recognized as a major breaking point for the oil and gas industry. The futures market has predicted the price will push many high-cost operators in the industry out of the market. When the Brent price slowly increased to $66 per barrel in May 2015 the industry thought that the price has finally reached the bottom and the worst was over. However, major oil exporters in the USA, OPEC and Russia continued to supply more crude oil to the market and demand remained flat mainly due to the influence of China’s lower growth rate. These factors plus a sudden 2% decline in the spot exchange rate of the Chinese Yuan gave rise to a second round of oil price decline. The Brent crude oil futures price [September 2015] dropped to $49 per barrel, and West Texas Intermediate (WTI) futures price [September 2015] hit $45 per barrel in the first week of August. On 16 August, WTI price further fell to $42.50 and the Brent price was $49.03 (Figure 1).

Xin ZhangLecturer in Finance, Department of Accounting and Finance, Aberdeen Business School

Figure 1: Crude Oil Price 1985 - 2015

This crash in oil prices has caused a dramatic impact on the oil industry and economies all over the world. Oil export countries are struggling to maintain their public spending as their state tax revenues were based on high oil prices. Many oil companies started to cut costs by not accepting new contracts and by changing work plans. Many investment projects were shelved and tens of thousands of people lost their jobs.

Analysts still predict that oil prices will continue to fall in the near future and China has played one of the key roles in this in the world market. This article will focus on investigating the main causes of the recent oil price crash and its impact on China.

ABERDEEN BUSINESS JOURNAL 2015 • Page 10


MANAGEMENT THEORY AND PRACTICE

THE OIL PRICE CRASH AND CHINA CAUSES OF OIL PRICE CRASH

1. Supply and Demand

From the early 2000s, the oil price was mainly driven by the forces of supply and demand. Figure 2 reviews the difference between the world’s crude oil supply and demand and the WTI price between 2003 and 2015.

Figure 2: World Liquids Relative Surplus or Deficit and WTI Crude Oil Price adjusted using the Consumer Price Index (CPI) to real February 2015 U.S. dollars, 2003-2015.

Supply

In the past five years, crude oil production in the USA has jumped by 75%, while Brazil and Canada have also increased their oil production by 24% and 42% (Bloomberg, 2015). Due to the dramatic jump in the U.S. domestic oil production, Saudi, Nigerian and Algerian crude oil that previously was sold in the USA is now being diverted to new markets in Asia. Meanwhile, Russia has been pumping more oil on to the international market.

Apart from the above countries, Libya has recovered its oil production while Iraq’s oil output will be doubled in 2015 compared with 2014 (Bloomberg, 2015). Also, the recent USA - Iranian nuclear project deal will allow delivery of more Iranian oil exports to the market. According to the EIA report (2015), this oil production increase in these main oil export countries has overfilled the market and is dragging down oil prices.

Demand

Basic economic theory states that, when demand is decreasing while supply remains the same, the product price will drop. As the global economy is slowing down, demand for oil in the market will drop and unavoidably the oil price will decrease.

On the one side, China’s economic growth in 2014 and 2015 was not at the high rates experienced in previous years. During an interview with the BBC, Danny Gabay of Fathom Financial Consulting claimed that the fall in oil prices was “overwhelmingly, predominantly, if not entirely, a demand shock. It’s China slowing down.”(BBC, 2014). In addition Carsten Menke suggests “when China’s economy wobbles, the oil market is quick to respond…commodity markets are signalling broad-based concerns about Chinese demand and the government’s ability to stimulate growth”. (Financial Times, June 2015).Based on supply and demand theory in economics, product

prices will drop when supply increases and demand remains the same. The international crude oil market not only faces an increase in supply but also suffers from a drop in demand. The steady upward trend in oil prices since the early 2000’s caused a massive increase in new oil project investment, which led to a huge boom in oil production. A high oil price makes it possible to cover the extensive cost of oil production projects in shale oil in the USA and sand oil in Canada.

Meanwhile, the economies of Europe (apart from Britain) and Japan are weakening (IEA, 2014), which indicates a lower level of oil demand. Therefore, based on the prediction from Figure 3, supply surplus will carry on to 2016, which indicates possible future downgrade movement on oil price.

Source: http://www.artberman.com (accessed on 10th Aug 2015)



4. Dollar/Yuan Exchange Rate

The crude oil price is quoted in U.S. dollars globally. In order to reflect the true price, a strengthening U.S. dollar will lead to lower local currency oil prices. Since 2014, the dollar has become stronger due to various reasons (Quantitative Easing, etc.). On 13 March 2015, the U.S. dollar hit a 12-year high against the Euro, which caused a huge decline in the oil price in Eurozone countries: “It’s a market under tremendous pressure, and the dollar has been the key driver for everything, because when the dollar is strong, the value of commodities fall” (Washington Post, 2015). On the other hand, China’s central bank devalued the Yuan by 2% against the US dollar on 10th August 2015 (BBC, 2015). A weaker Yuan means dollar-priced oil is more expensive locally, which may have a negative effect on oil imports of China which is the world’s second largest oil consumer. With the background of an oil supply surplus, the market started to panic and on 16 August 2015, WTI price fell to $42.50 per barrel and the Brent price hit $49.03.

The above has reviewed the main causes of the recent oil price crash. There are many other reasons such as technology development, the battle between oil and other renewable energy, hedge fund investment, political motivation, etc. which will not be investigated here.

Figure 3: World Liquids Fuels Production and Consumption Balance.

2. Shale Oil in USA and Sand Oil in Canada

In oil production, the expenses include capital costs (sunk costs spent in the past), operating costs (current spending to deliver oil out of the ground) and overhead costs (company fixed current cost). Expected well life and the production curve over time are other crucial elements that must be considered before investing in a project. Different fields have various mixes of costs.

Shale oil is one of the main reasons behind the massive increase in U.S. oil production together with sand oil in Canada. These sources are called ’the oil production revolution‘. However, shale/sand oil production cost is relatively high due to the techniques employed. Since the oil price crash many shale/sand oil production projects (high leveraged) have been shelved or cancelled in line with OPEC’s wishes. However, the USA shale oil market has unexpected resilience which “has proved itself to be more immune to lower oil prices than many analysts expected” (The Week, July 2015).

3. Organisation of Petroleum Exporting Countries [OPEC]

Another reason behind the oil price crash is OPEC’s refusal to cut its daily production output. According to OPEC’s monthly Oil Market Report: “As drilling subsides due to high costs and a potentially sustained low oil price, a drop in production can be expected to follow, possibly by late 2015”(OPEC, 2015). Saudi Arabia, one of the world’s leaders in both crude oil production and exports, does not want to lose its market share, which has happened before. With the lowest oil production costs in the world (around $4 to $5 a barrel), Saudi Arabia is able to cope with the current low price unlike many other nations. The Saudi oil minister stated that the low oil prices will discourage any future investment in oil projects, particularly in the USA, Brazil, Russia and the coast of West Africa.



IMPACT ON CHINA

As the world’s second-biggest economy, China became the world’s largest oil importer in 2013 and it currently imports almost 60 percent of its consumption (Market Watch, 2014). China’s economy played a key role in the recent oil price crash due to the lower demand growth and its ’New Normal Economy‘ policy. So what are the gains and losses for China

under a period of cheap oil prices?

Positive Benefits

In general, low oil prices will reduce inflationary pressures and allow emerging market central banks to cut interest rates to boost economic growth. International Monetary Fund researchers have estimated that falling oil prices could increase China’s GDP by 0.4 to 0.7 percent in 2015 and by 0.5 to 0.9 percent in 2016 (IMF, 2014). Bank of America Merrill Lynch estimates that China’s GDP will be boosted by about 0.15 percent for every 10 percent drop in the oil price, with its current account balance growing by 0.2 percent of GDP and consumer inflation declining by 0.25 percentage point (Tully, 2014).

Furthermore, it has cost China around $220 billion to import 280 million metric tons of crude oil in 2013. With the recent lower prices, the cost will be reduced by more than $30 billion (Lin, 2015). Also, China’s gas and diesel prices are set by the government. In November 2014, it increased consumption taxes for oil products and this has resulted in “little discernible price change to Chinese consumers” (Institute of Economic

Affairs, December 2014).

In addition, China’s manufacturers and transportation companies will benefit extensively from low oil prices. Unlike the USA, the UK and other developed countries, labour costs are very cheap in China. With reduced fuel cost for transportation, exporters in China are able to reduce their total cost significantly, which will lead to more products been exported from China.

Moreover, cheap oil has reduced the strategic oil reserve cost for China. By the end of 2013, the amount of China’s total strategic oil storage was 141 million barrels. Every drop in the oil price leads to huge savings in reserve costs.

Meanwhile, a falling oil price provides a unique opportunity for China to upgrade the structure of its energy industry. At the beginning of August, China Petrol has announced a full company restructure plan as well as a new upgrade of the quality of its oil products.

Finally, with lower oil prices the government will reduce the consumption of coal, which will bring environment and climate benefits to China.

Negative Costs

Chinese domestic oil production will face a challenge from cheaper oil imports. Also, the shale gas sector in China will be one of the losers under the influence of cheap oil. In addition, the renewable energy and coal industries have to find ways to reduce cost in order to compete with cheap oil in the energy market.

Furthermore, in the past few years many Chinese oil companies have acquired extensive oil and gas project investment in shale and sand oil fields from countries in South America and Europe. Because of the impact of cheap oil, these assets will become a major concern for these companies. However, the purpose of the acquirement is to learn and develop knowledge and technology for transfer back to China. Thus the trade-off here has to be accurately considered and calculated.

Finally, the Chinese government has signed many oil-for-loan agreements with Russia, Kazakhstan, Ecuador, Venezuela, etc. Depending on the terms and conditions, it might be exposed to

the risk of pre-agreed high oil price contracts.

CONCLUSION

The oil industry has suffered heavy pain due to the recent oil price crash. Many oil giants have announced losses and started to cut costs in various ways. A few small companies were unable to deal with maturing and increasingly expensive fields in the North Sea and been taken over by other corporations. Also, countries that are dependent heavily on high oil prices to maintain balanced public sector budgets are suffering huge losses on a daily basis (i.e. Russia, Iran, Venezuela, Cuba, Ecuador, Brazil, Nigeria, etc.). These countries have to find other ways to cope with economic and potential political troubles.

From a political point of view, lower oil price may provide the possibility to reduce geopolitical instability. “Any massive redistribution of income can raise political tensions,” as the Berenberg Bank economist Schmieding states “but strengthening the U.S., Europe, Japan, China and India, while weakening Russia, Iran, Saudi Arabia and Venezuela, is likely to make the world a safer place in the end.”(Bloomberg, 2015).

Under the current falling oil price environment, Europe and Japan are struggling to deal with deflation and China’s growth has slowed down. Other emerging countries and the USA and the UK will act as the key drivers of global growth.

Finally, how low can the oil price fall? The following words might be the most appropriate answer so far: “OPEC moots $80 as new ‘fair’ oil price - but will it stick?”; “Low prices will eventually cure low prices. But we must not get too excited too quickly” (Financial Times, July 2015).



INTRODUCTION A substantial part of the prosperity of the UK over the past 50 years is due to the extraordinary contribution made by the UK North Sea oil and gas industry and its supply chain to government revenue. The scale of this contribution for the upstream (exploration and production) sector from 1976-2014 is vividly illustrated in the chart below, produced by the fledgling Oil and Gas Authority (OGA) as the industry regulator and the executive arm of the Department of Energy and Climate Change (DECC).

Apart from the huge sums involved, this chart hints at the complexity of the oil and gas taxation system initially set up by the UK government, which involves Licence Fees, Royalty Payments, Ring Fence Corporation Tax, Supplementary Charges, Supplementary Petroleum Duty and Petroleum Revenue Tax. The complexity emerges, not only from the number of types of elements involved, but also from the screeds of detailed rules and regulations that specify the nature of the exemptions and allowances which oil companies can claim against the taxes. It is not the intention of this article to give a historical perspective of each aspect of the oil taxation system. However, it is worth noting that the oil industry has had access to tax specialists, some of whom are ex-tax inspectors of Her Majesty’s Revenue and Customs (HMRC) authority, in

BUSINESS BASICS

THE SYSTEM OF UK OIL AND GAS TAXATION

Alex Russell, Professor of Petroleum Accounting,

Aberdeen Business School, Robert Gordon University

and Chair of the Oil Industry Finance Association.


a perverse twist to the poacher turned game keeper allusion. It may come as no surprise that for many years several of the producing fields in the UK continental shelf (UKCS) paid little or no tax. There were huge fields however that paid tear-jerking marginal rates of tax such as the massive Forties and Brent fields.

COMPANY OIL TAXATION SYSTEM The current taxation system consists of three elements, namely, a so called Ring Fence Corporation Tax (RFCT), a Supplementary Charge (SC) and a Petroleum Revenue Tax.

Corporation tax is the standard tax paid by UK companies on their profits. The current rate of corporation tax is 20% although this will shortly fall to 19% following the first Conservative Party government budget, in July 2015, for nearly 20 years. Upstream oil companies pay ring fence corporation tax and the wording of this might conjure up an image of some protected status that favours the oil industry. Alas, for the industry, the protection is on behalf of the Treasury as it means that other losses incurred by an oil company cannot be offset against profits from its exploration and production activities. To exacerbate the plight of oil companies, the rate of ring fence corporation tax is 30% and not the current 20% rate for companies in general. In calculating taxable profits oil companies can deduct almost all of their capital expenditure from their revenue. Given the huge capital expenditure involved in exploring for and producing oil, these so called first year allowances have been, and continue to be, essential to ensuring investment in the North Sea is a viable proposition.

A supplementary charge of 10% on oil profits was introduced by the Labour government in April 2002. Basically the rationale for the extra charge was that, since oil companies’ profits had increased due to higher oil prices, more tax should be levied on the industry. Of course, if profits are higher, the 30% ring fence corporation tax would also have been higher. In December 2005, this windfall tax was increased to 20%, the effect of which was to make the UKCS a less attractive place for investment, and may well have started the decline in the output from the North Sea. Perhaps the real body blow to the industry occurred in March 2011 when the last coalition government increased the supplementary charge to 32%. The majority of exploration and production companies were thus paying a punitive marginal rate of tax of 62% (30% plus 32%).

After subsequent falls in oil prices a determined campaign was mounted to reverse the 2011 increases to supplementary tax, and this concession was granted by George Osborne as Chancellor of the Exchequer with effect from January 2015. The current marginal rate of tax is thus 50% (30% plus 20%). Other incentives have been introduced to encourage capital expenditure, such as an investment allowance and a cluster area allowance.

For fields that were granted development consent prior to 1993 the situation is worse, as they are subject to a third tranche of tax known as Petroleum Revenue Tax (PRT). PRT is currently charged at 50% but is due to fall to 35% from January 2016. Arithmetically gifted observers might be alarmed that another 50% charge when added to the previous 50% would leave no profits after tax for those oil companies that pay PRT. However, the situation is not quite that bad as the PRT is a tax deductible cost for Ring Fence Corporation Tax and the Supplementary Charge.

EXAMPLE If taxable profit from a field subject to PRT is £100 million then, PRT at 50% is £50 million, which leaves £50 million to be subjected to RFCT and SC (30% plus 20%) of 50%. This means an additional tax of £25 million (50% of £50 million) is levied. Thus total tax paid is £75 million, which means the marginal rate of tax for fields paying PRT is 75%. From January 2016, following the reduction of PRT to 35%, the marginal rate of tax will fall to 67.5%. Although very few fields pay PRT and irrespective of attempts to justify the high marginal rates of tax, the oil industry appears to have been singled out for exploitative tax treatment compared to the 20% corporation tax levied on the rest of the UK corporate sector.

In recognition of the current plight of the industry, the Chancellor has also introduced a ring fence expenditure supplement designed to encourage further investment in the mature UKCS. The value of exploration, appraisal, and development costs can be carried forward and inflated by 10% annually for up to 10 years when profits should hopefully have been generated, against which the costs can be offset.

THE INDUSTRY AS A TAX COLLECTOR North Sea oil and gas activity has been a true success story and the innovative and entrepreneurial approach adopted by the industry has been a model that other nations have sought to emulate. In today’s money values over £300 billion in direct taxes has boosted the coffers of the UK Treasury. Such largesse has enabled Britain to have stood side-by-side with its allies in resolving many world disputes, to fund the massive airport developments and to hold the Olympic Games.

Direct taxation tells only one side of the North Sea oil success story. In 2012 PricewaterhouseCoopers [PwC], on behalf of Oil & Gas UK as the industry’s representative body, undertook an analysis of the other taxes collected by the oil companies on behalf of the UK government. The results that emerged from the 48 operating companies are startling, informative and compelling. Indeed, extrapolating those results across all companies, it may well be that over £1 trillion has been contributed (directly or as collection agents) to the UK government over the lifetime of the industry.

THE OIL AND GAS INDUSTRY TODAY Unfortunately with the current price of Brent crude oil [key UK benchmark price] at less than $50 the golden age of tax contribution is over. This is especially so given the mature state of the industry, the high cost of production in the North Sea compared to other regions in the world and the small size of new field discoveries. The survival of the industry is threatened by the glut of oil available worldwide thanks to the strenuous efforts of the USA to beat off the challenge of Russia and Saudi Arabia in order to become the largest producer of oil in the world. US production of oil from shale is expensive. The existence of a supply of surplus oil relative to demand would normally provoke a reduction in output from the Organisation of Petroleum Producing Countries [OPEC] in an attempt to raise the price of a barrel of oil and thereby reduce demand. Over the past two years OPEC has continued to keep its production at a high level and the resulting low oil price has had serious economic consequences for countries such as Russia and Nigeria. The North Sea oil industry has also been a victim of these conflicts and tensions. The fall in the UK oil price from $114 a barrel to less than $50 a barrel has left the industry teetering on the brink of collapse. Thousands of North Sea jobs have been lost. New investment in the North Sea has dwindled to insignificant size due to exploration plans being shelved or cancelled. Currently, OGA is seeking ways to help the industry, and Aberdeen and the North East has started to feel the strain of an uncertain future that lies ahead for the industry. If the downturn in activity continues then, of course, a new phase of decommissioning will start and Aberdeen should be well positioned to play a leading role in tackling the demanding technical aspects of removing the mass of installation structure that litters the North Sea. One notable success of Oil & Gas UK has been the concession won from the UK government that it will effectively pay 50% of the decommissioning costs through an abandonment tax allowance.

The current situation is that relatively few companies are now paying any tax in the North Sea. Most companies have negative cash flows from their operations. Rather than continuing to treat the oil industry as a cash cow the authorities could support the industry by simplifying the taxation system and treating it the same as all other UK corporations. A single corporation tax at a rate of 20% would signal that the UK government wants the industry to survive the current difficult trading conditions and to shelve the decommissioning phase until it was absolutely necessary. Jobs would be saved and arguably the long-term economics of the situation would then be consistent with the goal of maximising economic recovery from the UKCS.


INTRODUCTION Being asked to write an article on a 50 year perspective of the economy of the North East of Scotland by its leading business focussed educational establishment is not only an honour but also a sharp reminder that I have been around here for a long time.

I was born, brought up and educated in the North East apart from a four year period doing my first degree at The University of Glasgow. I have had the privilege of spending my career over the past 35 years working with businesses, principally in an economic development role, in this part of the world.

The process of writing this article has given me the luxury to reminisce back to 1965 when the Governors of the Robert Gordon Institute of Technology [RGIT] had the foresight to set up an establishment which evolved into the Aberdeen Business School. There have been huge changes in the economic and industrial structure of our area in that time, some of which I would like to share with you in the following paragraphs.

Having been brought up on Speyside as a son of a distillery manager my views on the early years of the North East are almost bound to be Moray centric, but a keen interest in geography encouraged by my teachers at Aberlour High School and Keith Grammar School ensured that I had an avid interest in industry and its development throughout our area.

The North East of Scotland of 1965 was a very different place then from what it is today. Those of you reading this who were around at that time will have your own memories to fall back on.

THE FOOD AND BEVERAGE ECONOMY On the land the farms were very much smaller and the numbers employed very much greater than the situation today. In a few places some farmers were still using horses to do at least some of the farm work. Across the area ‘hairst time’ was still dominated by ‘binders’ to cut the ‘corn’ and I can clearly remember helping to ‘road’ in advance of the ‘binder’ for harvesting the crop which had ripened in the fields. Sheaves of corn were stacked and adorned the countryside in autumn, and corn ‘stooks’ could be seen in every farmyard. Some farms still had their own thrashing mills but many of the smaller holdings depended on a travelling mill to separate the ears of corn from the ‘stray’. All of the local community would join in on such occasions and they inevitably turned into great social events.

At the distilleries on Speyside there would be a regular stream of local farmers coming to collect ‘draff’ to feed their cattle and on the farm itself the humble ‘neep’ played a large part in the economy of most mixed farms, as winter food for cattle and sheep alike. In the mid-1960s the sight of a line of up to a dozen men ‘howin’ down a ‘dreel’ of ‘neeps’ to remove competing weeds and weaker seedlings was common in early summer in the North East. Cattle fodder was produced by the lifting or ‘pooin’ of the ‘neeps’ and preparing them for the hand operated ‘neep hasher’ on cold winter mornings, which will hold many memories for some in this part of the world!

The North East by then had a great reputation for its food industry. Lawsons of Dyce was at its peak providing employment for around 1000 people and selling its goods the length and breadth of Britain. The world famous Aberdeen Angus breed was also making waves around the world. My own particular memory was of the Sainsbury’s Kinermony herd being at its peak, exporting breeding animals across the globe, particularly to South and North America and Australia for very large prices. Other food businesses well known today such as Deans of Huntly had not yet started and Walkers of Aberlour were just thinking about extending their bakery behind the existing shop in Aberlour High Street, which I walked past every day. The invasion of the tartan clad shortbread tin into all of the world’s major markets was still a little way off! Down the Spey in Fochabers, the Baxter family had been selling their soups and preserves around the UK for some time but were yet to see the huge expansion of the 1970s and 1980s with the Highland Village still being some way away.

The whisky industry has been very important commercially across the North East for nearly 200 years but has had its ups and downs over that period. Looking back to 1965 however we see some noticeable absences today from the then group of active distilleries. These include Glen Ugie at Peterhead, now the site of Score UK, Glen Urie at Stonehaven now occupied by housing, and the Banff Distillery along from the Banff Links, where whilst working during the University summer holidays I sampled several drams of the very fine whisky once produced there. Meanwhile, when visiting Aberdeen in the mid-1960s we nearly always dined at the Chivas restaurant in Union Street. This was owned and

SPOTLIGHT

50 GOLDEN YEARS OF ECONOMIC DEVELOPMENT IN ABERDEEN AND THE NORTH EASTGordon McIntosh, Former Director of Economic Development, Aberdeen City Council



Photo credit: Norman Adams-Aberdeen City Council



Meanwhile, on one of my visits to Aberdeen, my cousin Billy and I visited a large crater like hole called Rubislaw Quarry. The granite industry was still alive and kicking in 1965 in Peterhead and around Kemnay as well as at the Hill of Rubislaw. This rough but finely hewn and polished rock was exported as far as New York to adorn magnificent buildings of their time.

There were many other notable companies around at that time including Hendersons as crane manufacturers, which moved to Arbroath and are still successful. ‘Tinny’ Robertsons and Mackinnons of Spring Gardens exported their coffee, tea, and cocoa processing machinery across the globe. I was particularly excited to see one of the cocoa processing machines, at over a hundred years old, still being used in a cocoa plantation in Tabasco, Mexico in 1998.

develop-ed by the Chivas Brothers who originally operated a grocery store and warehouse at the top of King Street. Here they developed Chivas Regal which today is the second largest whisky brand in the world after Johnny Walker.

In 1965 the market for ‘malts’ had not yet developed and even Glenfiddich and Glenmorangie had not so far started their world push. In Speyside as I recall, the only malt whiskies available generally were Macallan and Glenlivet or ‘Smithys’ as it was known locally.

In the meantime, Aberdeen harbour was ‘wall to wall’ with fishing boats with no less than 114 vessels over 80 feet in length, and with a few over 140 feet. According to the late Donald Dewar, in the House of Commons speaking in 1966, “5 times as much fish was landed in Aberdeen as any other Scottish Centre”. However fishing was not exclusive to Aberdeen with smaller ports such as Lossiemouth and Buckie having thriving fleets. The fish train still ran from Fraserburgh and Aberdeen on a daily basis to take the freshest possible product to the Billingsgate market in London. I remember well visiting the market with my Aberdeen cousins as a 9 year old and being astonished by the level of activity and noise, and the huge amount and variety of fish in front of me. Around the harbour there was still a very active and visible boat building and repair industry, and my research for this article reminded me that the Hall Russell yard were building oilfield supply boats in 1966 for destinations beyond the North Sea!

THE ABERDEEN ECONOMY Aberdeen as a city was very different too. Not long ‘rid’ of its tram system, the city had no shopping malls such as Bon Accord, St Nicholas, and Union Square, but rather stores such as Watt and Grant, Esslemont and MacIntosh, Shirlaw and Allen, and Falconers (where my aunt ran the wool department) were the places to visit on Union Street. Also visits to the Rubber Shop and Rae’s on George Street were always on my itinerary on sojourns to the big city! The changes in Aberdeen’s environment are too numerous to set out in this article, but one final recollection is that the mart at Kittybrewster was still very active, with beasts regularly escaping and making headlines in the Press and Journal newspaper. It was not until the mid-1980s that the mart was to move to its present site at Thainstone.

We did of course still have other very important industrial sectors in the North East in 1965 with textiles, paper, and the granite industry employing very large numbers of people. In 1965 there were no less than five long established large paper mills in and around Aberdeen on the banks of the rivers Dee and Don. The textile industry also had a strong and diverse base in Aberdeen with, to my recollection, at least 4 large employers in Crombies, Richards, Glen Gordon, and Harotts. However this industry sector was more prevalent across the wider North East with Rennies in Peterhead, Spence in Huntly and Turriff, Kynochs and Laidlaws in Keith, and of course the fantastic and enduring Johnstones Mill in Elgin.

Anyone looking back at 1965 may be surprised to see the changes that have occurred in the road and rail infrastructure. This was soon after the publication of the Beeching Report on the future shape of the UK’s railway network, and extensive closures had been announced. In a few years the Buchan, Speyside and Deeside lines were to cease operating.

In the meantime down in Aberdeen harbour strange looking ships were appearing along the quayside which, according to my cousins, were looking for oil under the North Sea. The oil company Shell opened an office in the City, largely unnoticed, in the summer of 1965 which was going to turn out to be a watershed year for the North East of Scotland.


INDUSTRY IN ABERDEEN AND THE NORTH EAST Of all the then industrial sectors it is perhaps the textile industry that has changed most dramatically in my lifetime. International competition fuelled by low labour costs gradually started to impact on local company competitiveness in the 1960s and 1970s. In 1980 I was part of the team auditing the annual accounts of Kynochs of Keith. On the second last day of the audit I found a stock cut off error that turned a small profit into a loss, at a time when the company’s share price was already struggling on the stock exchange. By 1984 when I joined the North East Scotland Development Authority (NESDA) many of our established textile companies were suffering and for the next decade the team at NESDA and latterly in Grampian Regional Council struggled to help companies restructure. Employment in the textiles industry was significant in several of our North East towns such as Huntly, Keith, and Elgin but many companies had not managed to find the resources to invest in the modern technology that was required to compete. Wm. Spence in Huntly and Turriff, despite its fine gauge woollen garments with a reputation for high quality, succumbed and, despite several attempts to resuscitate the business, ultimately failed.

In Aberdeen city textiles had been at the heart of the economy for hundreds of years. It was to be the same story of decline here too with, the combined GlenGordon/Harrots closing in Berryden, followed by the world famous Crombie Mill due to the fall of communism in Eastern Europe and the resultant loss of contracts to the Soviet army. Finally, Richards with its main site at Berryden ceased production. This left a site with the most complete history of the textiles industry in the UK open to vandalism as seen so graphically early in 2015.

Keith was a town with arguably the highest dependency on textiles north of the Borders through the worldwide success of Laidlaws and Kynochs, but the industry had suffered badly. The initial closure of Laidlaws was followed by a valiant effort lasting several years by a team of former NEXT senior managers to create a sustainable business. Despite an innovative approach to sales and product development, supported by the textiles team of the Robert Gordon University, they found it impossible to compete with the lower cost basis of companies from the Far East. Kynochs, the home of the Scotty Dog label, decided to bring back George Kynoch to try to revive the company and recreate the success of its previous generations. George was later to become the MP for Kincardine and Deeside and the Secretary of State for Scotland, but he was sadly unable to turn round the fortunes of this fine old company that had been the main provider of employment for generations of Keith inhabitants. On the demise of Kynochs, my team was charged by the council’s Economic Development and Planning Committee to develop a plan for the massive Kynochs site to bring alternative employment to the town. By good luck I had contacts with the House of Edgar which was experiencing a growth in demand for their tartan cloth, and after some negotiation they moved their manufacturing business to Keith. Today the company continues to experience success and, along with Johnstones of Elgin, their attention to quality and innovation ensures they remain the final flag carriers of a once very important industry.


Monopolies Commission, a way forward was established. This was at the expense of the lucrative export trade, which has never managed to return to the levels that it achieved before then. OIL AND GAS DEVELOPMENT It is now obvious that the survey boats in Aberdeen Harbour in 1965, together with the opening of Shell’s office in Market Street, was to be the beginning of an oil and gas industry that would change Aberdeen’s economic direction and make a huge difference to its culture. The trickle of survey boats soon turned into a flood of support vessels which saw the area around the harbour, particularly in Torry, transformed. Industrial estates sprung up at the Bridge of Don, Tullos, and then Dyce around a growing airport. Large office complexes never before seen in the city sprouted up in Altens and Kirkhill.

In recent years we have seen a mini explosion of development fuelled by an expectation of an industry continuing for at least another 20 to 30 years. The growth of these Business Parks at Westhill, Kingswells, Dyce Drive, and further north along the Energetica corridor and in the Gateway and Balmoral Business Park to the South, is an expression of a long term confidence in the industry. Aberdeen is the subsea capital of the world and second only to Houston as a centre of excellence for the global oil and gas industry.

Aberdeen now sits at the head of a world class UK wide oil and gas supply chain with its companies for the first time last year, according to Scottish Enterprise figures, earning more from overseas income than from the UK continental shelf.

This £30 billion per annum industry has made Aberdeen a cosmopolitan city but with a high cost of living. Today the challenge is to build on the huge range of oil and gas industry skills to ensure that it is embedded here for more than the next three decades.

EDUCATION AND TOURISM Aberdeen’s two universities and its colleges have also changed dramatically over the period with a much greater emphasis on the skills required to operate a world class industry. Standards of excellence in research, particularly medical, have been maintained. Five Nobel laureates have emanated from the city. In addition, Professor John Mallard’s team in the 1970s and 1980s developed the world’s first MRI scanner which I had the privilege to witness in their assembly workshop in the Lang Stracht in 1984. The Robert Gordon Institute of Technology has evolved from a technical college in to a fully-fledged university, moving to its wonderful new campus alongside the River Dee. Aberdeen University has also vacated its city centre site to focus on its King’s College campus in Old Aberdeen, leaving the City Council to renovate the magnificent Marischal College as its headquarters.

The building itself has become once again a major attraction since its renovation and provides a focal point in the city for the tourism industry which has changed dramatically since 1965. Hordes of Scottish tourists that would find their way annually to Scottish beaches now visit holiday resorts with

The paper industry is another sector that has experienced fundamental change over the past half century. Employing several thousand people in production and its associated supply chain only 15 years ago, only Arjo Wiggins survives in Stoneywood. I can clearly recall the Culter mill closing in 1981 and thereafter having to go to St Andrews to carry out the audit for the Culter Guardbridge Paper Company. The period concerned did however see some major investment along the way including the giant P4 plant at Taits of Inverurie. I recall walking around the state of the art temperature controlled dispatch warehouse at Donside Mill when in discussion with the receiver on a possible deal with some investors. Unfortunately the mill was demolished a short time later when all efforts to resurrect the plant failed. The significant industrial complexes on the rivers Dee and Don that were Taits, Donside, and Davidsons, have all gone, with two of the three sites later being replaced by much needed housing.

CHANGES IN THE FARMING ECONOMY In the countryside, farming has changed massively with units being generally much larger with fewer people working the land and the growth of mechanisation there for all to see. ‘Stooks’ and rectangular bales have disappeared, and looking over the countryside from the top of Bennachie you can visibly see the changes in the type of crop. Today there are vivid swathes of yellow from oil seed rape at certain times of the year, together with an increase in winter barley crops, all against the back drop of an increasing number of wind turbines which provide an important source of income to some farmers. As a core sector the beef industry had a reputation built on the back of the world famous Aberdeen Angus breed but it has had its fluctuations. In the late 1980s and early 1990s the industry was experiencing significant export success and we attended food exhibitions as the Grampian Food Task Force in London, Cologne, Paris, and Barcelona, reaching new buyers to considerable acclaim. Then disaster struck in the form of BSE. The industry was in turmoil. Overnight there was no market for the by-products of meat, bonemeal, and tallow, leaving the renderers and knackeries in a very difficult position with several folding. Farmers were unable to receive remuneration for the dead animals and abattoirs had no place to dispose of their offal.

It soon transpired that the Regional Council was responsible for the safe disposal of dead animals through the 1906 Dogs Act. A task force was set up to deal with the issue and my team was required to develop a way forward.

After a period of close negotiation with government and the industry, including giving evidence to a hearing of the


assured sunshine in Spain, Turkey, Florida, and many other destinations. However, there are so many other attractions to visit in the North East and the development of the Castle and Whisky Trails in the early 1980s has proven to be important for an industry still with so much potential. Indeed in Moray, the annual Speyside Whisky Festival has been developed into a major attraction for overseas tourists.

THE FUTURE OF ABERDEEN AND THE NORTH EAST It is interesting to speculate what the next 50 years may hold in store for the economy of this wonderful and unique part of the world. Will the Trump organisations developments north of Aberdeen lead to the North East becoming a world class golf destination? Will the Royal Family still be coming to Balmoral for their summer holidays, as the Queen has been doing for the past 50 years? Will Scottish whisky retain its position of popularity around the globe? Will there eventually be wind turbines in Aberdeen Bay? Will ocean-going cruise liners be able to visit Aberdeen? Above all, will the North East still have the energy industry at the cornerstone of its economy?

The North East has for centuries had its economy focussed on the land, its rivers, and the sea. With careful management all three can continue to ensure that we have both a successful economy and a desirable place in which to live and work for the future.

For many decades however there has been a woeful underinvestment in the region’s infrastructure by political administrations of all colours at both a Scottish and UK level. The North East contributes more per capita than any other part of Scotland to the nation’s Treasury, through taxation on whisky and oil and gas, but receives the least by a considerable margin. The North East has been a cash cow for both Scottish and UK governments in the past 50 years, but now we are at a point of no return, and there is an urgent need for investment in infrastructure beyond the construction of the Western Peripheral Route, which some say is 50 years overdue.

Earlier this year I was responsible for setting out the case for such investment with the UK Government, and I was delighted when they accepted the case by agreeing to start negotiations through George Osbourne’s April budget statement. The Scottish Government have also recognised the need for a ‘City Deal’ and, as I write this, colleagues from the Aberdeen and Aberdeenshire Councils are putting the detail of the bid together. The outline proposal focuses on a series of major projects around connectivity, air, rail, road, and digital communications as well as housing.

At the heart of the ‘City Deal’ lies a strategy for the necessary economic drivers which will ensure the successful growth of an economy and ultimately increased tax income for government that effectively pays for the upfront investment in infrastructure. With regard to infrastructure, Aberdeen sadly lags behind other European cities of its size and, more importantly, comparable competitor oil and gas cities around the world. Aberdeen desperately needs and deserves that Central Government support.

The economic case is built around a focus on innovation, internationalisation and skills. Innovation will ensure that the area becomes a world class centre of development for new technology, not just for oil and gas and renewables, but also for the bio-medical and food industries. Internationalisation will ensure that the economy exports such technology and expertise around the world. It is on the subject of skills however that I wish to conclude my review. The universities, colleges and research centres of the North East have provided the skills required to allow its people, as the region’s main resource, to build world beating industrial sectors. They have adapted time and again over decades and indeed centuries to the needs of modernising societies. The universities and their educational expertise have always been at the core of the North East’s success. To move forward we must put them at the centre of our economic model and encourage them to collaborate with industry, helping to ensure the region continues to prosper for the next 50 years and beyond.

B&W images in this feature courtesy of Aberdeen City Libraries.


THE ENTREPRENEUR’S SKILL

“I’M STILL YOUNG, THERE’S LOTS OF DRIVE AND AMBITION AS TO WHERE WE WANT TO GO. I BELIEVE THAT WHAT’S BEEN CREATED IS A LITTLE BIT SPECIAL.”


THE ROOTS OF ENTIER 2015 marks three special anniversaries – the 50th anniversary of the North Sea oil and gas industry, the 50th year of Aberdeen Business School and the 50th birthday of local entrepreneur Peter Bruce of Entier.

Entier began in 2008 when the founding directors spotted a gap in the market for a new, independent offshore catering company. Peter Bruce, one of those directors and now CEO and shareholder, founded a company which supplies catering and hotel services to the global offshore oil and gas industry, catering and facilities management services to business and education establishments and event catering in the Aberdeen area.

Entier’s story is impressive. In 6 years it has become a business with annual sales revenue of £46 million and employing 750 people. They will achieve £50 million of yearly turnover business by 2014/15. Peter - a self-proclaimed “simple chef” - is the driving force behind that success. The opening of a new state-of -the-art kitchen and training academy in Westhill in January 2015 was a significant investment in both the future of the company, and the North East hospitality industry as a whole.

With such a diverse business, every day is different for the “simple chef”. Looking after employees working in nurseries, schools and offshore installations at an international level gives a huge variety in each day. Peter can be travelling to any of the 29 countries in which Entier currently operate or be in the offices in Westhill concentrating on finance reviews. Peter does not have a prototype for a ‘normal’ day but is certain that his days are driven by pressure. Pressure is essential for performing his job; the busier he is, the more effective he is.

Hayley Lockerbie, Research Assistant,

Aberdeen Business School

AN ENTREPRENEURIAL MOMENT Peter had his light bulb moment in February 1997 at a course, run by Jack Black of Mindstore, here in Aberdeen. Up until that point, Peter did not believe in himself despite being an Operations Director for a large company. However the course gave him tools to help him realise that his abilities were equal to those around him. These tools, which he still uses today, encourage individuals to take time to think, relax and have a clear understanding of the larger picture. Peter feels that thinking time is important for every entrepreneur and senior manager to allow them to avoid knee jerk reactions and the feeling of “wanting to get it all done today”.

Acknowledging the difference between wanting to do well in life and actually achieving it, Peter dreamed of creating a business like Entier long before it became a reality. Despite people telling him is was not feasible, viable or worthy of the investment required, he lived by the Walt Disney quote – “if you can dream it, you can do it.” Coming second is not an option to Peter and he undertook a leap of faith to create Entier with a focus on quality and use of local suppliers. Peter’s determination and attitude to risk have been significant drivers in Entier’s success to date.

When the banks cut back their lending in 2008 and Peter decided to invest a considerable amount of his savings, he did not perceive that as risky. Belief in his commitment and goals gave him the confidence to create and develop Entier into its present form today. His maximum downside exposure was that he would have had to “put my chef whites on and start cooking again. That’s not life or death.” He offers a vote of thanks to those non-believers

THE CAREER OF PETER BRUCE, CHIEF EXECUTIVE OFFICER OF ENTIER


PETER’S BUSINESS PHILOSOPHY People are at the epicentre of Entier and Peter is a great believer in the “Bus Concept”. In his opinion there is a fundamental difference between people working for you and people working with you. Bringing people onto the bus (the bus here being Entier) is the first stage. Then you need to ensure that people are sitting in the right seat of the bus and sometimes people need to get off the bus. The key to a successful business is ensuring that the right people are on the bus, they know where the bus is going and they are willing to support the driver in reaching the destination. Peter describes himself as direct, hard but fair, generous and rewarding. He always looks after the people who look after him. Peter believes that an entrepreneur makes his or her own luck which increases with the effort expended. Being lucky is when the bus is full of talented people and the driver’s job becomes easier because team spirit can outweigh any individual. As the driver of the bus Peter’s role is to create that team spirit and environment at Entier, which sets it apart from its competitors. Peter partly does this by listening to people and communicating effectively, thereby gaining knowledge to store and collate for future use. Such actions have earned him the nickname of The Puzzle Master. Knowing events in one part of the business on Monday and their connection with other events in another part of the business on Friday helps when decision making or bidding for new business contracts.

In the first year of business Entier lost £100,000 of unrecoverable sales revenue as one of their clients went bust. Peter’s attitude to business ensured that this setback was overcome. Peter sees difficulties as challenges which become opportunities to be handled in order to achieve success. In the current climate of low oil prices and staff reductions across the sector, Peter has taken a different approach than most. At the beginning of this year, Peter explained to the whole Entier team that the company would not be making any knee jerk reactions. By continually assessing the environment, focusing on core business and encouraging staff to ignore the ‘what-if’s’, Entier has gained new business, is expanding into new geographic locations and now recognises the presence of opportunities in all shapes and sizes.

The most satisfying moment for Peter so far has been having the vision to develop Entier into its present structure. They have a new target of achieving annual sales revenue of £100 million: “I’m still young, there’s lots of drive and ambition as to where we want to go. I believe that what’s been created is a little bit special. And especially through all the doubters who said we would never get through the financial crisis, we would never make it.”

A SOCIAL AND COMMUNITY ENTREPRENEUR Peter’s desire to invest in the future of the hospitality industry in the North East is evident from the “Fresh Olives” initiative, a pioneering apprenticeship competition, aimed at 4th year school leavers. The initiative offers two competition winners a three-year paid apprenticeship, followed by a full time job offer. This gives new entrants into an ageing workforce the chance to be trained and developed from the beginning of their career. Peter sees benefits beyond those for just the competition winners. By working with 5 or 6 schools in the local area, the “Fresh Olives” initiative gives school children a glimpse into the catering industry, which is often perceived as hard work with long hours and low pay. Peter is local to Aberdeenshire and by sharing his experiences of travelling around the world, being involved in an industry which he loves, he is inspiring future generations to consider joining a dynamic sector.

The “Fresh Olives” initiative is not Peter’s only channel for engaging with the local community. As a member of the Scottish Development Group for JDRF – the type 1 diabetes charity – Entier sponsor the fundraising car for the charity, and Peter is an avid fundraiser and supporter of Macmillan. He is a project team member for the local charity Glencraft, which is a social enterprise and charity that provides careers opportunities for disabled and disadvantaged people. This role gives Peter great satisfaction. Peter is also a director of Fraserburgh Football Club, recently faced with the challenge of identifying a new manager. He is also involved with other local charities and sees this involvement as a means of inspiring his employees to become involved too.


Peter has been inspired by the likes of Margaret Thatcher, Nelson Mandela, Billy Connolly, Richard Branson and, most importantly, James Bond! Attending a lunch for Fraserburgh Football Club gave Peter an encounter with an unexpected source of inspiration, namely, Michelle Mone, the Scottish entrepreneur and founder of the Ultimo lingerie company. At a more local level, Stewart Spence, who Peter describes as the “godfather of catering”, is an inspiration. All of these people inspired Peter for different reasons. On a very personal level, a manager named Trevor Briggs inspired Peter through his belief and support. This has been the source of Peter’s faith in, and support for, others and willingness to give people opportunities regardless of age or gender. In Peter’s own words “if they are good enough, they are old enough”.

Recognising that not every day will be a sunshine day, Peter advises people who are thinking of starting a business today to remember that there will always be cloudy days. Peter, however, acknowledges that “some cloudy days can be lonely the higher you are up the tree”. However, those days bring opportunities and can be overcome by a combination of self - belief, dealing in facts, and taking time to think about the wider decisions.

Personally, Peter wants to make Entier a true global reality. He is quoted as saying that “we dreamed to be a £50m business, and we will turn this business into a £100m plus business”. Peter wants people in the North East of Scotland to believe in themselves more. There are many great businesses in the area created by people who have taken a chance and Peter would like to see that continue. “I’m a local boy who’s had the support to do things - taken the chance - and if you believe in your own ability or an idea or concept of business theme, then do it.”

“I’M A LOCAL BOY WHO’S HAD THE SUPPORT TO DO THINGS TAKEN THE CHANCE AND IF YOU BELIEVE IN YOUR OWN ABILITY OR AN IDEA OR CONCEPT OF BUSINESS THEME, THEN DO IT.”


ABS IN THE 1960’S

Three factors distinguish 1965 as the year Aberdeen Business School was founded.

It had its own building at 352 King Street

It offered a 3 year full time undergraduate course in addition to its PT Courses

A head of department was appointed.

1967 - ABS offers several full time courses in Management, Finance and Administration.

1968 - school had full time students from not only Scotland, but also a member of the Malaysian royal family.

1960s 352 King Street Building

ABS IN THE 1970’S

1972 - first undergraduate degree students matriculated.

The BA in Business Studies became established as a successful degree programme

1975 - ABS became the first educational institute in the UK to offer an approved postgraduate qualification in personnel management.

1977 - First Doctoral research student matriculated.

ABS IN THE 1980’S

1980 - it was decided to move from King Street to Hilton Campus.

1989 - first MBA launched.

Hilton Campus

…Aberdeen Business School Timeline…Aberdeen Business School Timeline…Aberdeen Business School Timeline…Aberdeen Business School Timeline…


ABS IN THE 1990’S

1991 - Kepplestone building was being used by ABS

1992 - university status was given to RGIT (Robert Gordon Institute of Technology).

1994 - ABS name formally registered as property of the university.

1998 - ABS moved to its current home at Garthdee campus

2002 - CIPD granted accreditation for delivery of HR courses in Kazakhstan and China.

2004 - Virtual Campus created, enabling greater provision for online course delivery.

2005 - first university in the UK given CIPD accreditation for its online HR course.

2011 – RGU named as Scottish University of the Year 2011

2011 – MSc Project Management accredited by the Association for Project Management (APM), becoming the only university in the UK to achieve accreditation by both the PMI and APM.

2012 - ‘Best Modern University in the UK’ - The Times Good University Guide 2012

2014 – Higher Education Statistics Agency figures show 97.7% of students graduating from RGU with their first degree in 2012/2013 were in employment or undertaking further study.

…Aberdeen Business School Timeline…Aberdeen Business School Timeline…Aberdeen Business School Timeline…Aberdeen Business School Timeline…

ABS FROM 2000 ONWARDS


INTRODUCTION The process of decommissioning old and uneconomic assets has been described by many as a huge opportunity, one to which the oil and gas industry is expected to rise with its usual entrepreneurial spirit. Yet when you consider that the costs of decommissioning over the next 40 years could range from around £40 billion, currently projected by Oil & Gas UK (OGUK), to levels upwards of £100 billion (suggested by some industry commentators) you have to reflect on the value that both industry and society will derive from this activity.

Whilst the success of traditional entrepreneurial activities are usually measured in terms of performance and profit, the author would argue that the strategy for decommissioning must be set much more in the context of social entrepreneurship, where the positive return to society and the achievement of appropriate environmental solutions are considered as part of the overall success criteria.

Certainly, from a Wood Group perspective, the core values of both social and financial responsibility cause us to look on decommissioning differently. Instead of viewing this as an opportunity to increase revenue and enhance return we have adopted a far broader perspective, which fits with Wood Group’s continued vision to play a key role in the stewardship of this industry.

As a result, decommissioning is not just about supporting our clients in the discharging of their licence obligations. It allows the industry to support both Government and society to secure the full potential of the resources within the United Kingdom Continental Shelf (UKCS) whilst providing employment opportunities, addressing environmental challenges and ultimately minimising the burden on the UK tax payer.

SOME CONTEXT 50 years ago the discovery of gas in the West Sole Field located in the Southern North Sea triggered a race to develop and exploit the basin’s natural resources and with it an engineering and technological endeavour that would see some of the largest and complex manmade structures installed in the hazardous and unforgiving seas around the UK.

Since then in excess of £525 billion has been spent, resulting in recovery of over 45 billion barrels oil equivalent (boe) and the development of an asset portfolio that includes over 400 facilities, 10,000km of pipelines and 5,000 wells. Regrettably, when this infrastructure was designed and installed little consideration was given to the need for its removal at the end of their economic life.

These production facilities have had to weather many storms, not least of which are the economic instabilities characteristic of the oil & gas industry. However, whilst its cyclical nature and dramatic fluctuations have seen cost pressure and changes to short term strategic plans, the industry has always demonstrated resilience and an ability to bounce back.

That said, the recent drop in the oil price has come at a critical time for the North Sea with the long-term sustainability already in question as a result of reduced efficiency and spiralling costs. So, whilst there remain both reserves (estimated between 12 and 24 billion boe still recoverable) and opportunities in the North Sea, the context around which these may be exploited is continually changing.

The low oil price has only served to shine a spotlight on those assets, which are uneconomic and as a result potentially accelerated their decommissioning.

In February 2014 the eponymous Wood Review was published and outlined six sector strategies of exploration, asset

THE PRACTICE OF ENTREPRENEURSHIP

Nigel Lees Regional Director Strategy and GrowthWood Group PSN



THE PRACTICE OF ENTREPRENEURSHIP

Nigel Lees Regional Director Strategy and GrowthWood Group PSN

stewardship, regional development, infrastructure, technology and decommissioning. The review called on the Government to establish a new arms-length regulator, the Oil & Gas Authority (OGA), to ensure implementation of the recommendations and introduced the concept of Maximising the Economic Recovery from the UKCS (MER UK).

As the economics of the basin have turned, the interrelation and mutual reliance between these strategies has become even more apparent. The need to protect our critical assets and infrastructure is clear, yet we must also plan for their decommissioning. In this regard, the Wood Review highlighted the need for a single forum to adopt a more strategic approach through greater collaboration.

Thus there exists a paradox of the need to ensure existing assets are utilised to maximise economic recovery whilst dealing with challenging market conditions and preparing and delivering cost effective decommissioning.

It is easy to look at decommissioning as a problem only for the oil industry to address and in particular for the operators and licence holders that have worked these fields. However, to suggest that anyone is shying away from their obligations could not be further from the truth. Instead the level of commitment to tackle these challenges is clear with significant resources expended in the definition and deployment of solutions.

The supply chain which has facilitated and enabled the exploration, development and production of the UKCS over the last 50 years is also preparing for the challenges ahead.

“Wood Group is unwavering in its commitment to play its part, working with all parties to develop a future vision and framework for decommissioning.”



expectation but there must be merit in approaching the decommissioning challenge with a broader outlook.

Fundamental to this approach is a requirement to ensure the timing of any decommissioning activity supports maximised recovery, that the scope is appropriate and well defined, and that the method of execution is suitable, efficient and effective. All of this must be underpinned by the requirement to collaborate and share learnings far beyond what has been customary till now.

COLLABORATION AS A CORE PRINCIPLE Wood Group is unwavering in its commitment to play its part, working with all parties to develop a future vision and framework for decommissioning. This is perhaps counter-intuitive to a traditional entrepreneurial perspective and some would question why an organisation with demonstrable experience and competitive advantage chooses to share with others.

The simple answer is that it’s the ‘right thing to do’ and is underpinned by our values, which define who we are and what we do. More fundamentally is the recognition that, with a challenge such as decommissioning, no single organisation can hope to shape or deploy the most effective and efficient solution in isolation.

Those organisations (both operators and supply chain) that are willing to work together to explore and develop new solutions will need to take a different view on managing risk and liability and in doing so will unlock both potential and value. Initially these opportunities are likely to manifest themselves in regionalised or bundled opportunities rather than pan UKCS

However the lack of decommissioning activity (<1% UKCS investment spend to date) and uncertainty around timing and continuity serve to make this an opportunity that is difficult to assess.

Confining responsibility to the industry alone neglects the major role the Government has in the successful and cost effective decommissioning of the North Sea not just as a regulator but also in the recognition that, through the provision of tax relief, the majority of the decommissioning cost will be borne by Government.

This is an issue that not only affects all segments of the industry and the Government but is one in which ultimately all parties hold a collective responsibility.

AN ENTREPRENEURIAL VISION OF THE FUTURE Wood Group is not only proud to have played its part in the history of the UKCS but it can also arguably demonstrate an unrivalled track record in facility decommissioning with capability stretching back to the 1990’s and covering iconic projects such as BP’s North West Hutton and Miller through to the Shell Brent field today. Yet the past is not necessarily an indicator of the future and in any respect the changing context and macro environment necessitates a fundamental change in approach to decommissioning.

It is the author’s belief that a pure entrepreneurial vision of the decommissioning opportunity is unlikely to deliver the most effective solution that satisfies each party and the wider stakeholder community. It can of course be argued that achieving balance between these groups is an idealistic



EXTENDING LIFE Ultimately the timing of decommissioning comes down to the economics of individual assets which may or may not be positively impacted through the ongoing strategies for production efficiency and cost reduction. Options for existing owners may be limited but new entrants and other players may still see opportunity in these mature assets.

Their transfer however can be hampered through the lack of capability and the thorny matter of decommissioning liabilities. If the goals of MER UK are to be realised then these barriers must be unlocked by Government and industry working together to ensure these strategic assets, indeed all assets, are in the right hands at the right time.

In respect to capability, Wood Group’s duty holder solution enables and facilitates the transfer of assets between parties supporting new owners with ability and experience to maximise productive life and economic recovery. The recent award of the first pipeline operator contract in the North Sea has seen Wood Group extend this model from platforms to cover complete infrastructure so extending the possibilities to support MER UK.

Yet extending life is not just about maximising recovery. As part of ultra-late life management the interface between the operational and decommissioning phases can be further reinforced increasing time to plan and prepare for the decommissioning and ultimately removal.

THE SCOPE OF DECOMMISSIONING For the North Sea, there is a strong regulatory framework in place that defines the scope we are addressing today. At its heart sits the OSPAR 98/3 decision. This is an output from the Oslo Paris Convention which has responsibility for protecting and conserving the North East Atlantic and its resources and in which regard has set the environmental vision around the disposal of disused offshore installations.

Yet as a global organisation we see wide variance in the approach and regulation associated with decommissioning activities. We have to accept that best practice is not confined to the UKCS, certainly not in all aspects, and we must be willing to challenge our current perceptions and customs.

Working together industry and Government must ensure the scope of decommissioning is fit-for-purpose and should support further research to ensure any challenge to scope is grounded in a robust evidence-base.

Yet we do not always need to challenge regulations; sometimes the real benefit comes from having clarity around what is expected in order to comply. Well Plug & Abandonment (P&A) accounts for more than 40% of projected costs bringing with it the additional challenge of liability in perpetuity.

Operators and owners of assets, conscious of this obligation and potential reputational damage from any future leak, are at risk of over engineering solutions and increasing cost. Yet the lack of long term data to identify the efficacy and integrity of

plays but as a result offer potential to test and refine solutions and approaches.

Whilst those involved in these early projects will benefit from first mover advantage, the Government (as a major stakeholder) must ensure that the lessons learnt will be shared and made available to others. In essence this will be less about creating competitive advantage and much more about creating a level playing field for the benefit of all, shaping the market rather than waiting for it to happen.

THE IMPORTANCE OF TIMING Although limited in number, there are already many lessons that can be learnt from completed decommissioning projects. Perhaps the most important is the need to start planning for asset retirement many years in advance of the anticipated date.

Even assets in early production stages will benefit from a foundation retirement plan and an operating model to balance medium and late life asset management challenges. There is also need to consider the regional, area and production opportunities that may extend life but influence preparation, abandonment and restoration obligations.

In this regard, Wood Group believes that the operational and decommissioning phases should not be seen as separate elements; instead the reality of their interdependence and the opportunity to enhance both sections through smart decision making should not be underestimated.

As an organisation we use the learnings from decommissioning of mature assets to update our capability and support the extension and operations of assets as they reach the late and ultra-late phases of their life. These learnings are also used to inform the concept selection and designs of new projects for our clients, both in the UKCS and across our international organisation.


previous P&A activities makes the design of future campaigns challenging.

The regulator unsurprisingly looks to the licence holders to demonstrate they are using the correct methodology. Yet whilst the theory is sound, one has to ask will the original liability holder still be around if a problem develops in the future?

This is not simply a question of apportioning and holding parties accountable for the liability but instead could be key to unlocking a more appropriate and entrepreneurial approach to decommissioning.

This plays to a core challenge within the industry around the allocation of risk on the basis of the organisation most suited to bear it rather than perhaps those with the responsibility of carrying out the task.

EFFICIENT EXECUTION OF DECOMMISSIONING A broad criticism, fairly levelled at our industry, is the lack of standardisation. Every platform in the UKCS is unique in some respect, yet that does not necessarily mandate a different plan for each. The simplification of the contracting, operating and business models associated with decommissioning must be seen as a priority.

In this regard, the author is pleased to have sponsored (as part of the Oil & Gas Industrial Strategy and with the support of Decom North Sea) the development of a late life - planning portal to deliver a framework for sharing of the learning to date and hopefully provide some direction and support to those undertaking decommissioning or even to consider the first steps in their approach.

Whilst it is unlikely that there will be one standard as a result of this approach, the sharing of knowledge is one of the first steps in driving cost efficiency and its successful delivery should drive further collaboration.

Technology and innovation will also play a significant role in the execution of these projects and we have already seen examples of new approaches such as the development of the Pioneering Spirit by Allseas. Arguably these are more closely related to true entrepreneurial vision. Yet, as impressive as the Pioneering Spirit is, it represents only a small component of the market. Just as important will be the development of downhole tools and capability to more effectively abandon [P&A] wells, which may result in even more significant overall savings.

Finally, it is important to reflect that we are not the only industry to deal with the decommissioning of redundant assets. Our pioneering approach to the last 50 years may prove an impediment as we seek to engineer the solutions to our current problems without reference to the outside world. There is desire to learn from sectors such as nuclear, as the correlation of risk and hazards between our respective industries are strong but equally important are sectors such as the salvage industry where the opportunities are seen far more simplistically and yet are no less challenging or hazardous.

SUMMARY It may sound counterintuitive to an entrepreneurial approach to work collaboratively, look to minimise scope and defer activity. However that is to miss the bigger picture and the wider opportunity.

Wood Group sees decommissioning not as an industry in its own right or even as an opportunity in time. Instead it looks upon it as a challenge that must be overcome to sustain our industry, maximise economic recovery and mitigate the risk of its early demise.

Regardless of your own perspective and whether you still view decommissioning as a market opportunity or a wider societal challenge, if we think beyond the challenges that decommissioning presents we can perhaps imagine a new way of working.

The concept of MER UK and the introduction of a new regulator provide the foundation for a new approach and the co-creation of a fit-for-purpose solution to the decommissioning challenge. Industry must now rise to this task and, unencumbered by traditional methodology and fixedness, decommissioning can not only become a success story in its own right but it can also become the catalyst for future change in our industry.

Far from being limited to the confines of the UKCS the experience and knowledge gained over the coming years will underpin the success of other basins as they reach maturity and will ensure that, long after successful realisation of MER UK, the North Sea supply chain will continue to grow, provide employment and support the oil & gas industry across the globe.


THE MULTINATIONAL MIRROR 50 YEARS OF NORTH SEA OIL & GAS ACTIVITY BY BP

Trevor Garlick, North Sea Regional President, BP

September 2014 marked 50 years since the award to BP of Licence P.001 to allow the company to begin drilling in the North Sea. It is a journey that has run in parallel to that of the Aberdeen Business School of the Robert Gordon University [RGU] with which BP has formed a close working relationship over the years and with both making significant contributions to the communities which they serve. As the two institutions mark five decades in the North East of Scotland, BP North Sea Regional President Trevor Garlick reflects on the company’s presence in the region.



EARLY BEGINNINGS In 1964, BP was awarded its first licenses in the North Sea. Exploration started immediately and, over the following years, the company brought the UK’s first offshore oil and gas ashore. Ten years later, in 1974, BP Exploration in Stavanger was established and the North Sea region that we know today was born. Since then, BP has pushed the frontiers of energy innovations, with giant discoveries in both UK and Norwegian waters. While it may be harder to find and recover resources today than it once was, our commitment remains the same. As a significant investor in the region, we understand the potential that the North Sea still has to offer. And we’re realising that potential. By improving production and investing in existing and new infrastructure, while working in collaboration with industry colleagues to address challenges around cost and efficiency, the North Sea can have a bright future.

In the early 1960s, the oil and gas industry had never encountered an environment with such severe weather conditions as the North Sea. Yet the prize offered real potential for the energy security of the UK and Norway. When BP found natural gas in the Southern North Sea in 1965 - the same year that Aberdeen Business School delivered its first course - it sparked a revolution that would change the energy landscape of northern Europe. The discovery of oil came five years later in 1970, when the company struck oil reserves in the giant Forties field, 180 kilometres east of Aberdeen. Its 2.5 billion barrels of recoverable oil reserves turned the North Sea into a globally significant oil and gas region. BP’s engineers immediately set to work building a series of connecting pipelines, as well as terminal facilities to transport, process and store this energy resource. North Sea oil was first landed ashore in November 1975 through the newly-built Forties Pipeline System. Queen Elizabeth II started the flow of oil by pushing a symbolic gold-plated button in BP’s control centre in Aberdeen. The next 15 years were a time of excitement and great opportunities. During this period, BP – or one of its heritage companies – started up more than 15 fields in the UK North Sea and four in the Norwegian North Sea. As platform design became more sophisticated and investment in bold and ground-breaking technology spearheaded several world firsts for the company, BP explored farther and deeper. In the early 1990s, we opened up the area to the west of Shetland with the discovery of the Foinaven field and then the Schiehallion field. The latter in particular delivered a number of firsts for us, namely, the deepest field development, the first purpose-built floating production, storage and offloading (FPSO) asset and the shortest-ever build cycle.

Despite a tough investment climate at the turn of the millenium, BP in the North Sea continued to break new ground using world-leading technology to maximise recovery from giant, and increasingly complex, fields. As well as bringing onstream previously undeveloped discoveries, we began unlocking potential from existing fields, such as Magnus and Valhall. BP’s presence in the Norwegian sector had also grown as a result of a merger with Amoco. This was the largest merger in history at

THE MULTINATIONAL MIRROR 50 YEARS OF NORTH SEA OIL & GAS ACTIVITY BY BP



the time. Over the next decade, the company invested in two major projects in the Norwegian sector: The Skarv and Valhall redevelopment was part of $16 billion of new investment in a number of exciting North Sea projects. BP was also the first to realise the need to put “value over volume” and from 2011-2013 sold a number of non-strategic North Sea assets in order to focus on a smaller number of higher value assets with long-term growth potential.

TECHNOLOGY AND THE NORTH SEA Technology has played a significant role from the very beginning of the North Sea with BP often pushing the frontiers of innovation. In the 1960s, we were one of the first to apply 2D seismic imaging to map the relatively shallow reservoirs. Today, our world-leading 4D seismic imaging means we can see the changes within a reservoir over time to maximise the recovery of oil and gas. We also operate one of only two enhanced oil recovery (EOR) schemes in UK waters through Magnus, and are currently incorporating EOR in our multi-billion pound Clair Ridge and Quad204 projects. This includes the world’s first offshore full-field deployment of LoSal® technology on Clair Ridge.

Today, BP remains one of the region’s leading operators and a significant investor. We are refurbishing and renewing some of our oldest assets and facilities, while two of the biggest UK field developments are well under way, namely, the aforementioned Clair Ridge and Quad204 developments.

“THIS REGION’S POTENTIAL FOR GROWTH GOES FAR BEYOND THE SIGNIFICANT OPPORTUNITIES THAT REMAIN IN OIL AND GAS PRODUCTION AND THE NORTH EAST OF SCOTLAND IS WELL POSITIONED TO CAPITALISE ON A RANGE OF EMERGING SECTORS.”

QUAD204 Quad204 is the redevelopment of our Schiehallion and Loyal fields. The project involves the installation of a new floating, production, storage and offloading vessel – the Glen Lyon – which is due to arrive in the North Sea in 2016, together with a major upgrade and replacement of the subsea facilities. Schiehallion and Loyal have produced nearly 400 million barrels of oil since production started in 1998. The Quad204 development aims to access the remaining estimated 450 million barrels still available and to help extend production from the fields out to 2035 and beyond. In April this year we announced the start of drilling on the Loyal field by the new-build, semi-submersible Deepsea Aberdeen, marking the start of a seven year drilling campaign west of Shetland. The Glen Lyon FPSO replaces the Schiehallion FPSO, which started production in 1998. Glen Lyon, which is 270 metres long and 52 metres wide, will be able to process and export up to 130,000 barrels of oil a day and store up to 1 million barrels.

CLAIR RIDGE Clair Ridge is our second phase of development of the giant Clair field which lies 75 kilometres to the west of the Shetland Islands. The project comprises two new bridge-linked platforms and new pipeline infrastructure to connect to processing facilities in Shetland. In 2013, we reached a landmark in the project when we installed the platform jackets (or legs) and, more recently, we completed the safe installation of the platform’s quarters and utilities modules. The next major milestone in the project will be the installation of the production and drilling platform modules, scheduled for summer 2016, with production expected to commence in late 2017. Once operational, the Clair Ridge development will have the capability to produce an estimated 640 million barrels of oil over a 40 year period, with peak production expected to be up to 120,000 barrels of oil per day.


THE FUTURE OF THE UK NORTH SEA INDUSTRY Against this backdrop of opportunity significant challenges remain that requires all participants - industry, government and regulator - to work cooperatively and collaboratively to place the sector on a more even footing. In order to restore the North Sea’s international competitiveness bold action and behavioural change is needed now. I am pleased to say that this work is well under way with Sir Ian Wood’s UKCS Maximising Recovery Review and the recently-established Oil and Gas Authority (OGA) providing strong foundations from which the industry can build. The recent fiscal changes are also positive but self-help is needed if we are to build a sustainable future industry in this region.

Through all of this work safety will continue to be the cornerstone of BP’s operations. The North Sea has been the birthplace for many industry standards and this is a legacy we must maintain.

This region’s potential for growth goes far beyond the significant opportunities that remain in oil and gas production and the North East of Scotland is well positioned to capitalise on a range of emerging sectors. Renewable energy, the global export of oilfield services and decommissioning each present significant prizes and companies looking to invest in these industries would do well to consider the deep pool of talent and innovation that exists in this part of the world.

Often the source of this talent is the universities and RGU’s Energy Centre, providing training and education in a range of disciplines, is one example of that. BP’s scholarship programme delivered by our campus team offers engineering scholarships to RGU students, some of whom have successfully applied for internships and graduate roles within BP. Myself and other members of BP’s leadership team have also conducted a range of guest lectures for MBA students at Aberdeen Business School – an experience that I have found hugely rewarding and one which is well-received by students. BP is also a promoter of the arts with 2015 marking our 12th year supporting RGU’s Gray’s School of Art Degree Show, an annual highlight in the local arts calendar.

There have been many changes over the past five decades and challenges will always present themselves. However one factor that has remained consistent is BP’s expertise and commitment to the North Sea. Also enduring over the years is our partnership with world-class academic centres like RGU. If we as an industry can address the challenges that we face today there is the promise of continued success in the region for years to come. I would like to wish the same continued success to RGU and the Aberdeen Business School as it embarks on the next chapter in its history.


Jacqueline Christie, Communication Manager, Thorpe Molloy Recruitment Ltd

Recruitment FundamentalsDuring our in-house recruitment consultant training the Generation Y graduates were amused to learn that when Thorpe Molloy Recruitment started out nearly twenty years ago the best way to impress a client was to personally hand deliver a shortlist of great candidates’ CVs. Success was based on the speed you could run, not the speed of the bandwidth! Today’s digital natives cannot remember a time when the web was only something that spiders made. Sir Tim Berners-Lee – who’s that?

Despite the hype around the “digital transformation” of the recruitment industry (who really knows what that means) the fundamentals of effective recruitment remain the same. Basically, recruitment is all about customer service. Back in 1997 customers expected excellent service and of course they still do, in fact consumers have never had such a powerful voice.

However life has become much more sophisticated. There are an additional one and a half billion people on the planet, global employment mobility, acute competition for talent and the

phenomenal appeal of the social web.

Recruitment and TechnologyTechnology has not taken over recruitment. Rather recruiters are using technology to improve performance by becoming more efficient and cost effective, by searching deeper and wider, by attracting superior candidates and by delivering…guess what? Enhanced customer service. HR and recruitment professionals have harnessed web technology to drive efficiencies, streamlining the recruitment process by deploying systems and tools which promote effectiveness, enable competitiveness and respond to the evolving online behaviour of the candidates that they so keenly wish to attract.

The explosion of activity around E-recruitment has created a bewildering array of options for every stage of the recruitment process. We are not technologists and we love real people over databases so I will not examine the detail of the acronyms ATS, HRIS, CMS and ERP here but, there is nothing more demoralising than submitting an application for a dream job via an online portal with the gnawing feeling that the CV (and a lot of personal information) has just disappeared into a black hole. Equally disheartening is signing up for job alerts and being inundated with recommended posts of which only a small percentage apply to you because the filtering system just is not specific enough. Like every data system the quality of the customer experience is matched only by the quality of the people operating that system and the processes which they follow.

E-BUSINESS

BILLION DOLLAR MATCHMAKER

“DIGITAL RECRUITMENT HAS UNLEASHED THE POWER OF PASSIVE CANDIDATES.”


75% of recruiters believe that employer brand has a significant impact on hiring (2015 Global Recruiting Trends: Linkedin Talent Solutions). However a negative experience at the online application stage evaporates any feel good factor accumulated during the engaging and attracting stages, much of which is carried out on social networks through story-telling, creative content marketing, experience marketing, thought leadership, personality and fun. It resembles the creation of a great buzz about a forthcoming party to which people strive to gain entry, and compete with each other to be at the front of the queue, only for the security staff at the door to say “no entry”.

Although online professional networks, job sites, career websites and social media are powerful tools for relating an employer’s story, a superior advocate is a happy employee who believes that his/her company is a rewarding place to work. Social media has created platforms for employees to become highly visible ambassadors. Their comments act like a five star rating system and can have a huge impact on the public perception of a company. However, as social media platforms are operated by third parties, a prospective employer has no control over a change in Facebook policy or the impact of the Twitter share price on the development of that media channel. Thus it is important to build communities around brand marketing and direct users back to a personal career website (if it exists) or the pages of a corporate site which are dedicated to career development.

One of the most effective ways to learn is through personal experience and employers are catching on to this by utilising one of the current top ten technology trends - online simulation games. In an experience which I term “corporate games”, applicants compete in a virtual workplace to prove that they are the most suitable candidates by experiencing everyday operations as virtual employees. Their responses, reactions and performance generate data which is interpreted to determine the most suitable applicants. Visit www.gamesforbusiness.eu for an example of their gamification work with PwC.

Digital Data and RecruitmentDigital recruitment has unleashed the power of passive candidates. Globally, 75% of professionals are passive but only 61% of companies recruit passive candidates (2015 Global Recruiting Trends: Linkedin Talent Solutions). Identifying and engaging these passive candidates can most successfully be achieved through information management and data analysis. The current terminology of “Big Data” is somewhat unfortunate as, at least to me, it sounds so arrogant, carrying the inference that it is THE person to know at the party mentioned earlier. However data can only establish patterns and decrease uncertainty if it is analysed using the most relevant prompts or questions, and that is the crux of the vital conversation between recruiter and hiring manager. A talented recruiter will ask the questions which really drill down and nail the relevant attitude, aptitude, skills, aspirations and experience of candidates. Once the job specification has been agreed then the searching process can begin using data filters in Linkedin,


niche professional communities or bespoke databases cultivated from information flowing from target advertising and content marketing.

There is no exclusivity on our digital data. Algorithms across the web correlate behaviour, location, preferences, interests, current job title and skills of candidates. Job seekers will have experienced it many times as targeted advertising of, say, an enticing holiday that pops up on an individual’s Facebook page as a sponsored post, or Linkedin sends an email sharing a list of companies that are “looking for someone just like you”. Although semantic search is not new, its power is evolving, so increasing the relevance of an individual’s CV and job search results alike. Powerful search engines are also increasing the effectiveness of job aggregators. The incredible reach of indeed.co.uk utilises rating technology familiar to consumers in retail and hospitality by introducing a brilliant piece of third party advocacy which accentuates customer service. Adzuna.co.uk is a job aggregator with a sassy ValueMyCV tool which uses attributes from CVs to determine the worth of a prospective candidate in cash terms. The outcome is bound to lead to disappointment for some and delight for others. Either way it is probably not the basis for a salary discussion with an employee’s line manager.

Investment Return and E-recruitmentA huge amount of data flows throughout the web but the challenge for recruitment is to ensure its rampant behaviour is friendly, and not feral. The data allows for a match to be made and can also be used to determine the return on investment [ROI] on every step of the recruitment investment process. For instance, how many Linkedin inMails lead to a hire? Which paid for job advertisements are most effective? What is the quality of the hire? How long is the average retention of an employee sourced from a niche job board compared to a local recruitment agency? There is some way to go before the Kevin Costner effect in the film Moneyball is repeated by recruiters across the world as 64% of global talent leaders believe they are not effectively tracking the ROI on sources of hire (2015 Global

Recruiting Trends: Linkedin Talent Solutions).

Job Seekers and E-recruitmentCustomers expect a responsive experience on mobile job searches (visit www.thorpemolloy.com for example), and responsive does not just mean a speedy reply to a query. Users will disregard a website, community or job-board which does not load quickly, has difficult to populating fields, poor navigation and demands a laborious application process. A Glassdoor mobile survey found that although 75% of job seekers search for a job via mobile technology only 40% actually apply, indicating that the process is not user friendly. It is time for organisations to catch up with customer behaviour.

OK, so your strong social employer brand has created a stream of applicants who feel pretty confident about how much they know about your organisation and the type of place it would be to work. Your responsive website provided the gateway to a user friendly application process and the CV screening software and scoring metrics identified the best people to be taken forward to interview.

Right?

Maybe not.

CV screening software will not differentiate between the person who has invested a great deal of thought into the application process compared to a generic CV which has also been sent to 100 other job applications. Although the software can rapidly search through thousands of CVs it cannot select those who have been designed to catch your eye and it cannot listen to the podcast or watch the video blog which explains the career history of an individual with passion and relevance.

Interviews are another part of the recruitment process which defy the intervention of the digital process. Tools such as video interviews and Skype open up the world, but it is still people on either end of the camera. Online psychometric analysis is a valuable adjunct to an interview but completely inadequate independently.



The key issue in an interview is the quality of the questions. A recruiter will use questioning and perception to understand the extent of the research which the applicant has undertaken on the post and the company; a recruiter will make an informed judgement of the skills, experience, attitude and the odd blank space in a CV. A recruiter will determine the candidate who has the right ideas, problem solving abilities and personality to work well in the organisation. An investigation by employer branding experts Universum found that culture fit, personality and communication skills will be top priorities over the next five years when screening for talent. How can these be identified by “Big Data” and algorithms? For a visual illustration of this, take a minute to view “The Brains Behind The Butterflies” campaign by eHarmony. It is a different context but the same matchmaking principles apply https://www.youtube.com/user/eharmonyuk.

The irreversible change to how people interact across the internet has enabled unprecedented opportunities to engage and attract professionals, unlocking previously unimagined talent pools and empowering job searchers, employers and recruiters. E-recruitment is a billion dollar business with the aim of finding the most suitable candidates quickly, but technology is not yet the ultimate matchmaker.

Every recruitment professional utilises E-recruitment tools to some extent. They are streamlining and facilitating recruitment locally and globally and are particularly powerful for volume recruitment. Although it has enabled an incredible reach to be achieved there is much to be developed to consistently ensure a worthwhile customer service experience. Comprehensively understanding a role, writing an appealing job description and personal specification, using perception during interviews, building strong employer branding and facilitating first class on-boarding for new employees requires a human rather than a digital matchmaker. E-recruitment has the capacity to strip personality out of the recruitment process, turning it into a robotic procedure which is the antithesis of what it should be. A lifeline for job seekers drowning in the volume of online job postings is a recruiter who can identify them as the perfect match when relevant vacancies arise because they have taken the time to know the real person.

Savvy recruitment professionals are benefiting from E-recruitment, not being made redundant by it. Long live the human ultimate matchmaker!

Making E-recruitment work for you• HR and Marketing should work together to achieve maximum employer branding impact.

• Recruitment strategies must be devised which differentiate and engage target audiences.

• The job application process needs to support employer branding and relationship building activities and not diminish them.

• Identification of company data and analysis is vital. Be targeted and relevant.

• CV screening is not fool-proof. It cannot identify the excellent candidate who needs help “selling” themselves on paper, nor can it identify “white” lies.



OVERVIEW OF THE OFFSHORE WIND INDUSTRY

Professor Paul Mitchell, Offshore Renewables Institute

STATISTICAL CORNER



BACKGROUND In comparison to the UKCS offshore oil and gas industry the offshore wind industry is a relative newcomer and is still in its growth stage. They both operate on the UKCS and share parallel approaches to tackling cost reduction.

In the 1990s the oil and gas industry, then as now, was faced with a significant drop in the price of oil coupled with expensive and non-sustainable costs of operations. At that time the industry-led CRINE initiative and the parallel government-led oil and gas industry Task Force initiative led to the creation of the PILOT and LOGIC initiatives. Here standardisation, standard contracts, shared data and other initiatives were identified as means to control costs.

Twenty some years later the offshore wind industry was faced with costs of producing electricity which were viewed by government to be substantially greater than could be sustainable. As earlier with offshore oil and gas there was an industry led initiative and a parallel government-led initiative. The former was managed by The Crown Estate which resulted in the Cost Reduction Pathways Study followed a short time later by the report from the DECC-led Offshore Wind Cost Reduction Task Force. These set a target of cutting costs by 30% by 2020. The PILOT equivalent for offshore wind is the Offshore Wind Programme Board (OWPB) which again identifies standardisation of equipment, creation of standardised contracts and sharing data as means to help reduce costs.

OFFSHORE WIND INDUSTRY IN UK The UK leads the world in installed offshore wind capacity and with 4,494MW of Europe’s 8,045MW it has almost 56% of the European capacity. The next largest is Denmark (15.8%) and Germany is rising quickly with 13% currently. In European waters the bulk of the offshore wind capacity is in the North Sea (63.8%) with 22.5% in the Atlantic and 14.2% in the Baltic Sea. There are nearly 2500 offshore wind turbines installed in Europe across 74 offshore windfarms in 11 countries with the installed capacity producing 29.6TWh, enough to provide 1% of the EU’s total electricity consumption.

As of June 2015, the UK has 25 offshore windfarms which provide some 13TWh of electricity a year, enough to power 3 million homes. The industry is set to grow with 6GW of capacity expected to be installed by 2016 and 10 GW by 2020 which will provide 8 – 10% of the UK’s electricity demand. This is a sizeable sector employing 6,830 people.

This is a significant achievement considering that the first offshore windfarm at Blyth Harbour only started operating in 2000. Development since that point has been coordinated by the Crown Estate through a series of licensing rounds which progressively increased in size, water depth and distance from shore.

The first round, which was launched in 2001, involved 18 sites in England and Wales with a potential capacity of 1.5GW. This was followed in 2003 by the larger Round 2 sites which were located further from shore and in deeper waters in three strategic areas – Greater Wash, Greater Thames and Irish Sea – and when complete will add potentially 7GW of installed capacity.

Round 3 followed in 2010 and operates across nine zones throughout UK waters and has the potential to generate up to 13GW of power. Construction of these projects will start this year.

In addition to the Crown Estate’s licensing rounds the Scottish Government created its own scheme to work in Scottish Territorial Waters.

Of the five offshore windfarms under development in Scotland, the Moray Firth and Firth of Forth are under the Crown Estate’s Third licensing round and the Beatrice, Inch Cape and Neart na Gaoithe are in Scottish Territorial Waters.

Planning and delivery of offshore windfarms is a complicated and largely uncharted process as developers, the consenting authorities and the statutory consultees are still developing their understanding of the processes and issues. In simplified terms in order to develop an offshore windfarm a license is required to generate electricity and a consent to develop the project for both the offshore generating station and any onshore substation and facilities. Gaining consent is an expensive operation involving significant work over at least two years to gauge the level of environmental impact.



GOVERNMENT ASSISTANCE When many of the offshore windfarms under development were first muted the Renewable Obligation (RO) was the mechanism through which the subsidy system operated. The RO was established to help new renewable energy technologies to enter the market, with differing levels of support reflecting the state of maturity of the industry. Developers were paid a Renewable Energy Certificate (ROC) for each MWh generated and the number of ROCs varied with technology, reflecting the state of maturity of the technology. However, when the government instituted a revision of the electricity market, the so-called EMR – or Electricity Market Reform – consideration of the implications of its many facets spread consternation through the electricity industry.

Following protracted deliberations it was decided that ROCs would be phased out by the end of March 2017 to be replaced by a Contracts for Difference (CfD) mechanism which was less attractive financially but considered by government to give improved value for money. Probably the biggest system change is that under the ROC scheme a financially viable and consented project was eligible to receive ROCs at the rate appropriate for the technology. However, under the CfD mechanism the amount of funding for a given group of technologies was capped under the Levy Control Framework which effectively limited the number of projects that would receive contracts. The mechanism was further complicated in that an auction system was instituted where value for money, or the cheapest cost of electricity, was the determining factor. Following the first such auction earlier in 2015 just two projects - Neart na Gaoithe and East Anglia One - were awarded contracts. There will be another auction held later in 2015, assuming the government follows the published guidelines.

THE INDUSTRY IN SCOTLAND From a Scottish East Coast perspective there are five large offshore windfarms in different stages of development. All have received planning consent but only Neart na Gaoithe and Beatrice, both in Scottish Territorial Waters, have been awarded CfD contracts.

Four of the Scottish projects are in the Forth and Tay development zones and all (Neart na Gaoithe , Inch Cape and SeaGreen Alpha and Bravo) received consent to develop from the Scottish Government in October last year and so were eligible to potentially bid for CfD contracts at auction. However, it became apparent that the RSPB had issues with the consenting process and called for a Judicial Review which was heard at the end of May. The outcome will be very important as, although the JR is targeted at the process, it may impact on the capability of Neart na Gaoithe to proceed to development stage. As Donald Trump has demonstrated in his legal challenges against the development of the European Offshore Wind Development Centre in Aberdeen Bay, the appeals process can drag on for a long time, if allowed by the courts.

CAPITAL EXPENDITURE Whilst the development process is complicated and expensive with £10s of millions spent in development, the next step of building the windfarms moves the capital expenditure [Capex] into £100s of millions if not billions of total spending over a relatively short period. Operations and maintenance and ultimately decommissioning costs all have to be factored into the overall cost of generating electricity. The financial measures used to compare these costs is the Levelised Cost of Electricity (LCOE) referred to in terms of £/MWh. At the time of the work of the Crown Estate’s and DECC’s Cost Reduction Task Force the LCOE for offshore wind was in the order of £150/MWh and shortly later some projects were coming in at £164/MWh. The aim set by these two studies was to reduce costs by 30%, giving a target of £100/MWh by 2020.

The Cost Reduction Monitoring Framework recently reported that costs had fallen substantially mainly due to the faster deployment than initially thought of larger turbines which increased the amount of electricity produced. The results of the CfD auction are testament to the success of the industry in reducing costs with one coming in at £115/MWh and the other at £119/MWh. Some of the cost reduction has come through alliancing strategies and standardisation of components across several windfarms in the same ownership which allows serial production cost savings to be realised. The company Dong Energy is the largest owner of offshore windfarms in Europe with 24% of the installations at the end of 2014 and is benefitting from the economies of operating at scale to the extent that they are targeting a cost per MWh of 100 euros. Other companies such as Vattenfall are setting similar targets. With this attitude the industry will be sustainable.

Innovation in deployment systems is helping drive down costs and technology innovations targeted at increasing the size of turbines and gearboxes, together with improved blade shape and integrity to enhance longevity and energy yield and greater component reliability to reduce on-going operations and maintenance costs, will all have their place in trimming costs.

Foundations and substructures – the elements that anchor the turbines to the seabed and support them at the appropriate height – are significant cost items and provide challenges to the supply chain to deliver in a timely fashion. As turbines become larger, the distances from shore longer and the water deeper other technologies such as floating platforms need urgent investigation. Floating structures, whether they be the spars favoured by Statoil for the Buchan Deep project ,the semi-submersible installations potentially being deployed at the Kincardine project, both off the Aberdeenshire coast, or the tension leg platforms being promoted by the ETI, offer significant advantages and have export potential as the offshore wind industry is global, just like offshore oil and gas.


HEALTH AND SAFETY Health and Safety is a major concern for the offshore wind industry and, unlike the oil and gas sector, the HSE is not directly involved but rather it has encouraged the industry to develop its own standards and guidance notes. This challenge was initially adopted by the trade body Renewable UK which through a number of initiatives such as health and safety training, guidance and sound practice, incident reporting initiative, health and safety awards and the creation of the Offshore Renewable Energy Emergency Forum (OREEF), have driven the safety culture forward.

A significant intervention by the developers was the creation in 2010 of the G9 Association. This brings nine of the world’s largest offshore wind developers together to form a new group that places health and safety at the forefront of all offshore wind activity and development.

Through the sharing and analysis of health and safety incidents provided by the G9 member companies, an evidence based understanding has been developed of the risks encountered during the construction and operational phases of a windfarm project. The G9 is using this information to identify areas of high risk and develop guidance and mitigation strategies.

OFFSHORE RENEWABLES INSTITUTE

The Institute (ORI) was formed as a partnership by the universities of Aberdeen, Dundee and Robert Gordon in order to bring the skills of the three universities together to focus on the needs of the important offshore wind and wider marine renewables industries. It was through extensive discussion and engagement with industry that it was realised that, while there were other institutions in Scotland addressing technological solutions, there was a gap in terms of the process by which offshore windfarms are developed and managed.

The ORI brings the skills and experience of over 70 academics from across the three universities which is both multi-institutional and interdisciplinary and allows it to assemble teams of economists, civil engineers, environmental scientists and lawyers to address problems faced by the industry. For instance we have been reviewing the use of LCOE modelling and its application to optimise supply chain delivery in a Joint Industry Academic Project involving around 20 partners. Other projects, such as Risk Based Consenting of Offshore Renewable Energy [RICORE] led by Professor David Gray of RGU’s Business School brings together environmentalists, lawyers and planners to develop a risk based approach to the consenting of offshore wind projects to reduce the time and cost of carrying out an environmental impact assessment.

From a more engineering focused point of view the £2million investment in the Marine Renewables Test Centre at the University of Dundee brings state of the art technology to bear on geotechnical and materials testing on offshore renewables structures.

The main areas which the ORI addresses are:

Framing embraces regulation, law,

economics and finance, policy and

support mechanisms.

Consenting addresses environmental impact,

marine spatial planning, long-

term environmental monitoring,

mitigation strategies and the

consenting process.

Deploying involves design fabrication and

installation focused on foundations

and substructures, geotechnics,

materials, supply chain

development, alliancing strategies

and contracts.

Managing addresses issue of asset

management, safety and reliability,

health and safety, workforce

management and operations

management.

THE FUTURE Scotland has a tremendous potential to capitalise on its rich wind, wave and tidal resources and the industry is poised to deploy in the next few years several large scale wind farms which will contribute to meeting Scotland’s demand for energy and develop an export potential as other countries follow the European example.

The potential is huge and the industry is geared up to deploy at scale with reduced costs and strong local content to ensure job creation and long term prospects as the wind farms are managed over time. However stability is required in the policy regime. Offshore wind farms involve considerable capital investment but if there is not a sound funding regime investors will lose confidence. The industry needs to know the intentions of the UK government with respect to carbon reduction targets and the allocation to offshore wind in the levy control framework over the next few years. If there is clarity in this regard then the supply chain will be able to position itself to deliver the components in a timely fashion and ports can develop their services for the industry and to give investors confidence. If the current uncertain situation as to the position beyond 2020 continues then, as with onshore wind earlier, we run the risk of losing the initiative and other countries dominating the market.


EDUCATION AND INITIAL BUSINESS ROLE In case any of my school teachers are reading this, I have to admit I did not see the value of education in high school. I was too determined to gain entry into the world of business and so left school and ended up in jobs where I knew I could do better. When I was once shown how to use a squeezy cleaning bottle and blue roll to clean a table in a restaurant, I knew that life

needed to change!

Robert Gordon University helped to redirect my career. I studied for a BA (Honors) Degree in Public Policy and Management, graduating in 1997. This varied course really grabbed my attention and I even managed to spend a year in Canada on an exchange, where I gained my real passion for the field of Human Resources [HR]. I went from being a class clown in school to someone who enjoyed education and the reward was graduating with a First Class Honors degree. Whilst reluctant to say, my parents were right in saying that hard work does pay off!

Despite my passion for HR, I had a childhood dream of joining the police force. So in 1997 I went off to become a police officer in Grampian Police (now Police Scotland), based in Fraserburgh with the ultimate aim of moving into HR in the police. My degree course gave me the skills to have the confidence to don uniform after only 12 weeks of training and to be prepared to walk into situations for which you could never really train.

The reality of the police was that you could never change the way it worked. My degree course had made me very analytical and I wanted to challenge the existing order. I was often told that we couldn’t change the system. People that have worked with me know never to say that! Over time, this inability to make an impact caused too much frustration and I realised that my police service was over and it was time to move on.

After a few years in the police, I opted to go directly into HR as a profession. As the skills learned were very varied and valuable - my undergraduate course thankfully gave me this option.

I wrote to every oil and gas services company in the “Yellow Pages”, being a resident of Aberdeen as the oil capital of Europe, and secured a job for six weeks as a recruiter of trades personnel at £5 per hour.

I had to start at the bottom. University does not give you the ability to climb to the top of the ladder immediately – I had to manage my expectations, at least for a while. Just four years later, I had progressed to the Head of HR for a large global oil and gas services company. With a headcount of over 5000 staff and 60 in HR, it was just as well I had learned the right way to operate through my degree course, including some life skills which helped put that into practice.

My approach was to always give 120% and to ask endless questions so I could learn more and faster. This allowed me to continually evolve on the job through self- development and networks like the CIPD [Chartered Institute of Personnel Development].

A BUSINESS CAREER OPPORTUNITY In 2006, I was in the fortunate position of being part of the largest management buy out in Scotland in the past decade. Senior management bought the company for which I worked from its parent Halliburton (An oil and gas services major) and named it Production Services Network (PSN). This took me on a journey of leading a HR department across 23 countries, with a great team of 110 HR staff looking after nearly 9000 employees.

On many occasions I felt exposed. They say that if you do not feel exposed you are in the wrong job and I certainly agree with that. Studying an analytical degree certainly helped me to think on my feet.

DEAN HUNTER FOUNDER OF

ABERDEEN BUSINESS SCHOOL ALUMNI


I had to continually develop myself. As my role grew, then so did the company’s expectations of me. Continual professional development was easy to find in this role, and I did identify some great learning opportunities along the way. To be part of the Offshore Contractor’s Association for 10 years led me to participate in industry debates on The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) and Working Time Regulations, relating to offshore, as well as negotiating with trade union partners.

I was exposed to leading the people aspects of a multi-million pond merger, and I also gained extensive pleasure in developing my own team, many of which are now HR directors and vice presidents around town.

Development, or a lack of, is one of the main reasons that people leave companies. In my experience, I had to find these opportunities as no one was going to hand them over. They are there if you look for them.

From a learning perspective, I knew I had to stay ahead. In 2008, I studied via the virtual campus and gained an LLM degree in Employment Law and Practice at RGU’s Aberdeen Business School. In reality, if an HR manager wants to progress, then he or she must be able to speak confidently about the most complex employment law and employee relations issues.

At the age of 31, I joined the executive committee of that same company which was another huge step upwards. Once a subject is mastered technically, personal attitude and behavior, especially negotiation skills, the ability to listen and to influence others, become paramount. Ultimately having the ability to first of all manage, and then to lead.

“ROBERT GORDON UNIVERSITY HELPED TO REDIRECT MY CAREER. THIS VARIED COURSE (BA (HONORS) DEGREE IN PUBLIC POLICY AND MANAGEMENT) REALLY GRABBED MY ATTENTION AND I EVEN MANAGED TO SPEND A YEAR IN CANADA ON AN EXCHANGE, WHERE I GAINED MY REAL PASSION FOR THE FIELD OF HUMAN RESOURCES.“


A highlight of my career was being awarded the HR Director of the Year Award in 2008. This was sponsored by the Aberdeen Business School and was a very challenging process. The awards are more for the HR team than the manager but again are proof that hard work pays off.

The oil and gas services company was listed in the Times Top 100 Best Companies to Work For for four years in a row, despite operating in an industry known for its “hire and fire” policy.

In 2011, the company was bought by John Wood Group PLC in recognition of its high quality business culture and values. We took some comfort in the fact that we in HR had contributed to the success.

My gospel is to share the message that HR and sound people management can add a real tangible difference to commercial success by using no nonsense, practical HR language. It’s not rocket science. HR is ultimately there to support the business and on occasion lead it. Worrying about the profile of HR in a business is counter productive, as you can become defensive and over protective of your team. Eventually you realise that all walls can come down and HR can be a real partner with the business.

When PSN was taken over I had been with the same business in the same sector for nearly 14 years. It was time to use the entrepreneurial spark which I had acquired from the leaders with whom I had worked and create something special - I wanted to create a new business.

BUSINESS START – UP The vision of this business would be two fold; it would attract and retain the best HR staff in the field, and it would offer commercial no-nonsense HR support services locally, regardless of the client’s location in Scotland and latterly the UK.

In June 2011 Hunter Adams was born, starting with a laptop in my spare room at home. By the end of 2014, this was a company with 90 consultants across the UK, delivering over £5m in revenue per annum. We now have offices in Aberdeen, Edinburgh and London, and clients across the UK.

In 2014, we were awarded the “Best New Company in Scotland” by the Scottish Business Awards for our growth and development.

MY BUSINESS PHILOSOPHY We are most proud of the fact that, for a group of HR people, the team is of such great quality that we have managed to fund this business with £30,000 of loan funding, which was paid back by the end of month three following start-up. This has astounded investors. Not often do you hear the words commercial and HR in the same sentence but we are proving this day in and day out.

The signature product is our engagement process. We have helped business with up to 60% staff turnover reduce this almost immediately by providing practical bite size chunks of support. Culture is like a diet and bad habits surrounding staff management can lead to failure among firms with the highest business potential.

We practice what we preach and each year we independently gauge our culture with an external facilitator. We find out the focus of our staff for the year ahead and we make commitments to them. The key to success is then delivering on the factors which matter to the team. These commitments become our vehicle for communication through the year. In February 2015, we were listed as the top Scottish Company in the Times Top 100 Best Small Companies To Work For. You can never stand still and having a great culture takes extensive work and commitment and it has to be genuine or staff will see right through insincerity.

“I AM VERY PROUD TO BE AN ALUMNI OF ABERDEEN BUSINESS SCHOOL. DURING MY TIME IN THE CORPORATE WORLD WE HAVE SPONSORED THE MSC IN HUMAN RESOURCES MANAGEMENT FOR SEVERAL YEARS. WE HAVE MENTORED STUDENTS AND SPENT TIME WITH THEM TALKING ABOUT THE REALITIES OF HR AND THE NEED TO MAKE A DIFFERENCE.”


Our values - Team, Relationships, Integrity, Solutions Driven, Commercially Focused and Quality - describe who we are and how we work. We do not feel the need to plaster these all over our office walls; our whole team live by them and our management team model them every day – which is non-negotiable.

The unique selling point of the company is that it offers all HR services under one roof. No other HR consultancy does this in the UK. This means that we can truly partner with our clients such as Enquest PLC, BP, Sainsbury’s Bank and so on.

My role in Hunter Adams is to look after our clients and our team. I also lead our development panel to work to ensure our team receive first class training with us. In 2012, we launched an HR Academy to take people from other sectors and to convert them into HR careerists, whilst learning through Aberdeen Business School part time. We have some real success stories.

I am very proud to be an Alumni of Aberdeen Business School. During my time in the corporate world we have sponsored the MSc in Human Resources Management for several years. We have mentored students and spent time with them talking about the realities of HR and the need to make a difference.

In 2014 we launched an Innovation Den, akin to Dragon’s Den, to work with HR related students to understand the creative side of HR and we were blown away by their creativity and ideas. We do this because of the energy we gain from working with the staff and students at Aberdeen Business School and not to win any competitions!

We wish Aberdeen Business School another fantastic 50 years of delivering real life practical learning opportunities for its students globally.

PROFILE OF DEAN HUNTER Dean joined the HR profession 17 years ago in search of a new challenge and enjoyed a meteoric rise to become the global HR director of the billion dollar oil giant PSN employing 8,500 people throughout the world.

Management-buy-outs are about managing and keeping people in the midst of monumental change. In May 2006, Dean led the management buyout from the Halliburton Group of the oil giant Production Services Network (PSN). This business was subsequently ranked as a Top 3 company for employee wellbeing and a Top 10 company for employee retention.

As global HR director at PSN, Dean was responsible for around 8,500 employees in more than 20 countries and designed and delivered a corporate culture ranked in the Times Top 100 Best Companies to Work for in 2008, 2009, 2010 and 2011. In less than two years he managed to reduce the staff turnover of the company from 40% to 7%.

In 2014, Hunter Adams was voted ‘Best New Company’ in Scotland at the Scottish Business Awards. It was also listed as the top Scottish Company in the Times Top 100 Best Small Companies To Work For in 2015. Over the past fifteen years, Dean has negotiated with challenging trade unions and been a leading force in industry debates including T.U.P.E and Working Time. Dean has pioneered ingenious employment strategies converting talented personnel to the oil and gas industry. He is also co-founder of the Scottish HR network of Employment Eye with over 200 members and is a Fellow of the Chartered Institute of Personnel and Development (CIPD) as well as holding a Masters in Employment Law and Practice.

Dean drives Hunter Adams with the same talent and determination. In spite of the economic downturn, by the 100th day of business, Hunter Adams had secured contracts in the UK, Norway, Singapore, Baku, Houston and Australia.

“THE SIGNATURE PRODUCT IS OUR

ENGAGEMENT PROCESS. WE HAVE HELPED

BUSINESS WITH UP TO 60% STAFF

TURNOVER REDUCE THIS ALMOST IMMEDIATELY

BY PROVIDING PRACTICAL BITE

SIZE CHUNKS OF SUPPORT.”


HARNESSING THE POWER OF STUDENT ALUMNI – THE EXPERIENCE OF ROBERT GORDON UNIVERSITYClaire Shaw, Head of Alumni Relations, Student Services, Robert Gordon University

THE VISION OF THE ROBERT GORDON UNIVERSITY FOR GRADUATE EMPLOYABILITY IS THAT ITS STUDENTS SHOULD BE RECOGNISED AS THE MOST FIT-FOR-WORK, INNOVATIVE, CREATIVE, AND ENGAGED PARTICIPANTS IN THE LABOUR FORCE AND THE ECONOMY, AND THAT THE UNIVERSITY SHOULD SUSTAIN A REPUTATION FOR ITS CLOSE ENGAGEMENT WITH EMPLOYERS.

THE STUDENT JOB MARKET The vision of the Robert Gordon University [RGU] for graduate employability is that its students should be recognised as the most fit-for-work, innovative, creative, and engaged participants in the labour force and the economy, and that the university should sustain a reputation for its close engagement with employers.

Over the past decade RGU has acquired an enviable record in this context, securing its current position as the number 1 UK university for graduate employment. This has been a significant factor in increasing the recognition and status of the university, both nationally and internationally.

However, with the recent drop in global oil prices and the resulting pressure on jobs in the oil and gas sector, and specifically in Aberdeen, it is increasingly important that our students are given every opportunity to enhance their employability skills, enabling them to stand out from the crowd in the highly competitive graduate job market.

“Principles, Pragmatism

and Perseverance“

Hamish Dodds

President and CEO of

Hard Rock International

& RGU Graduate

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RGU Inspirational Alumni

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“Whatever you

Lynn CalderVice President Lime Rock Partners, Trustee RGU

Foundation Board & RGU Graduate

believe you can do, start it now. Be bold in your dreams and believe in yourself. What

comes next can take you on an incredible journey.”

“University isn’t

Judith Wallace

IM Advisor/Business Analyst

at Shell & RGU Graduate

just a tick the

box exercise.

It’s about

maximising your

potential and

making YOU

the number one

candidate.”

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“Give yourself permission to

aim high in work and life“Alan Fotheringham

Global Director at Wood Group Kenny& RGU Graduate

44191/0415/AM


ABERDEEN BUSINESS SCHOOL PLATFORM


The Higher Education Policy Institute Student Experience Survey 2014 reported that student expectations are high and seemingly becoming higher. During his time in office as the British Minister of State for Universities and Science, David Willetts emphasised that alongside league table positions, new buildings, placement opportunities and professional accreditations, students are seeking direct engagement with alumni. Prospective students are increasingly seeking to understand and assess the quality of past and recent graduates and their achievements since graduation. Incoming cohorts of students want reassurance that alumni will play an active role in their career development, mainly through opening up their networks of influence and sharing their own real experiences in order to help students improve their job prospects. In essence, they want to use the careers of alumni as a lever to support their own employability.

Alumni are uniquely placed to provide advice and guidance to students on navigating those first steps into graduate employment alongside the services of the Careers and Employability Departments that are available on university campuses, so helping graduates to build their own networks and expand their opportunities. It is therefore both timely and important for RGU to redefine its policy for engaging alumni. To facilitate this kind of authentic connection with alumni we must consider graduates as continuing to belong to the university community long after graduation and acknowledge our role in supporting the journey of the graduate as their career unfolds through times of success and transition (Vanderlelie, 2015).

STUDENT EMPLOYABILITY AND ALUMNI By building a strong connection with alumni, universities have the power to enrich teaching in a manner that is not only informed by industry experience but also takes it further by facilitating connections between theoretical knowledge and professional job applications (Lizzio, 2011). To support the enhancement of the student learning experience provided by RGU and to enhance student employability and success, it is vital to develop evidence-based methods to engage alumni in a mutually beneficial relationship with the University.

Alan Dick is the Chairman of RGU’s Alumni Council and Vice President at Simmons & Company International. He strongly believes that there are numerous benefits which alumni can exploit when engaging with and supporting RGU. These include access to quality graduates; the ability to guide graduates towards careers and skills that fit their own organisation’s needs; and the opportunity to increase the visibility of their organisations.

However, in order to build and maintain these linkages, more work needs to be undertaken to explore the factors that motivate alumni to seek a relationship with their alma mater.

During her presentation on “Re-visioning alumni relationships to improve graduate employability” at the recent Students Transitions Achievement Retention & Success conference on student achievement and success, Dr Jessica Vanderlie [Senior

Lecturer and Graduate Advisor within Griffith University’s School of Medical Science and School of Medicine, and recipient of the 2012 Australian Award for University Teaching] proposed the following key questions to open sector wide dialogue on effective methods of alumni engagement:

1) Which methods do universities currently employ for engaging with alumni and the strengths and weaknesses of these approaches?

2) Which new approaches to engagement with alumni would maximise value for recent graduates, alumni, universities and professional networks?

3) Are current measures of graduate success congruent with our graduates’ perceptions of success?

4) How can universities more effectively support the study-work transition?

RGU has recently launched an Inspirational Alumni Campaign on campus, celebrating the incredible success of our graduates and inspiring our students to aim high to achieve their ambitions. Hamish Dodds is President and Chief Executive Officer of Hardrock Café. As a graduate of Aberdeen Business School he is one of the many RGU alumni who have kindly supported the university in this campaign, citing “Principles, Pragmatism and Perseverance” as the key to his success.

THE FUTURE The focus is to harness that wealth of information and experience and inspire our alumni to reconnect RGU and support the next generation of students and graduates. A university that could harness the total population of alumni behind a mission would send out a powerful and inspiring message (Creamer, 2011). RGU has approximately 90,000 alumni and there are numerous ways to utilise their willingness to offer their precious time to the university in this quest.

Whenever we reach out to our alumni we are genuinely overwhelmed by the warmth that is conveyed and their willingness to give support. We have a responsibility to our students to unlock the potential of our alumni to enhance their experience and employability and we have an equal responsibility to enable our alumni to assist their alma mater and make a difference to student and graduate employability.

REFERENCES Vanderlelie, J. (2015) Re-visioning alumni relationships to improve graduate employability. Retrieved from http://www.unistars.org/papers/STARS2015/07G.pdf

Lizzio, A. (2011). The Student Lifecycle: An integrative framework for guiding practice. Griffith University. Retrieved from http://app.griffith.edu.au/assessmentmatters/pdfs/student-lifecycle-framework.pdf

Creamer, A. (2013). Universities should see alumni as a talent pool not a money pot. The Guardian, Higher Education Network

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“Whatever you

Lynn CalderVice President Lime Rock Partners, Trustee RGU

Foundation Board & RGU Graduate

believe you can do, start it now. Be bold in your dreams and believe in yourself. What

comes next can take you on an incredible journey.”

“Give yourself permission to

aim high in work and life“Alan Fotheringham

Global Director at Wood Group Kenny& RGU Graduate

44191/0415/AM


ABERDEEN BUSINESS JOURNAL 2015 • Page 52 ABERDEEN BUSINESS JOURNAL 2015 • Page PB

Robert Gordon UniversityGarthdee Campus

Garthdee RoadAberdeen AB10 7QE

United KIngdomwww.rgu.ac.uk

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Documents

RGU Aberdeen Business School Journal 8 Sept 2015