The challenges of the oil and gas industry mean effective travel management is of crucial importance. Nick Easen reports on the sector
IF THERE’S ONE INDUSTRY whose prospects look solid when it comes to business travel, it’s the oil and gas sector. We’re consuming more than twice as much oil and gas as we did in 1973 and it accounts for more than half of our energy needs globally.
Every day we use 142 million barrels of oil and gas combined, and it’s likely to rise further to 180 million by 2030. Our sheer hunger for oil and gas means that we will increasingly need more people to travel around the globe to search for it, dig for it or pump it out, and move it to market. “The industry is booming at the moment, energy is vital and the exploration market has picked up dramatically,” says Adam Knights, group sales director at ATPI. “It’s not recession proof – look at the 1970s – but this time there is so much pent-up demand from emerging markets, such as China and India.”
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Rising fuel prices have made drilling and exploration in extreme spots more attractive, from Sakhalin in Russia’s far east to the prolific deepwater Golden Triangle, consisting of Brazil, the Gulf of Mexico and West Africa, and this means extensive travel programmes for its engineers, geologists and crews. “Our business is now incredibly broad in its geographical nature,” explains Kevin Morrison, supply chain manager at Archer (UK), an oil company with 100 offices around the globe and activities in energy-rich Saudi Arabia, Nigeria and Indonesia.
It’s not just developing markets that are active. Take shale gas in North America: the US alone has created more than 600,000 direct and indirect jobs in this sector. By 2015, that number is expected to exceed 850,000 – most of whom have to move to remote sites regularly for work, from North Dakota to southern Texas.
NORTH SEA OIL
Domestically, the UK is also a big supplier of top talent that travels for this global industry, borne out of expertise in North Sea oil from its base in Aberdeen. This is one of the main reasons why the Granite City’s airport saw its busiest October for five years, up 11 per cent on 2011 – its second busiest on record and a 21st month of year-on-year growth – despite a limp economy at home.
It’s no small player on the business travel front either, with an oil and gas industry that is worth billions of pounds to the UK economy. A company like BP is estimated to spend in excess of £100 million a year globally on business travel, and companies such as Total, Sinopec, Chevron, Exxon and Conoco Philips have equally large budgets for travel. In the industry as a whole, 30 per cent is spent on white collar travel – management, corporate and business hand-pumping and deal breaking – while 70 per cent is focused on getting people to work on-site across the globe, including oil rig
engineers, platform managers and technicians, plus their support crews.
“Travel in this sector is very complex,” says Paul Jarvie, an account manager at FCM Travel Solutions in Aberdeen. “There are 15 different disciplines within crew staff alone, each travelling at different times for different reasons.” When they get to work on offshore platforms, logistically travel management can also be difficult. “For instance employees are not permitted to carry mobile phones on oil rigs – an enforcement that can make communication with travellers difficult,” explains Anthony Drury, general manager for American Express Business Travel UK.
Energy companies tend to procure their air tickets and hotel nights like they procure any other commodity. The same process applies for ordering head gaskets for oil wells as it does for chartering helicopters or airport taxis. Oil and gas companies increasingly put rigorous contracts and supply chain management procedures in place and expect their travel suppliers to deliver to the letter. It means that there are few ex-travel agents running corporate travel internally in this industry; instead they rely on and trust their suppliers, in whatever sector – including travel – to perform and fulfil rigorous contracts. “Banks don’t sell beer and bars don’t lend money – it should be the same with travel,” Derek Massie, senior vice-president of human resources of Seadrill, told a recent GBTA symposium on oil and gas that took place in Rotterdam.
Logistics and travel in the oil sector are managed by company administrators – particularly, human resource departments that use crew management software to move people around. These programmes can now direct travel management companies (TMCs) to purchase the travel needed.
Certainly more tools are becoming available, especially in the area of crew logistics, and some TMCs are integrating their booking tools into those of their oil and gas clients, in order to make their process as seamless and as smooth as possible. “If you employ a TMC for your travel, don’t duplicate that overhead cost with an in-house team to check each transaction the agent does,” says Massie. “If your agency doesn’t get the best fares and provide good service for the CEO, what are they doing for your core business – for example, the crews?”
Travel is often project-driven and price sensitive. Undoubtedly there is incredible scrutiny of any TMC offering and an eye for detail on a global and geographical level is essential at all levels. “Agents have to know the fares market and ensure easy access to a wide range of them, including those that are offshore,” explains Jackie Kjos, senior account manager at Giles Travel.
SAFETY AND SECURITY
It is likely that the oil and gas sector was tracking its business travellers more extensively and routinely before any other sector, since safety and security is paramount in this business. Many have traveller tracking systems in-house; others rely on their travel supplier. “We have seen an increase in the number of clients requiring support in either tracking using a traveller’s booking reference number or passenger name record, or utilising a web-based system,” explains Kjos. “This is probably due to the increase in travel to more hostile areas.”
Inevitably, there’s a large amount of traveller traffic to high-risk areas, whether it be the Niger
Delta or outside of Angola’s capital Luanda – as a result, expertise beyond normal international corporate travel is required on both the buyer and supplier side.
This sector, as one travel buyer put it, “is like no other industry in the world”. Multi-faceted logistical issues with tight deadlines and frequent booking changes are common, as are complex itineraries with multi-sector flights. There can be urgent visa requests at short notice, where agents will have to meet-and-greet clients at the airport to hand over visa documentation on a regular basis.
Anyone operating in travel in the oil and gas industry must understand the energy business as a whole, because it impacts many areas of interest, from health and safety to human resources, finance and recruitment. Suppliers and buyers must get to grips with many of the internal workings of an energy company’s business operations not only around the world, but within the company structure, too.
“The scope of a travel programme in the oil and gas sector may be beyond that of a traditional corporate programme,” says JP Peplinski, vice-president of CWT Energy Services. “Good communication is key.”
Yet anyone investing in business travel in the oil and gas sector, whether it’s getting the Houston executive to an Indonesian oilfield or a Bangladeshi crew to Abidjan, will be rewarded. We aren’t giving up fossil fuels anytime soon, so it’s an industry with a bright outlook.
WHAT’S HAPPENING IN THIS SECTOR?
• New travel frontiers are opening up, including East Africa, far north-eastern Norway, Angola, Rwanda and Nigeria. Brazil is also emerging.
• The industry operates on a global scale, and travel doesn’t necessarily originate in the UK – consequently, it is a 24/7 operation, working across all time zones.
• Companies in the oil and gas sector expect the benefit of off-shore fares. Everyone has to be creative in sourcing the best local rates.
• There is more focus on traveller security and safety, especially as oil and gas personnel travel to more hostile areas in Africa, Russia and South America.
• In the next 15 years, many senior managers in the sector will be retiring. Their younger peers will have different expectations when it comes to travel.
SAFETY AND COST
Archer is a global oilfield service company that employs over 8,500 people worldwide. It currently uses FCM for its business travel. Kevin Morrison, supply chain manager at Archer (UK), tells BBT about the process
“It is important to have an open and honest relationship with your TMC. The three key priorities for us are transparency, communication and good account management. We need to feel confident that our staff’s travel requirements, comfort and safety are top priority any time of the day or night.
Communication with our TMC is vital because last-minute changes in travel arrangements can impact on our operations. It is important for our TMC to understand our business so that they ensure our people are well cared for – for example, we always ensure that staff fly in premium economy to New Zealand. Safety is also very important, particularly when we are sending people to places like Nigeria.
The challenge, however, is still about managing costs. The size and complexity of our account means that we are looking to benchmark expenditure and maximise savings. Every TMC will promise you cost savings, but they don’t always deliver. In reality we are looking for the best savings and service.”
p sales director Adam Knights talks about his experience in the oil and gas industry
The logistics of managing travel in this sector can be incredibly multi-faceted and truly global. We have a booking team in Aberdeen but we may not even look at booking any UK travel at times, even though our clients are based here.
We may have to get a crew of deck handlers from a logistics company in Manila in the Philippines, as well as cooks and chefs from India, and fly them to a deep-sea oil vessel in Angola. Not only that, we may have to get the geophysicist on site from Texas and the engineer from Wales.
The client will want this all together in one travel management plan. They want local pricing of flights, not everything booked out of the UK. We then have to access prices in the Philippines and India. Luckily, we have offices there to do that kind of thing. Oil and gas companies operate global businesses that act locally and they expect the same from their travel providers.
CASE STUDY: Seadrill
Seadrill is a leading offshore deepwater drilling company with a workforce of 7,900 people from 50 nations, and it operates in 15 countries on five continents.
Total annual travel spend: US$65 million
Annual number of air tickets: 58,500
“We move 160 people per day to 48 rigs – failure is very expensive,” says Derek Massie, senior vice president of human resources at Seadrill. “Before 2011 we had more than 25 travel providers, no reporting, no measurements and little control; now, we have one global travel management company.”
Advice on travel policies and expectations in the oil and gas industry:
• You won’t please all the people all the time.
• Everybody wants business class but no one wants to pay for it.
• Emotional travel experience is a factor for employee retention.
• Make sure your policy is as clear and transparent as possible.
• Ensure your policy is fit for your market.
• There are cultural challenges – for example, in Asia and France it is very hierarchy-driven, while Scandinavia is more egalitarian and socialistic.