Supply Services to Arctic Offshore Operations; Macro-environment, Market Demand, and Business Potentials - The Case of Maersk Supply Service

Title: Supply Services to Arctic Offshore Operations; Macro-environment, Market Demand, and Business Potentials – The Case of Maersk Supply Service Authors: Linnea Sonesson – Master of Science in Business Administration and Technology Management Patrik Torstensson – Master of Science in Mechanical Engineering and Technology Management Supervisors: Bertil Nilsson – Adjunct Professor, Department of Industrial Management and Logistics, Lund Institute of Technology, Lund University Ulf Paulsson – Associate Professor, Department of Business Administration, Lund School of Economics, Lund University Niels P. Elmbo – Senior General Manager, Project and Sub Sea, Maersk Supply Service Issue of Study: A forecasted increase in energy demand and consumption, together with a decrease of existing oil and gas reserves, has led the oil and gas producers to new areas beyond the conventional oil and gas regions. The Arctic, an area mainly located north of the Arctic Circle, is believed to hold very large potential of the world’s yet-to-be discovered oil and gas reserves. In addition, the Arctic is relatively unexplored and therefore qualifies as a new area. The harsh conditions and sensitive environment, together with the opinions and requirements from a number of affected stakeholders, bring new and unknown challenges to companies interested in operating in the Arctic region. In step with increased exploration and production activities in the Arctic, there is an increased demand for service providers such as the Offshore Supply Vessel (OSV) industry to be able to operate in the area. However, some questions remain to be answered. For example, which stakeholders have an influence on the development of the Arctic petroleum industry, what OSV services does the market demand, what are the main challenges in providing the required services, and what is the potential for and within the Arctic OSV industry? Purpose: To contribute to the knowledge regarding the Arctic offshore oil and gas industry in general and the business potential for the OSV industry within the waters of the Arctic region in particular. Objectives: The objectives of this thesis are; • To describe the general conditions and challenges associated with Arctic oil and gas operations and to identify the industry stakeholder characteristics. • To investigate the market demand for OSV services to Arctic exploration and production activities. • To analyze the business opportunities and risks for OSV services in the Arctic and to evaluate the business potentials for one of the traditional OSV operators; Maersk Supply Service. Method: This study is basically performed in a three-step-process, which can be illustrated by a funnel, where the first step includes a general analysis of the Arctic oil and gas industry, which gradually will be narrowed down to a case study on a single company, on which the general aspects are applied. This thesis employs mainly a qualitative method with a mix of both analytical and systems approaches. Conclusions: The stakeholder analysis indicates a complexity within the Arctic oil and gas industry and different stakeholders are of different opinions. However, there are business potentials for Arctic OSV services, due to market demand and the current low state of competition. The case company, Maersk Supply Service, has good potential to benefit from these business potentials. There are however many risks and challenges associated with a market entrance and commencing operations in the region