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USA: FMC Technologies, Edison Chouest Offshore Team Up

FMC Technologies, Inc. announced today that it has formed a joint venture with Edison Chouest Offshore LLC. The new company will be based in Houston.

Utilizing the subsea technologies, tooling and expertise of FMC Technologies, and the vessel, port logistics and ROV operations of Edison Chouest Offshore, the new company intends to provide integrated vessel-based subsea services for offshore oil and gas fields globally. Services to be offered by the joint venture include equipment intervention, riserless light well intervention, plug and abandonment and other services. The company’s objective is to provide cost-effective solutions to enhance the customer’s ability to initiate, maintain, and increase production from subsea field developments through efficient operations, innovative technologies and a broad inventory of vessels and tools.

 ”We are pleased to be working with Edison Chouest Offshore to expand the portfolio of subsea services offered by FMC Technologies,” said Tore Halvorsen, FMC Technologies’ Senior Vice President, Subsea Technologies. “This joint venture will provide integrated subsea solutions to address the growing needs of our customers to increase production and improve field recovery rates.”

 ”We look forward to working with FMC Technologies on this new venture,” said Dino Chouest, Vice President of Operations, Edison Chouest Offshore. “Their leadership in the subsea market combined with our expertise in marine transportation will bring new integrated technologies and operations to the development of subsea fields.”

Subsea World News – USA: FMC Technologies, Edison Chouest Offshore Team Up.

ReCap: Worldwide Field Development News Dec 23 – Dec 29, 2011

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This week the SubseaIQ team added 2 new projects and updated 11 projects. You can see all the updates made over any time period via the Project Update History search. The latest offshore field develoment news and activities are listed below for your convenience.

Mediterranean
Noble Finds Gas Pay in Cyprus
Dec 28, 2011 – Noble Energy has made a natural gas discovery at the Cyprus Block 12 prospect, offshore the Republic of Cyprus. The Cyprus A-1 well encountered about 310 feet (94 meters) of net natural gas pay in multiple high-quality Miocene sand intervals. The well reached a depth of 19,225 feet (5,860 meters) in a water depth of 5,540 feet (1,689 meters). Results from drilling, formation logs and initial evaluation work indicate an estimated gross resource range of 5 to 8 Tcf, with a gross mean of 7 Tcf. Noble plans to appraise the find. Noble Energy operates the discovery with a 70 percent working interest; while Delek Drilling and Avner Oil Exploration each hold 15 percent.
Project Details: Cyprus (Aphrodite)
Europe – North Sea
Aker Solutions to Supply Subsea Equipment for Svalin Development
Dec 29, 2011 – Statoil awarded Aker Solutions a contract to engineer, procure and construct a subsea production system for the Svalin development in the Norwegian sector of the North Sea. The scope of work includes two subsea trees, one four-slot integrated template structure with process distribution manifold, subsea and topside production control systems, wellhead systems and remote connection systems. Final equipment deliveries are slated for 3Q 2013. Svalin is a fast-track oil field project situated in a water depth of 394 feet (120 meters).
Tendeka Secures Sand Control Frame Agreement for Troll field
Dec 28, 2011 – Statoil has granted Tendeka a major frame agreement for the provision of sand screens and inflow control devices and services for use in the Troll field. The contract is for an initial three-year period with a further two optional extensions, each of two years. Tendeka’s scope of work includes the provision of sand screens with associated inflow control technology and services for deployment in the field. Troll produces 400,000 barrels a day from three platforms northwest of Bergen. Troll, a natural gas and oil field, lies in the northern part of the Norwegian sector of the North Sea, about 40 miles (65 kilometers) west of Kollsnes, near Bergen. Statoil, holding a 30.59 percent, operates the field; Petoro holds 56 percent; A/S Norske Shell holds 8.1 percent; ConocoPhillips holds 1.62 percent; and Total holds 3.69 percent.
Project Details: Troll Area
EnCore Reaches TD in Tudor Rose
Dec 28, 2011 – EnCore Oil has encountered an oil column in the Tudor Rose well within the targeted Beauly formation and oil water contact at 3,236 feet (986 meters) total vertical depth. The operator gathered wireline samplings and conducted pressure testing of the hydrocarbon-bearing zone. Initial wellsite analysis of the samples suggest a viscosity of 600 to 800 Centipoise, which is likely too viscous to be commercially exploitable. EnCore says further onshore analysis is required before the provisional evaluation can be confirmed. The well will be plugged and abandoned. The Tudor Rose well is located on Block 14/30a in the UK sector of the North Sea. EnCore operates the block with a 40 percent interest; while Nautical Petroleum holds 20 percent; Endeavour holds 20 percent; and EnQuest holds 20 percent.
Project Details: Tudor Rose
Endeavour Acquires UK Producing Assets
Dec 27, 2011 – Endeavour has entered into a purchase and sale agreement to acquire ConocoPhillips’ interest in three producing UK oil fields in the central North Sea for $330 million. Endeavour will increase their current ownership interest in the Alba field, a late Eocene reservoir that has been producing since 1994. Additionally, the company will add ownership interests in the MacCulloch and Nicol fields. Endeavour’s aggregate working interest in the Alba field will be 25.68 percent following the closing of the acquisition. The company anticipates assuming operatorship of the MacCulloch field, subject to final partner agreement.
Project Details: Alba
Antrim Sidetracks Erne Discovery
Dec 27, 2011 – Antrim Energy announced that the Erne discovery well sidetrack, 21/29d-11Z, encountered about 24 feet (7 meters) of net oil pay and 14 feet (4 meters) of net gas pay in a high-quality sandstone reservoir. Initial interpretation is that the well has penetrated a separate accumulation from that in the 21/29d-11 discovery well, but further work is necessary to confirm this, stated the operator. The 21/29d-11Z well will now be suspended for potential future re-entry and use in the development of the Erne discovery. The 21/29d-11Z well was designed to appraise the Erne oil discovery in the Eocene Tay formation, and was drilled up-dip of the discovery location to a total depth of 5,124 feet (1,562 meters). Erne is located in Block 21/29d in the UK sector of the North Sea. Antrim Energy operates Block 21/29d.
Project Details: Erne
BG Discovers Oil in PL 373 S
Dec 27, 2011 – BG Norge has made an oil discovery in the North Sea in Production License 373 S. The wells, 34/3-3 S and 34/3-3 A, proved oil in early Jurassic sandstone. The objective of the well 34/3-3 S was to prove hydrocarbons in the Cook formation of the early Jurassic age in the Jordbaer Vest prospect. Oil was proven in the upper part of the Cook formation with very good reservoir quality. The objective of the 34/3-3 A sidetrack was to delineate the 34/3-3 S discovery by confirming the extent of the reservoir rocks, and also proving oil in the lower part of the Cook formation. The well proved oil both in the upper and lower Cook formation with very good reservoir quality. Extensive data acquisition programs have been carried out in both wells. Preliminary estimates place the size of the discovery between 1.5 and 4 million standard cubic meters of oil equivalents. The licensees will consider developing the discovery with the Knarr development, which was approved in June 2011.
Project Details: Knarr (Jordbaer)
Statoil Considers Skrugard Development in the Barents Sea
Dec 27, 2011 – Statoil and partners are considering developing the Skrugard discovery in the Barents Sea by a floating production unit with additional capacity to process and transport from other prospects in the vicinity. Statoil says a feasibility study has identified a technical and commercial solution for Skugard, resulting in the rapid development of the discovery. The production unit will have separate oil and storage and offloading capability with a production capacity of 95,000 bopd. The field development calls for 14 oil producers and pressure support will be provided via injection wells for water and gas. Skugard is estimated to hold around 250 MMbbl of recoverable oil equivalents, with a considerable upside potential. Statoil plans to drill an exploration well on Havis, a prospect located roughly five kilometers from the Skrugard discovery, but within the same license. After drilling the Havis well, the rig will drill an appraisal well on Skrugard. Skrugard is located in Production License 532, which Statoil operates, holding a 50 percent interest. Partners in the license include Eni Norge (30 percent) and Petoro (20 percent).
Project Details: Skrugard
Australia
BHP Billiton Confirms Rig Slot for Tallaganda-1 Well
Dec 28, 2011 – The WA-351-P joint venture has approved the budget to drill the Tallaganda-1 well in the block. The operator, BHP Billiton, has secured the Atwood Eagle semisub to drill the well and expects to commence well operations at Tallaganda-1 in the first quarter of 2012. The Tallaganda-1 prospect straddles both the WA-351-P and WA-335-P permits and will test the gas potential of sandstones in the prolific Triassic age, Mungaroo formation, in a well defined horst block.
Project Details: Tallaganda
Africa – West
Makouala Marine-1 Fails to Hit Commercial Pay
Dec 28, 2011 – Lundin Petroleum says the Makouala Marine-1 well has encountered limited oil-bearing pay in the targeted Sendji formation reservoirs. The operator will now plug and abandon the well. This well was the second of a two-to-three well campaign in the area. Makouala Marine-1 is located in Block Marine XIV, offshore Congo. Soco International operates the block.
Project Details: Makouala Marine
Asia – SouthEast
Otto Executes Final Farm-in Agreements for SC 55
Dec 28, 2011 – Otto Energy has executed the final farm-in agreements supporting BHP Billiton’s earlier decision to enter into Service Contract 55, offshore Palawan, Philippines. Once the execution is finalized, Otto will receive a final payment relating to back costs associated with SC55 of US $7.3 million, of which $5 million has already been received. Otto will submit the required assignment documents to the Philippine Department of Energy for their approval of the transfer of participating interest to BHP Billiton. Upon completion of the farm-in, Otto’s working interest in SC 55 will reduce to 33.18 percent.
Cairn to Enter Second Phase of Exploration
Dec 27, 2011 – Cairn Lanka Limited has successfully completed the first phase of the exploration campaign in Sri Lanka Block SL-2007-01-001. The exploration program involved the acquisition, processing and interpretation of 433,175 acres (1,753 square kilometers) of 3D seismic data and a three-well deepwater drilling program. The seismic program exceeded the first phase commitment by 20 percent, and the drilling program exceeded the drilling depth commitment by 50 percent. Cairn said this program resulted in two successive gas and condensate discoveries; the CLPL-Dorado-91H/1z well and, the CLPL-Barracuda-1G/1 well. The third well, CLPL-Dorado North 1-82K/1 was plugged and abandoned as a dry hole. This drilling program has found an established working petroleum system in the frontier Mannar Basin. Cairn Lanka intends to enter the second phase of exploration.

Source

Worldwide: Project Field Development News

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Worldwide Field Development News
Dec 2 – Dec 8, 2011
This week the SubseaIQ team added 2 new projects and updated 17 projects. You can see all the updates made over any time period via the Project Update History search. The latest offshore field develoment news and activities are listed below for your convenience.

Mediterranean
Northern Obtains Seismic Data from Adriatic Sea
Dec 7, 2011 – Northern Petroleum completed a 148,263-acre (600 square kilometer) 2D seismic survey offshore Southern Adriatic covering two licenses, F.R39.NP and F.R40.P. Seismic acquisition began last month using the vessel ‘M/V Princess’ contracted from CGGVeritas S.AA. Completion of the acquisition occurred within the prescribed six-day period. The work program, including this seismic acquisition, aims to obtain complete and better quality data to improve definition of the promising prospects identified from older seismic surveys. A further 3D seismic is planned in 2012 and will commence once approvals are obtained from all relevant authorities. The F.R39.Np and F.R40.P permits include the Rovesti and Giove oil discoveries and 10 mapped prospects. Northern and partner, Azimuth, intend to define and delineate suitable appraisal and exploration drilling targets.
Europe – North Sea
Det norske Gets Nod to Drill Wildcat Well 25/6-4 S
Dec 7, 2011 – The Norwegian Petroleum Directorate has granted Det norske a drilling permit for well 25/6-4 in the Norwegian sector of the North Sea. The Songa Delta (mid-water semisub) will drill the well in 114 meters of water. The drilling program for well 25/6-4 S applies to the drilling of a wildcat well in Production License 414. Det norske is the operator of the license with a 40 percent interest. Partners in the license include Faroe (20 percent), Bayerngas (20 percent) and Noreco (20 percent).
Centrica Successfully Appraises Butch Discovery
Dec 7, 2011 – Centrica announced that appraisal results at its Butch exploration well have indicated a significant presence of light oil in the reservoir. The operator said preliminary resource estimates specify a discovery of between 30 to 60 MMboe for the main Butch segment. Further data collection is now underway and the drilling of a second sidetrack well has commenced on the Butch southwest compartment, where the well is targeting additional volumes. The discovery lies in 217 feet (66 meters) of water and is close to existing infrastructure. Centrica Energi has a 40 percent operating interest in Butch discovery; while Suncor Energy holds 30 percent; Spring Energy holds 15 percent and Faroe Petroleum holds 15 percent.
Project Details: Butch
Total Acquires GDF Suez’s Stake in Elgin/Franklin
Dec 7, 2011 – Total has purchased GDF Suez’s share in the Elgin, Franklin fields (this participation is held through a 22.5 percent stake in the company, Elgin Franklin Oil & Gas). By giving Total control of the whole of the capital of EFOG, which it previously held 77.5 percent, this acquisition increases its share in the Elgin/Franklin fields from 35.8 percent to 46.2 percent. Following the completed transaction, the partners in Elgin/Franklin will be EFOG (Total 100 percent) 46.2 percent; Eni 21.87 percent; BG 14.1 percent; E.ON Ruhrgas 5.2 percent; Esso Exploration & Production 4.4 percent; Chevron 3.9 percent; Dyas 2.2 percent; and Summit Petroleum 2.2 percent. The Elgin/Franklin development produces approximately 140,000 boed. Located in the Central Graben area of the UK North Sea about 149 miles (240 kilometers) east of Aberdeen, the Elgin and Franklin fields are 4 miles (6 kilometers) away from each other in waters measuring 305 feet (93 meters).
Project Details: Elgin/Franklin
Antrim Hits Pay in Erne Well
Dec 7, 2011 – Antrim Energy has made a discovery in the Erne exploratory well, 21/29d-11, in the UK sector of the North Sea. The well reached a total depth of 5,562 feet (1,695 meters), encountering a gross hydrocarbon column in excess of 50 feet (15 meters) in the Eocene Upper Tay sandstone. This includes 20 feet (6 meters) of net oil pay and 10 feet (3 meters) of net gas pay, with average porosity exceeding 30 percent, and average hydrocarbon saturation of about 80 percent. The operator will now drill a sidetrack well from the pilot hole to further delineate the reservoir. Erne is located in Block 21/29d in the UK sector of the North Sea. Antrim Energy operates Block 21/29d.
Project Details: Erne
Statoil Gets Nod to Drill in Barents Sea
Dec 5, 2011 – The Norwegian Petroleum Directorate has granted Statoil a drilling permit for wellbore 7220/7-1 in the Barents Sea. The Aker Barents (UDW semisub) will drill the well. The drilling program applies to the drilling of a wildcat well in Production License 532. Drilling will occur about 62 miles (100 kilometers) northwest of the Snohvit field. Statoil serves as the operator of the permit with a 50 percent interest. The other licensees are Eni (30 percent) and Petoro (20 percent).
Statoil Reaches Investment Decision for Visund North
Dec 5, 2011 – Statoil and partners have reached an investment decision for the Visund North development in the North Sea. Recoverable reserves are expected to be 29 MMbbl of oil equivalents, consisting mainly of oil. The development entails a standard seabed template with two wells, to be manufactured by FMC, and installed in the summer of 2012. The oil will transport to Visund A through a new pipeline system, for processing on the platform. Statoil says that all of the main contracts have been awarded, apart from marine installations and platform modifications. These are planned to occur by the end of the year. Production is slated for 2013. The oil and gas field is located in Blocks 34/8 and 34/7, which Statoil operates.
Project Details: Greater Gullfaks Area
Providence Receives Exploration License 2/11
Dec 2, 2011 – Providence has acquired Standard Exploration License 2/11 in the Kish Bank Basin, offshore Dublin. The granted license has a time period of up to six years and is split into two three-year phases. The license is a successor authorization to the previous License Option 08/2. License 2/11 contains the Dalkey Island exploration prospect, which the partners have committed to drill during the first phase. The partners have recently commenced the application process for a foreshore license over the area in order to carry out well site survey and drilling operations. Providence operates the license with a 50 percent interest.
Project Details: Dalkey Island
N. America – US GOM
FMC Technologies to Deliver Subsea Equipment for Who Dat Field
Dec 8, 2011 – FMC Technologies has signed an agreement with LLOG Exploration Limited for the design, manufacture and supply of subsea production systems for the Who Dat development in the GOM. FMC’s scope of supply includes seven subsea production trees and control systems. Delivery of the equipment is slated for 2012. The Who Dat field, situated in 3,000 feet (914 meters) of water, is expected to commence production in 3Q11. LLOG operates the field with a 67.5 percent interest.
Project Details: Who Dat
S. America – Other & Carib.
FOGL to Spud Loligo in Late April/Early May
Dec 7, 2011 – FOGL announced that the Leiv Eiriksson (mid-water semisub) has left Greenland and is now en route to the Falkland Islands for the upcoming B&S and FOGL drilling program. The company plans to spud the Loligo prospect in late April or early May 2012, and the second well to spud on completion of Loligo. Loligo is a Tertiary Channel play structure with estimated Pmean reserves of 4.7 Bbbl. The Loligo complex comprises several reservoir objectives along with a number of various reservoir targets. The well is located in the Falkland Islands.
S. America – Brazil
ANP Orders Chevron to Shut-In Well at Frade Development
Dec 2, 2011 – The National Petroleum Agency has ordered Chevron Brasil Upstream to shut-in one production well and four water injection wells at the Frade FPSO offshore Brazil. ANP submitted this requested after conducting a safety audit of the vessel and found that sulfide gas has been leaking. The closed production well accounts for less than 10 percent of the field’s total production output of about 79,000 bopd, stated the operator. The field is situated in the Campos Basin in approximately 3,700 feet (1,128 meters) of water, roughly 230 miles (370 kilometers) northeast of Rio de Janeiro. Frade is a subsea development with wells tied-back to the Frade FPSO.
Project Details: Frade
Africa – West
Vanco Makes a Discovery in Independence-1X Well
Dec 7, 2011 – Vanco Cote d’Ivoire and partners have made a discovery in the Independence-1X exploratory well in Block CI-401. The discovery has penetrated the targeted objective and found a series of good-quality sandstones containing light oil. Full review of well results, including wireline logs, reservoir pressures and fluid samples, confirm that the well penetrated 8 meters (26 feet) of hydrocarbon pay in good-quality Turonian-aged sand package. Recovered hydrocarbon samples from Independence-1X well indicate the oil registers at 40 degree API gravity. The operator will temporarily abandon the well at a total depth of 13,556 feet (4,132 meters). The Ocean Rig Olympia (UDW drillship) drilled the well in a water depth of 5,541 feet (1,689 meters). Vanco (Operator) holds a 28.34 percent participating interest.
Asia – SouthEast
Lundin Spuds Bertam-2 Offshore Malaysia
Dec 8, 2011 – Lundin Petroleum has spud the Bertam-2 appraisal well in PM307 Production Sharing Contract area, offshore Peninsular Malaysia. The total depth of the well is 6,194 feet (1,888 meters) and is being drilled by the Offshore Courageous (400’ ILC) jackup. The objectives of the well are to appraise and test the Oligocene lower coastal plain sandstones of the PM307 PSC area, and to test the continuity and quality of the K10 oil reservoir. The operator will also explore the deeper sands in an independent closure on the northern side of the structure. Discovered in 1995, the Bertam well hit oil in the K10 sandstone reservoir. While conducting a flow test, the well produced 34 degree API oil at a rate of 624 bopd. Bertam-2 is located to the northeast of the discovery well in 249 feet (76 meters) of water. PM307 PSC is operated by Lundin Malaysia with a 75 percent interest; Petronas holds the remaining interest.
Australia
AWE Sells BassGas Stake to Toyota Tsusho
Dec 8, 2011 – AWE Limited will sell an 11.25 percent stake in T/L1, and a 2.75 percent interest in T/18P in the BassGas project to Toyota Tsusho for a cash consideration of A$80.125 million. The T/L1 permit includes the Yolla gas and condensate field and its associated production infrastructure, and a 2.75 percent interest in T/18P, which includes the Trefoil gas and condensate discovery. Once the agreement is finalized, AWE will hold a 46.25 percent interest in T/L1 and a 44.75 percent interest in T/18P.
Project Details: BassGas Project
Chevron, FMC Team Up for Subsea Equipment for Wheatstone
Dec 8, 2011 – Chevron granted FMC Technologies a contract for the design, manufacture and supply of subsea production systems to support the Wheatstone project. The scope of supply includes 11 subsea production trees, 11 wellheads, three manifolds, subsea and topside controls and well access systems. Delivery of the equipment is scheduled to commence in 2013. The Chevron-operated Wheatstone project, situated offshore Australia, compromises the Wheatstone and Iago gas fields, located in water depths between 330 and 850 feet (100 to 260 meters).
Project Details: Wheatstone
Eni Commences 3D Seismic over Blackwood
Dec 7, 2011 – Eni has commenced a Bathurst 3D seismic survey over the Blackwood East area of permit NT/P68. The field acquisition program is scheduled for completion within 50 days. Under the terms of the farm-in agreement, Eni will pay MEO’s share of the costs to acquire and process the 3D seismic survey. The company will have 365 days from completion of the acquisition to elect whether or not to exercise its option to drill, and pay 100 percent of the cost of the Blackwood-2 well in order to retain its 50 percent interest in the gas discovery. The CGG Veritas seismic vessel, M/V Veritas Viking II is acquiring the 172,480-acre (698-square kilometer) seismic survey.
Project Details: Blackwood
Eni Purchases Additional Interest in Evans Shoal Field
Dec 7, 2011 – Eni has purchased a 32.5 percent stake in the Evans Shoal gas field in the Timor Sea, Australia. The undeveloped field, discovered in 1998, holds expected gas-in-place of up to 7 Tcf. Subject to completion of the purchase of Santos-interests, in a separate transaction, Eni has agreed to sell a 7.5 percent equity share in exploration permit NT/P48 to Shell. Both transactions are subject to the regulatory authority. Following the approved transaction, the partners in the revised NT/P48 joint venture will consist of Eni (32.5 percent, operator), Petronas (25 percent and Osaka Gas (10 percent). The Evans Shoal gas field is located in the NT/P 48 exploration permit in the Bonaparte Basin.
Project Details: Evans Shoal
Apache Brings Reindeer/Devil Creek Project Online
Dec 7, 2011 – Apache has commenced production from the Reindeer field in the Carnarvon Basin. The delivery of the gas is being processed at the new onshore Devil Creek plant near Karratha. The Reindeer/Devil Creek development includes the installation of an offshore unmanned wellhead platform in the Reindeer field, a 105-kilometer pipeline to shore and the development of the gas plant. The Devil Creek gas plant has a gross production capacity of 215 TJ/day and is initially planned to ramp up to sales of 120 TJ/day. The Reindeer gas field is located in the Carnarvon Basin, offshore Western Australia in waters measuring 203 feet (62 meters) within exploration permit WA-209-P. Apache Corporation holds a 55 percent operating interest, and Santos holds the remaining 45 percent interest.
Project Details: Reindeer-Devil Creek Project

UK: Aker Solutions to Supply Subsea Modules for Western Isles Project

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Aker Solutions in Aberdeen that it has received an order to manufacture and deliver a number of subsea control modules and topside power units as part of an 12,6 million contract with Dana Petroleum plc.

The company has signed a contract for the project management, engineering, procurement and construction of a number of subsea systems for the Western Isles Development Project on the UK continental shelf. It marks the first contract agreement between the two companies.

A total of nine subsea control modules will be delivered by Aker Solutions’ Aberdeen facility. The full scope of work will also see one master control system, one electrical power unit, one hydraulic unit, one subsea isolation valve panel, two topside umbilical termination units, two subsea distribution units, five electrical distribution boxes and 11 mounting bases delivered.

The work will also include offshore installation and commissioning support of all subsea control system equipment and Aker Solutions expects final deliveries will be made in second quarter of 2011.

Paul Griffin, Dana Petroleum’s UK Managing Director said “This is an exciting time for Dana as we strive to grow our business in the UK and internationally. The Western Isles development is a significant project for us and we’re pleased to be working with Aker Solutions to bring the field online, with first production expected in late 2014.”

The Western Isles Development Project is located 500 kilometres north east of Aberdeen and comprises the Harris and Barra reservoirs.

“We are very pleased to be awarded this important contract with Dana Petroleum. Not only does this contract allow us to utilise the full strength of our subsea offering, it also reinforces our position as a leading name in the subsea technology sector. We look forward to building a relationship with this new customer,” said Alan Brunnen, EVP Subsea within Aker Solutions.

Aker Solutions’ contract party is Aker Subsea Ltd.

Aker Solutions is one of the largest employers in the north-east of Scotland, employing around 2,500 people at bases across Aberdeen City, Dyce and Portlethen.

Source

This Is What American Needs To Do To Win The Global Jobs War

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Jim Clifton

To win the jobs war, America needs to be the best in the world not only at entrepreneurship and innovation, but also at customer science.

The country simply cannot win new jobs unless it uses the most advanced sciences in the world to create billions of new global customers.

Simply put, new global customers create new U.S. jobs. That’s why America needs to more than triple exports in the next five years — or continue on a downward slide. The battle for global customers will be the defining element in the new war for jobs and GDP growth.

Whoever sells the goods and services, and whoever owns the companies that own the customers, wins. The United States needs to average a minimum 10% annual increase in exports over the next 30 years to maintain its leadership of the free world.

The big advantage China has over the United States right now is that China wins customers with low prices. This strategy really can work — not great, but OK for a while — because as long as America invents the new products and innovations, it can produce them for the first iteration and create millions of great jobs. But when China evolves to understanding customers and their needs better than U.S. companies do, the United States loses its advantage.

If America allows China — or India or anyone else — to get further into behavioral economics and customer science than it does, the country will lose the jobs war. That is what Toyota, Volkswagen, and other automakers did to U.S. car companies.

They won by simply listening to customers better and then delivering what customers wanted at fair prices. America cannot afford to concede the science of customer insights or customer-centric innovations to China or any other foreign competitors or it risks losing to them. This is a “game over” moment for America.

Why? Because if those countries learn to provide better service and meet customers’ needs better, then customers won’t need U.S. retailers and supply chains to deliver products. China will set up its own retailers and supply chains, and God help America if that were to happen. Its best retailers, shops, banks, car dealers, restaurants, grocery stores, malls, and even movie theaters would be Chinese owned and controlled, which means that the best cash flows, margins, and stock values all become foreign owned.

There has already been a trend lately toward foreign-business takeovers, and the effects have been economically and psychologically devastating in headquarter cities. Belgian-based conglomerate InBev bought American icon Anheuser-Busch. When that happened, a little bit of St. Louis died. Brazilian-backed 3G Capital acquired Burger King, and a little bit of Miami died.

When a national oil company in Venezuela bought out CITGO, a little bit of Houston died. When the Arcapita Bank, formerly First Islamic Investment Bank, bought a majority of Caribou Coffee, a little bit of Minneapolis died. No question, when foreign companies take over American businesses, something changes. Americans feel somehow that they’re not what they used to be.

This might sound controversial to some Americans, but they should all love Walmart, no matter what particular beef they might have with the company. If it weren’t for Walmart eating up all the little corner grocers and hardware stores, the Germans, Japanese, French, and for sure the Chinese would have.

Somebody will come do it better. Walmart, Target, and Costco should be applauded for leading the way in reinventing retailing in America because if they hadn’t, foreign companies would have. Right now the big box stores are worried about the “dollar stores.” That’s great — Americans want Americans competing against other Americans.

The flip side of great performers like Walmart, Target, and Costco is poorly run companies. They’re job killers, especially in their headquarter cities. Local firms, big or small, that are bad with customers will be cannibalized by outside companies. The most dangerous outside companies, as far as your city is concerned, are foreign. Jobs appear in combination with customers and GDP growth and then again in combination with American ownership and control.

You might think I’m an advocate of protectionism. I am not. Quite the opposite, I am 100% pro trade, pro competition, and pro law of the jungle. By no means do I think America should erect barriers against foreign-owned companies.

Leaders have yet to learn that relationships trump price in almost all businesses, from hair salons to high-tech consulting.

The solution isn’t to avoid competition, but to take it head-on. Americans have to know more about American customers and all customers in the world than Europeans do, and especially more than the Chinese, Brazilians, and Indians do. The country that best knows the needs and preferences of all 7 billion customers will have a prohibitive advantage in winning the world’s best jobs.

Sure, companies should do a great job of executing Six Sigma, lean manufacturing, reengineering, TQM, and so on. These practices all work and are essential to winning, but they are no longer enough. I don’t know about your organization, but Gallup has squeezed the last drop out of most of these brilliant practices, all to its great benefit. But the low-hanging fruit of improving processes and efficiency has all been picked. What remains untapped is the incalculable opportunity within the emotional economy of customers.

In fact, one of the biggest blind spots in most American businesses is that they don’t realize how big the emotional economy is within their own customer base worldwide. The best corporate leaders in the United States are still unaware that they are leaving a great deal of money on the table through abysmal execution of the employee-customer links because they are so focused on the “hard numbers,” of which they have already squeezed every dollar to diminishing returns.

You and your teams can double and quadruple exports and foreign sales by increasing the number of your current customers who give you a 5 for partnership on a 1-5 scale. Let’s assume that 20% of your customers give you a top score, which is about the global average. By raising that number to 40%, you will experience record sales increases without spending a nickel more on advertising and marketing. You grow, America grows, jobs grow.

From my 40 years of studying customers, this represents the biggest missed opportunity of all organizational leadership — probably because it is easier for leaders to talk a good game and then at the end of the day, just cut their price, falling back to the rule of classical economics that every decision is rational, which is not true.

What customers at any level really want is somebody who deeply understands their needs and becomes a trusted partner or advisor. The business world fails at managing this one most critical behavioral economic variable more than any other, but it remains the lowest hanging fruit for organic growth for virtually all businesses.

Leaders have yet to learn that relationships trump price in almost all business circumstances, from hair salons to high-tech consulting. He who most deeply understands the customer’s needs tends to win and always gets the highest margins. That’s why talent and relationships can almost always beat low price — they inspire customer engagement. To measure customer engagement, these are the best 11 questions Gallup scientists have found to ask customers anywhere in the world:

CE1. Taking into account all the products and services you receive from them, how satisfied are you with (Company) overall?

CE2. How likely are you to continue to do business with (Company)?

CE3. How likely are you to recommend (Company) to a friend or associate?

CE4. (Company) is a name I can always trust.

CE5. (Company) always delivers on what they promise.

CE6. (Company) always treats me fairly.

CE7. If a problem arises, I can always count on (Company) to reach a fair and satisfactory resolution.

CE8. I feel proud to be (a/an) (Company) customer.

CE9. (Company) always treats me with respect.

CE10. (Company) is the perfect company/product for people like me.

CE11. I can’t imagine a world without (Company).

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