Thinking of Diversifying from Oil & Gas to Offshore Wind? Here are a few things to consider…
We’ve heard the saying that the only constant thing is change. As a young nurse, I had to change my career path due to health reasons. Then as an employee in the oil and gas supply chain, I changed again in 2015. This time, to become self-employed and align my career with my ‘why’.
For the oil and gas industry, there have been many changes over the past 5 years. Economic downturns, political powers and climate change mean the oil and gas industry has and will see some of the most constant change it has ever seen.
But just like my career, with the change, comes opportunity. Offshore Wind presents considerable diversification opportunity for Oil & Gas companies that act quickly and for the right reasons. The world’s offshore wind capacity has more than trebled in the past five years. Within the following ten years, it could represent capital over £200 billion across this period.
The developers and suppliers in the Offshore Wind sector are looking to reduce costs. This includes incorporating best practices and technologies from other sectors. If there was ever an opportunity for the oil and gas industry to share its expertise and experience in a market that needs it, this is it!
This blog discusses transferrable skills and expertise that make diversifying to Offshore Wind a fantastic opportunity for many Oil & Gas companies. I also highlight top tips for what to consider for companies planning to diversify.
What is the Transferrable Expertise Between Oil & Gas and Offshore Wind?
The need to work in a harsh, offshore environment is common in many energy sectors such as oil and gas and renewables e.g. offshore wind. For instance, offshore work relies on good weather. It also depends on whether projects go ahead as planned. Delays in a project (due to bad weather conditions, for example) affects the project timeline and can significantly increase costs. If you work on subsea projects where the fabrication of topsides, and floating/fixed structures are critical to project progress, you’ll know what I mean.
Transitioning into other energy sectors is already happening in the Oil & Gas industry. For example, some EPC contractors e.g. Aker Solutions and Wood, have renewable divisions in their business. A few Oil & Gas Operators have started re-introducing themselves to the market as “energy” companies. Equinor and Shell are an example of two Operators that have already started this process. With Energy Transition in full swing I’m sure that we will see more of this over the years ahead.
- Project management
- Array cables
- Substation structures
- Turbine foundations
- Secondary steelwork
- Cable installation
- Installation equipment
- Installation support services
- Maintenance and inspection
You will also get some great insight to the industry challenges and technology advancements speaking with ORE Catapult.
What skills do I need to diversify from Oil & Gas to Offshore Wind?
What you need will depend on your company’s current capabilities. But certain things are crucial, regardless of your market offering.
You will always need highly skilled people that deliver a market-leading service. Your company should be credible and known as a leader in your current market. That said, you don’t need to be the best at everything. If you provide many services, for instance, identify what you are truly good at. This can be hard for companies to do – we, business leaders, like to think we are good everything! But to diversify, you increase your success rate if you plan to deploy an offering that is your core expertise.
It’s awesome to be technically sound. But you run the risk of not being commercially astute. To successfully diversify, you need experienced people in your sales, marketing and contracts functions. The commercial team needs a good understanding of the Offshore Wind sector so that they know how to work the commercials and they can modify business models appropriately.
How can I know enough about Offshore Wind to make an impact?
Market research is a large part of this to make sure that you indeed have a transferrable product and/or service. Membership bodies are also helpful. You can utilise them to track projects, industry intel and they can provide networking opportunities. Share your insights with your technical and commercial teams so that they understand the market landscape and what it takes to compete.
If you have 10+ people in your business that all have extensive knowledge in the Oil & Gas sector, bringing in someone who has experience from the offshore wind sector could catapult your market entry. They know a lot of the do’s and don’ts and may already have a network. Other options are to partner with a company that has the expertise and knowledge that you need. You could also bring in consultants for a while, ensuring that they have a clear mandate and that your staff learn as much as possible so the knowledge transfer creates a sustainable impact.
If you plan to focus on a new sector such as Offshore Wind, you must change how you talk about your offering. Messaging that engaged your Oil & Gas clientele won’t necessarily do the same for an Offshore Wind company. I often see Oil & Gas companies going to Offshore Wind events and saying the same value proposition that they use for the Oil & Gas market.
They may have changed the images from FPSOs to Wind Turbines, but the content is still very Oil & Gas focused.
I compare this approach to having a standard CV and not tailoring it to each role and/or industry. Lack of effort can lead to doors closing and opportunities becoming few and far between. Take the time to make sure you’re diversifying in the right place.
Initial market intelligence and market research are so important. If after this you still think it’s right, spend your time and money into creating your marketing material, message and even some case studies. Take Oil & Gas studies and put an offshore wind angle on them or show the comparable offering.
What does it cost to diversify?
There are always costs that come with market research and gaining market intelligence, even if that cost is just your time. There is so much you can do to find out this information online for free. But there’s a cost in putting resources into actually doing the research. If you want in-depth research, there’s a cost for engaging third-party companies such as Wood Mackenzie and market research companies.
Upskilling your staff in areas of sales and marketing will have a cost too. As part of preparing to succeed in diversification, you’ll need your team to build a strong, supportive network that is slightly (or very) different from the network they had before.
Hence, you need to invest in networking, attending and exhibiting at relevant trade shows and looking out for opportunities for editorial and/or public speaking to share your offering with the industry. These are all great ways of driving increased visibility for your business, showing that you’re a company to be considered in the new target sector e.g. Offshore Wind.
I’ve learned from my recent experiences within Offshore Wind that many decisions are not made here in the UK. You may need to travel more widely in Europe, the US and Asia to learn and build relationships.
The main point is that offshore wind projects are being increasingly funded by venture capitalists and third-party investors. It can be quite difficult to navigate your way through and understanding what boxes you’re going to need to tick in those early stages.
There are things to consider such as warranty bonds when working in offshore wind. This has become a sticking point for some of the smaller businesses that don’t have the cash to front for them. There are several support organisations so people are becoming more aware of what’s on offer and how to get the support they need.
You can read a little more on the Investment process within this Crown Estate report.
Where can I get support for diversification?
A Scottish Enterprise publication explains initiatives and organisations that support oil and gas companies to find opportunities within offshore wind. The guide also highlights existing support available for Scottish companies.
Some other organisations and initiatives not included in the document include:
AREG – Aberdeen Renewable Energy Group. It’s a low-cost membership that puts you into a directory of key supply chain, gives you networking and project opportunities and much more.
Navingo – a Dutch Media company with a focus in Offshore Renewable publications and events.
DoqaruCon – A Sales Development conference for companies in Oil & Gas and Offshore Renewables which will touch on Diversification during the content. The event is on the 5th March 2020 in Aberdeen.
There are a lot of options out there, picking the right one for your needs is important.
Skills Development Scotland can also support. If people need financial support to re-train staff for working at offshore wind farms, then they can support putting them through the courses. It’s not just for businesses but individuals as well.
So, what should you consider before diversifying from Oil & Gas to Offshore Wind?
1. Be patient and do not rush. If you want to be successful in the offshore wind industry you need to be ahead of the curve with your offering.
2. Align your online content. Your website should mirror whatever you are saying when you’re in face-to-face meetings or at events.
3. Consider the costs. Don’t assume that you can do it all for nothing or on the cheap. It’s not just money – also consider resources and skillset.
When you make a change, it requires significant investment in yourself so make sure you put in the work. I’ve learned so much in my journey from nursing to business development consultant and business owner. It wasn’t always easy and it costs me time, money, brainpower and energy. But it was worth it – just like it is worth putting in the effort to diversify into the Offshore Wind sector if it’s the right fit for your company.
Have any of you already diversified? If so, I’d love to know about your experience! What were you biggest challenges? How did you navigate them?
If you’d like to have an informal chat about your diversification plans or you’re looking to bounce off ideas that this article may have sparked, send me a private message here and I’ll be in touch!