The Big Interview - The black art of the black gold
Given the predicted decline in North Sea oil and gas output over coming years, is this a good market for a panel builder to be in? Tim Fryer asked Richard Cowling of PDC Systems, a company specialising in the field
PSB: How much of your business is involved in the oil and gas industry?
RC: Probably around 80 – 85%. At present like everybody else we are looking for a diversity in markets, so we are changing the company structure slightly to accommodate that. The North Sea oil industry has changed its requirements and we now try and get 50% of our business from exports. Many of the exports doors are opened for us by using the technology available in the North Sea - clients standardise on one product that is then used world-wide. Aberdeen becomes our route to market for these companies.
PSB: This diversity is presumably a consequence of a reduction in North Sea oil & gas reserves?
RC: Its difficult to tell. Its hard to believe that given the amount of space we are talking about that they have hit the best reserves in the North Sea. I’m sure that there is quite a lot of untapped or undeclared or ‘tight holes’ out there.
PSB: Tight Holes?
RC: That is where they drill their holes but don’t release information from it. I think new technology will help. The methodology of getting the oil out will change. I don’t think the days of the big platforms will come back - that market is gone. I think technology enhanced recovery, as is going on now, will extend field lives considerably. One new development is CO2 injection – that is the type of clever step forward that is going to occur. We have got a £5.5m new project that has just been announced that involves separating CO2 out of the hydrocarbon, firing a gas fired power station and reinjecting the CO2 back into the North Sea, therefore enhancing recovery and reduces greenhouse gases by putting the CO2 back from whence it came.
PSB: What are the bulk of the panels used for in the oil and gas industry?
RC: One of our main panels, of which there are now over 450 worldwide, is used for monitoring fire and gas in portable accommodation systems, and has become an accepted standard that a lot of clients are very happy with. We based this product on good design, reliability, maintainability and accessibility so that we put quality engineering into the front end. There are variations but it is a standard product we have developed to meet industry needs. We can work to create the design for clients or if they have a design we can integrate it for them so that covers everything from standard electrics through to PLC control systems.
PSB: Beyond your reliability, maintainability and accessibility, are there any other considerations, like ATEX compliance for example, that are critical to the oil and gas industry.
RC: They have to meet a lot of restrictions regarding the areas of operation and the atmospheric conditions they are in. The area of operation from Zone 1 and 2 is different technology requirements, but generally our experiences gained over a number of years by practical involvement in the industry can provide solutions. It still appears in many cases as being a black art - but it all comes back to good engineering.
The ATEX laws when they came out still have a number of black holes and people are still building panels that technically they should still not be building because they are uncertified to do it. Under ATEX you are supposed to be ISO 9001 certified, you should be quality assured and you should have a quality certification notified body. There are still a number of black box companies around that stick components in boxes and pass them off as fully certified and authenticated under the CE declaration, which is mandatory with every
piece of equipment now under the EC laws - but nobody seems to have policed that.
PSB: How many panel builders do you have?
RC: We have just increased to ten. We have built it up slowly to try to keep control of it because the oil
industry, like many other industries, is like a roller coaster. Unfortunately this country seems to be having a ‘no-industry’ syndrome at the moment where we seem to be determined not to support industry while we seem determined to support the civil service. Developing new products and supporting technical industries
we are remarkably poor as a country.
PSB: The whole status of engineers and engineering is not as good in the UK as it is in other countries, even European countries.
RC: We have gone down the route of believing that people who polish seats in government offices produce worthwhile revenue. They are prepared to waste money and they are not prepared to put money into backing technology. There are a number of things like Enterprise Trusts - £415m budget in Scotland of which £15m goes to help the universities and £400m goes into polishing seats. If you gave 400 Scottish companies a million pounds each then I am sure they could show a more useful way to spend it. To look forward into the future you really need to get an idea of what the requirements are - that is how we will get back on the technical basis. I’m not looking for handouts like the agricultural policy, we are looking for
something more beneficial to be done.
PSB: So what is it you want?
RC: I think it is mostly when you are developing products and need some money to move forward. I have been through the SMART track before and spend an awful lot of time and wasted effort to get to the point when you are then vetted by a committee who do not understand my business. Alternatively, you have to go to one of these investment trusts that put money into your company, and the first thing that disappears is 95% of your company. Now I set up the company to last for generations to come, not to hire and fire and
take the money and run. We started up the business 13 years ago and have put a lot into the company and I would like to see it last for staff to have a job that was challenging and rewarding.
PSB: Would you like to see money available when companies are developing product or bring them to market?
RC: It’s difficult to lay a direction on that. I would certainly be interested in exploring a methodology of funding that isn’t overloaded with paperwork and where the money doesn’t disappear before it gets to where it is needed.
PSB: So a company has either got to grow very slowly and organically or it has to take the risk of being put into the hands of the bean counters?
RC: Yes - in which case you are liable and lose control immediately. And its not control freakery. We set up the company with a blank sheet of paper when I was made redundant, 49 years old, we funded it and have done so right the way through and are privately owned and we owe nothing to anybody. So in some ways we are a traditional British industry. The Midlands used to be a fortress of innovation. Small companies that
could turn out anything, If you needed a left hand squiggly widget there would have been a company in the Midlands that would have been able to make it for you.
We seem to have gone down the route of thinking that if we build a factory in the third world country where salaries are low than that is good business. But why is it good business. Why are we not competitive. There is so much waste of money and the people at the sharp end who create jobs for other people are being screwed down and down and down. It is the profit makers in the middle who have no commitment to anybody who are destroying this.
PSB: Are you optimistic about the future of the panel building industry?
RC: I think in general if look at where the market is going to come from then it is difficult to judge, but if you look at the panel industry at the moment I wouldn’t say its halcyon but its relatively buoyant. Other industries are very difficult to follow because they are up and down so quickly. Diversity is the key factor.