2022 has been an incredible, epoch-making year in energy – what might 2023 look like?

It’s unlikely we’ll ever see a year like this again for the energy sector.

Colin Elcoate – 2023 Forward Look

Being bold and brave in a globalised world

At the end of the year, it’s customary to reflect on our achievements and successes as well as look ahead to the future priorities of 2023.

For the Alderley Group of companies – Alderley, SMS and Kelton – 2022 has been an incredible year.

It’s been a year of market turbulence but also one of immense opportunity where our teams across the UK, Middle East, India and APAC have stepped up to the plate and delivered time and again for our clients.

With uncertain times upon us these past few years – a global pandemic, war in Ukraine and political upheaval in much of the world – we’ve taken bold decisions to drive change and refocus our business building on our core competences, fantastic people, and the solutions that our clients need right now.

While we are a British company, we have a truly global team.  I’m therefore immensely proud of our teams across the world which, over the past two years, have been brave and operated in ‘growth-mode’, not just ‘survival-mode’ investing in key areas such as digital, consultancy, aftermarket service, systems and projects, and training despite often facing significant headwinds.

By staying focused on the longer-term goals, our group of companies is in a much better place to serve our global roster of clients and high-profile projects.

Diversification across locations

One of our most simple yet impactful strategic moves has been to diversify and globalise what we do thereby backing the original pioneering vision of our founder Tony Shepherd decades ago.

For example, Dermot Clarke, our Managing Director in the Middle East, has established our new regional headquarters in Dammam, in the key market of Saudi Arabia.  We have also made sure that Dan McKim, Group Technical Director, now owns all technical disciplines within the Group, meaning that we can utilise the best resource to deliver the right solutions for our clients, wherever they’re based.

From an SMS perspective, Dave Howlett, Managing Director of the Group’s hydraulics business, has overseen rapid international order intake growth for hydraulic control systems by adapting proven solutions to suit new local market needs across different territories.

It’s all meant a greater sharing of ideas as our group companies have been encouraged to challenge engrained ways of doing business becoming agile and leaner in the process.  This has led to our Technical Leadership Committee becoming the source of many excellent technical discussions leading to innovative and more efficient, compact, and cost-effective client solutions.

These initiatives have positively impacted our growing global footprint such as our India operation, which launched in late 2020 and continues to provide a fantastic resource of new talent and ideas.  Indeed, our strategic growth plan isn’t just focused on the UK and Middle East.  Martin Bell, Sales Director, has moved to the APAC region to support our growing client base in a part of the world that is seeing unprecedented global demand for energy.

2022 – a year of two halves

Using a footballing analogy, which may be painful for England fans at least, 2022 has been a year of two halves.

The first half of the year saw ferocious bidding activity as the world restarted post-COVID.  Competition was strong and clients were demanding tight lead times to make up for lost time on delayed projects.

We had to match our clients’ needs to become operational as quickly as possible – we were ready, had a refreshed offer, a clear strategy, and responded well.

The second half of 2022 presented new challenges.  We saw supply chain issues with prices for materials going sky high, electronic components in short supply and the tightest imaginable labour market conditions.

Things have settled down, which bodes well for 2023.  However, 2023 will see the energy sector continue to be buffeted from time to time by these issues particularly labour supply.

Our team has responded to the challenge by establishing a Strategic Sourcing Function across the business.  Our Head of Strategic Sourcing, Nick Doherty, has transformed our sourcing approach to establish strong and often new supply chain partnerships, as well as new technologies and capability to best deliver for our clients.

2022 offered a glimpse of the future too.  We are seeing a terrific pipeline of opportunity in low carbon technologies particularly hydrogen, and carbon capture, utilisation, and storage (CCUS).  We’ve backed emerging opportunities in this area by investing in top talent like Catherine Jones who joined the business this year as Measurement Consultant at our Aberdeen-based business Kelton.

Digitalisation is also gathering pace – the oil and gas industry, so long a laggard in digital, is making up for lost time.  Funds are now available and with the opportunities that digital provides in terms of efficiency understood by all, I anticipate that digital growth will be a key industry driver in the new year.

As we approach the end of 2022, almost 5% of our turnover now comes from low carbon work – a significant uptick from 2021.  Low carbon opportunities are not limited to the UK market.  With COP28 taking place in the UAE next year, we will see an exciting pipeline of opportunities as the country puts itself on the world’s low carbon map in earnest.  Needless to say that we will bring the expertise and experience from our global team to benefit this key global energy hub.

In sum, 2022 was a year of reckoning, where external factors transformed the global energy market.

Prospects for 2023

2023 looks promising.

The market remains buoyant, and we are confident that we can continue to grow across all Business Units.  Our ops team is laser focused on operational excellence and are fine-tuned to the centralised global resources available to them.  With a fair wind, our low carbon business could see significant hydrogen and carbon capture opportunities later in the year.  We’re not dependent on it for success, and the timing will be uncertain, but when the projects start to move, we’re ready to support.

In particular, our aftermarket service team look set for a busy year ahead.  Hardik Shah, Aftermarket Services Sales and Proposals Manager in the Middle East has led projects and overseen strong growth in traditional Alderley systems and projects markets including Kuwait and Oman.  Nithin Jacob, Country Manager in Qatar, continues to support this key growth market successfully.  And Andrew Charles, Aftermarket Services Operations and Projects Manager has set up a ‘Special Projects’ team able to deliver quick-turn technically complex modification and upgrade solutions with real flair and efficiency.

Our strategy and focus will continue to evolve as the market does.   We relish the challenge as we’re more agile in comparison to many of our competitors.  This means we’re able to pivot and react quickly.  Even as the business grows, we will be careful never to lose this quality – it’s a differentiator for us and one our clients value.   The positive impact of our new CFO, Martin Shaw, will also be felt as he works with our teams to pursue further growth opportunities.

On a personal level, I’d like to see the UK outline and start to execute a coherent, realistic energy strategy that serves the country’s needs in terms of providing affordable, secure and cleaner energy.

This strategy must utilise, not overlook the best of British engineering and technology right across the supply chain.  With the right policy framework in place, the UK supply chain will be able to invest with reassurance thereby securing the UK’s energy future and strengthening the country’s export capability.

We have good reasons to believe that 2023 will be a strong year for the UK and global energy sector.