With 2018 now behind us, and the new year just beginning, we asked Peter Adam, Add Energy’s Executive Vice President, to share insights into his last 12 months in business, as well as his predictions and advice for the energy industry in 2019.
How would you sum up the past 12 months in the energy industry?
There was definite optimism at the start of 2018, and although I don’t think this has fully come to fruition yet, we certainly saw green shoots emerging throughout the year, which has benefited Add Energy.
The market was still very tough. Companies were lowering costs to be more competitive, and I have witnessed some companies competing for work that wasn’t necessarily their core business, which led to higher levels of competition than you would traditionally have seen before.
I believe that cost remained the biggest driver of decisions, rather than value of delivery. Although, towards the end of 2018, we did start to see more recognition of the value proposition of a scope of work, rather than just the cost alone, because the results speak for themselves in the net benefit.
What surprised you about the energy industry in 2018?
The main surprise for us was the engagement of drilling companies in being proactive in looking at optimisation and efficiencies in their businesses, especially at a time when I thought they would still be tight on cost from losses of revenue caused by the downturn.
We hadn’t anticipated much growth in the drilling sector, as we know how much they’ve suffered with the low oil price. However, we did have a significant uptake in asset management contracts from drilling companies in 2018, which I believe was due to them starting to plan for the upturn.
While the majority of companies are beginning to invest back into how they’re going to operate more efficiently for the long term, even once the oil price does go back up, they need to understand how they can do more with less.
In the second half of 2018, we started to see the transformation of business models within the industry. Companies want to avoid periods of redundancies in the future if the oil price crashes again, so they’re starting to pivot and are leaning more on consultancies and specialist providers to fill skills gaps - companies that will come in, complete a project, and leave again, with no difficult conversations required.
We also saw an increase in renewable energy work in the marketplace, which has a longer-term view on capital and lifecycle costs. It’s less volatile than the oil commodity driven market, and I am positive this will lead to more opportunities in the power generation sector this year.
What were some of the highlights for Add Energy in 2018?
2018 was an incredibly strong year for us, and some of our top highlights include working with BP globally, winning projects with 10 new clients that we had never worked with before, securing maintenance training work with an oil major, and building our leadership team to consolidate the high growth we’ve had, and to prepare for our future growth.
Strengthening our Middle East presence has also been a highlight for us. We have started to see the benefits of our new partnership with DC Gruppe in Saudi Arabia, which has already led to significant opportunities in the region.
We have also invested heavily into software in 2018, which I believe will pay dividends as we move into 2019. From our 15 years of experience working with operators and power generation companies, we have identified common industry problems, and we want to help solve them through software. One of these solutions, Aim-Hi™, is a cloud based tool designed to optimise maintenance management, and is set to launch early this year.
We plan on continuing our excellent partnership with the University of Salford in developing software and technological solutions for our clients and the marketplace. This year, we will be continuing our investment into multiple asset management digital solutions.
What was key to Add Energy’s success in 2018?
The most critical part of our success has been our people, and the capabilities they bring. We grew the business and selected high quality people throughout the downturn, and that makes us strong for the future.
The nature of what we do has also been fundamental to our success. Our work is largely focused around cost efficiencies and gains, and unlocking opportunities for our clients, and with that we can demonstrate potential results to clients, before we even embark on a project.
Our ability to deliver work internationally has also been an instrumental part of our growth. We work in many different countries around the globe, and can do a lot of our work remotely, which saves on cost for the client.
What opportunities do you predict for 2019?
I think training will be a big opportunity for our industry in 2019. With the recovery of every downturn, certain things flourish - and this tends to be recruitment and training. There will be a deficit of people with the competence and skills the industry needs, and as a result, I think 2019 will be about attracting talent into the industry, and giving them the right training.
We are delivering training for clients globally already, in maintenance execution and process safety. We’re also looking at embedding our people into our clients’ businesses, to fill resource gaps.
I believe this could be a long-term solution, as people, now more than ever, don’t want to take on resource that they may need to let go if there’s another downturn. They may not need that specialist person full-time, so using a consultancy to bring in the skills required on a flexible basis could be more beneficial for them.
The internet of things is a big opportunity for 2019 too. Luckily for us, we’re investing money into an asset tracking system, with RFID codes and software that tracks management of change. With several opportunities in our pipeline seeking this support already, we are excited to see our software come to life.
In terms of regional growth, I am predicting high growth for Add Energy in North America and the Middle East in 2019 due to the investments we have made into these regions since 2016.
What are your goals for 2019?
Our main goals for 2019 are mostly centred around:
- 3 new asset management software/product launches
- Helping clients bring assets back online
- Strategic geographical growth
- Digitalisation of assets
What are you most looking forward to in business this year?
I’m excited to continue to grow the business, and see the results of our investment in research and the development of digital solutions. We are all looking forward to see the deployment of our new solutions, working in partnership with major energy companies.
We’re also planning to open new offices for Add Energy in 3 new locations, and we plan to continue to research other key regions of potential operation too.
What challenges do you think businesses will face in 2019, and how can they mitigate against them?
I think that growth relating to the upturn is going to be a big challenge for many businesses. Add Energy was fortunate enough to have experienced significant growth during 2016-2018, and the advice I would share to other companies who are growing or have plans to grow in 2019, is to:
- Ensure you hire the right people whose culture and behaviours are aligned to the business' core values
- Invest in training and development to ensure the team has the skills they need to deliver the job they were brought in to do
- Stick to your key strengths and core services
- Leverage on data science and digitalisation
How do you think Brexit will affect the energy industry in 2019?
I think Brexit is going to be challenging for all businesses in the UK. The challenges are mainly going to be around volatility of currency and getting personnel, as well as tax regimes and the risk of double tax.
I think it will be particularly challenging for resourcing - for those people who have been in the UK for a long time already, and also for companies who want to bring in people to work for them who have the desired technical skills that the industry needs.
I also think it will be critical for small businesses to think about whether they have subsidiaries in Europe or not.
What advice would you give companies who want to optimise their asset and integrity management in 2019?
To unlock efficiencies and leverage on digitalisation, you first need robust data standards in place, that are consistently applied with rigour.
This structuring enables the potential for opitmisation and performance improvements, because without this, any software or tools applied will not meet expectations because the base data isn't available to provide meaningful insights.
Get the basics right, invest time and money into fixing data quality and completeness issues to enable performance and financial gains to be achieved.