INSIGHT ENERGY: The Big Interview with Perenco boss John Sewell

Big Interview with operations manager of Perenco John Sewell at the company's office in Great Yarmouth.Picture: James Bass (Image: Archant Norfolk Photographic © 2013)

When it comes to the offshore gas industry, John Sewell has seen it all.

For more than three decades, he has been embedded in some of the world's biggest energy companies, with spells at Shell, Arco, and BP, before making the move to Perenco UK ten years ago.

Initially, he was appointed terminal manager of the Bacton Gas Terminal, where 30pc of the country's gas still feeds in through Norfolk.

And since then, he has risen through the ranks, from offshore operator at Great Yarmouth, to his current role as Perenco UK's Southern North Sea operations manager.

To date, he has over seen multi-million pound deals, which have allowed Perenco to extend life of dozens of assets throughout the North Sea.

And none have been so prevalent as the Perenco's most recent acquisition: the £257m deal to buy BP's Southern North Sea gas assets.

I met John at Perenco's Great Yarmouth base to get an update on the company.

Ben Woods: Last November saw Perenco complete the acquisition of BP's Southern Gas Assets. What challenges did you face during the hand over?

John Sewell: The biggest challenge to any transition is people. You are trying to get the people on the same train that you are on as you move forward with the assets - without them it is not going to happen.

The people from BP came across on the same terms and conditions they were previously on. We have also taken all the contractors until we understand the operation a bit more. You try to do minimal change and you try to manage the operation through the existing safety management system, so you can go through that transition. Then in the next 18 months to three years we will transform the operation to be run under the Perenco model of operating.

Our operating model is such that we like to do as much as we possibly can, whereas the larger operators would contract out a lot of services and rely on external third parties to do a lot of the work. We will try and bring a lot of that in house - we like to be in control of the operation.

BW: Clearly work on the former BP assets will be a main focus for Perenco this year, but what other projects is the company working on?

JS: The integration of the SNS North BP assets is a major focus for 2013 and will continue to be so in 2014, so we have got to look to maximise the value of the combined asset base. But in addition to that we are drilling a new well on 18 Bravo, which is our Inde platform (56 miles east of Bacton), and we hope to have that complete and online in April of this year. We are doing a number of infrastructure projects to enhance the life of the fields and to continue to maximise the value of the assets.

But our overall goal is to push the end of field life of these assets as far out as possible. There is some inevitability around decommissioning so we are increasing the size of our decommissioning group to start planning for the future. We will be continuing with rigless well abandonments and trying to get the cost of that down. We will also be starting this year on some of the detailed engineering for the decommissioning of the Thames installation, which is of a significant size. That is, overall, a three and a half to a four year project.

BW: With decommissioning in mind, I was speaking with your decommissioning manager Keith Tucker who told me that Perenco are always keen to work with local firms where possible? Do you have a good relationship with the East of England supply chain?

JS: "I think we have got a very good relationship with the local supply chain. Our contracting strategy is to use local service position where we can. It is about getting the right value for money, that does not necessarily mean the cheapest, but getting the right value for the service that is being provided. That is our strategy and I have communicated that a number of times with the local supply chain. As an example our spend in 2012 locally is about £60m out of a total spend of about £120m so it is a significant amount of money that we spend locally."

BW: Changing the focus a little. There is much talk at the moment about the gap in skills for energy industries in the eastern region. Does it concern you?

JS: There is no doubt that there is a skills gap. It is a challenge for our industry as well in terms of getting skilled engineers and technicians from the local area. Now, what have we done? Well, I think we have been very active over the last seven years. We have got an active apprenticeship programme where we have four or five apprentices through our organisation every year. I am on the board of the skills for energy with EEEGR and so I have been an active proponent of enhancing the local skill base in the area.

In addition to our apprentices we also have a graduate training scheme where we bring in four graduate engineers each year into our organisation and that is not fill specific roles that is about getting young people into the industry to grow them and potentially develop them as future managers within the organisation. So I think we do a lot, and we will continue to do a lot because I am a great believer in getting young skilled talent into the region, and if possible, I would rather use people that live in the region.

One of the success stories, if you look at our apprenticeship scheme, is that we have taken on about 28 apprentices and we still have 26 of those working with us.

BW: Looking ahead this year, is Perenco on the verge of making any more acquisitions?

JS: The other key investment that we made, other than the BP assets, was in 2011 when we purchased the BP Wytch Farm assets off the Bournemouth coast that was a significant investment to the tune of about $500,000,000 (£327,139,500). Are we looking at other potential acquisitions? The answer to that is we are always looking for opportunities to add valuable assets to our portfolio.

BW: And what about the next 25 years for Perenco? What does the future hold for the company.

JS: It is always difficult to look forward that length of time, but we do believe that there will continue to be a significant requirement for gas in the UK. I think there will be a second dash for gas, which will continue to push out the end of field life for some of our assets. When you consider that some of our assets are already 45 years old, and I want them to go for another 15 or 20 years, it is quite a challenge to do that. There is a bright future for gas in the North Sea, and continues to be so.

We look at a three to five year plan as to what we want to achieve, but things change so rapidly because you have to be responsive. Perenco has shown that we are responsive to those opportunities. One of the key things for us is that we are a truly independent oil and gas company. We are owned by the Perrodo family, we are not answerable to shareholders, and financially we are in a good position so we can react quickly to opportunities that come along.

But one of the challenges that we face is with ageing assets. Some of our platforms are 45 years old, originally designed for a 25 year life span, and we want them to go for another 15 or 20 years, and that is a significant challenge and potential cost to us, but we have got to make sure we manage our costs if we want to keep operating these fields for the next 20 or 30 years.

BW: The energy industry has come into sharp focus on a number of occasions recently, as the government continues to grapple with the challenge of keeping the lights on in the future. Fracking for shale gas is one method that has under public scrutiny. Is it something that you would consider as a company?

JS: Fracking is not new. It has been going on for years in the USA as well as the UK. It is not new technology. It is just the application of that technology for the shale gas, which has caused a lot of focus and attention from the public. I think in the USA it has had a marked affect of gas prices. Gas prices have been reduced by 2/3 as a result of shale gas, but it is a different environment in the states. You have got big, unpopulated, areas where you can go in and do the fracking without having impact on the people and that is different in the UK. The areas where fracking is going to take place in populated areas, so therefore the ability to do it is going to be more tightly regulated - and rightly so. But I don't think we should shy away from it as a country. There is a potential great prize to be had from the reserves that can be recovered from the fracking operation - potentially another North Sea again. As a country, we should be embracing that and trying to develop that, but in clearly in more tightly regulated regime.

As a company, we are not interested at this moment in time, but that doesn't mean we would not be, but I think at this early stage, as far as I am aware, we are not doing anything associated with those potential shale gas opportunities. But I also believe it will not have a significant impact on UK gas prices, as it has done in the states.

BW: On a more personal note, you have worked for Shell, Arco, BP, as well as Perenco for 10 years. What is it that still gets you out of bed in the morning?

JS: Everyday is different, everyday is a challenge. I have never had a dull moment in all those years. There are couple of things that get me out of bed, and one of those is the development of people. I get immense amount of pleasure out of seeing youngsters develop in this industry, and there is a number of my managers that I have in the organisation now that were at significantly lower levels in the organisation ten years ago. And I get a great deal of pleasure out that.

BW: And what were the landmark moments?

JS: I think the acquisitions are always the big things. When Perenco first came into the UK and no one knew who Perenco were and there was a lot of uncertainty. But then we took over the Mobil assets in 2007, which again made us much bigger. I have seen rapid growth in the ten years that I have been at Perenco UK. We are now the biggest infrastructural operator in the North Sea - and that is an incredible change to where we were in 2003.