GE Oil & Gas and McDermott recently launched io oil & gas consulting, a new independent venture that the founder says is designed to transform the development of front-end solutions for offshore fields.

The new firm describes its mission as instilling greater certainty into the design and planning of an offshore oil and gas field as well as overhauling the current operator-contractor relationship.

“io is an independent consultancy backed by two industry big hitters, GE Oil & Gas and McDermott,” said Dan Jackson, io CEO. “It’s a new model of consultancy, plus it is bringing together the contracting community and the operators to get a better blueprint in the planning phase. We believe there is an opportunity to do that a lot better.”

The fact that the oil price is now about half of what it was when the company was in development makes the new consultancy far more potent than it would have been, Jackson said.

“We saw that the industry was in a hiatus a year ago, with big operators canceling projects, putting them on hold and rethinking them even with the higher oil price. The current oil price has made these decisions more urgent as they cannot afford to continue with big, inefficient projects.”

Better planning

There is a better way of doing the planning stage, Jackson said.

“Some contractors are suffering tremendously from poor planning right now,” Jackson said. “That means there has been a complete mismatch of expectations in terms of schedule, costs, risks and in the technical solutions. The big issue is that most projects, certainly most megaprojects, significantly overrun on budget and schedule. Schedule delays in some circumstances are as great as or more damaging than just the cost overruns.

“The statistics are staggering. Conservatively, two out of three megaprojects are over budget and behind schedule.”

Jackson said that over budget often means by 60% or more and being behind schedule means 18 months delayed.

“That statistic is exaggerated more in remote locations, challenging environments and in more technically complex projects,” Jackson said. “There is just no certainty in the planning stage. Projects are falling over during execution because of a very poor plan at the front-end stage.”

Contractors today, with a few exceptions, are only engaged at the back-end of the tender stage, Jackson said, and the amount of influence that they can have during the tender stage is next to nothing. The influence is merely covering up the problem and only offers a very small percentage of change at the end of the day.

“We want to offer a lot more certainty in the blueprint at the planning stage,” Jackson said. “Certainty in the planning means certainty in the contracting of the tender stage, which means far more certainty during execution. I think we have a unique opportunity in the market. There’s no one with the knowledge that io has. There are specialist engineering firms, some of which are very good. They’re specialists in one component or another. They may be specialists in topsides or hulls, for example. But io’s realm is the full-field development, and this is a very important point. The whole system is what matters, not optimization of a component. And we’ve lost that in the industry.

“We haven’t changed the model of how we contract our field developments. We do it in a very piecemeal way. We optimize each component individually. The operator has the responsibility to integrate the whole system, but no contractor is in the market offering that.”

Jackson sees io as more akin to an architecture firm.

“We view the whole system,” Jackson said. “We need to go from the reservoir downhole, seabed, surface, production facilities, whether they’re floating or fixed, to the transportation system for the product. At the moment I don’t see anybody in the market with the knowledge for a full-field development that can put it into a blueprint. That’s what io is doing that’s very different. It’s bringing together the contracting community’s knowledge with a purpose to get a better blueprint so the projects will proceed successfully. And what we will do is identify and remove the inefficiencies from the system.”

The inefficiencies start at the planning stage, Jackson said, and that is where they need to be removed.

“We need to get to solutions that use technologies that are appropriate for the application,” Jackson said. “We’ve seen specifications from one project to the next just spiraling out of control. If you’re developing a project on a piecemeal basis and you’re just looking at individual components, projects end up justifying unnecessary levels of excess. We need to start with a base that is sensible and suitable for the application. We’re in a world where reliability, integrity and safety are paramount, but this does not justify having things included that don’t need to be there.”

Independent entity

Jackson stressed that io is independent of its parent firms. “We’re set up separately and are operationally independent. We will not create solutions that suit a parent entity. Our responsibility is to the operators, so we’re engaged as a consultant. There is a process of how we gain access to the knowledge and the specialties of our parent that clients might need. io is here to change the industry and to change the way that we plan projects.”

The other thing that differentiates io is that it will operate only at the front-end stage, Jackson said.

“We’re not chartered with going into the execution phase,” Jackson said. “We don’t need to. Our purpose is to provide a better blueprint so that the planning stage finishes at the end of FEED or the tender stage. That’s when—if the plan’s right—the contractors all know what they’re doing, and we let them get on with it.”

Technology enablers

New technology will play an important role going forward, Jackson said. “There are tremendous opportunities for technology enablers. Without going into specifics, there are some technologies that offer refinements and improvements to the way that a component works, for example. These can provide an incremental benefit, a cost saving, a reliability benefit or something else. But the real enabler comes when you look at a system as a whole and see whether they’re seabed technologies, downhole technologies or even topsides technologies.”

Sometimes the industry struggles to bring in the new technologies that become available, Jackson said, because of the way the industry is structured in terms of a piecemeal approach. This is how io and its holistic approach can help.

“At the moment, the knowledge being used to put the blueprint together is out of date and inaccurate, so the blueprint is wrong and, therefore, the operators are struggling with engaging with the contractors at the tender stage,” Jackson said. “io, with access to McDermott’s knowledge and GE Oil & Gas’ technical strength, is perfectly placed to help operators.”

Joining Jackson in the io leadership team are Mark Dixon, CTO, with more than 20 years in the offshore oil and gas sector, including extensive startup experience; Tony McAloon, COO, with a 35-year track record of business governance experience in the industry; and Oliver Dixon, CFO, with 15 years of experience driving companies’ growth strategies.

io is headquartered in London and will launch satellite offices in the U.S. and Asia.