Houston downtown offshore oil industry

A mutual passion for offshore oil and a keen sense of ambition has cemented the Nordic-American bond in recent years, a bond that goes back centuries to when Norsemen from Greenland became the first Europeans to discover America around the year 1000.

At present, around 10,000 Norwegian expats call Houston, Texas, home, making it the biggest Norwegian population outside of Norway. Most can be found occupied selling Norwegian technology to the local offshore oil and gas sector, with over 150 Nordic companies now operating in the Texan town.

This link was celebrated in May last year when the Norwegian Crown Prince Haakon and Crown Princess Mette-Marit made a special visit to the city, emphasising that both countries share not only history, but strong economics centred mostly on the extraction of offshore oil.

For Norwegians, whose country was built on its oil riches, Houston is a natural second home.

Houston: the oil capital of the world

"Houston is Houston," says Jens P. Kaalstad, vice president of Subsea at Kongsberg Oil & Gas Technologies. "It is the oil capital of the world."

Canada has significantly increased the financial liability of offshore operators for oil spills in the Arctic and Atlantic oceans.

Houston is home to some of the biggest oil companies in the world, such as ConocoPhillips and Chevron, as well as many of the major service companies, such as Transocean, Haliburton and GE.

INTSOK, a non-profit foundation responsible for promoting Norway’s offshore oil and gas capabilities abroad, estimates there is $150bn to be made in the US market over the next four years and another $30bn in mega projects including deepwater.

Globally, Barclays Global 2014 E&P [exploration and production] Spending Outlook estimates operators will spend $723bn on E&P budgets in 2014, a 6.1% increase from 2013. Many of these projects will be specked out of Houston.

To get a share of this lucrative market companies need to have a base in Houston’s multicultural global business hub.

Norwegian technology: the appeal of Norwegian innovation

"Everybody will meet with a Norwegian – they want to see the technology," says Denise Patrick a senior strategist at Pierpont Communications based in Houston.

"Norwegians come from a country where innovation is highly prized and supported by the government."

Last year Patrick co-wrote a report commissioned by INTSOK called ‘How to Succeed in the US Market Place’ which interviewed Norwegian companies working in Houston to understand and learn from their experience.

Norwegians come from a country where innovation is highly prized and supported by the government; with a tax regime that is specifically geared towards research and development. This, plus years of experience working in the harsh environment of the North Sea, has resulted in a huge respect and an excellent reputation for Norwegian technology in Houston, as well as all over the world.

"We don’t necessarily come from deep waters and go to deep waters, but we come from a harsh environment. We try to do it right the first time because it is very expensive to go out and fix it," says Kaalstad.

INTSOK say the speed at which Norwegian companies take an idea to prototype is unmatched around the world and that Norwegian companies are known globally for "core strengths in Arctic harsh environment, Subsea / SURF [subsea umbilicals, Risers and flowlines] and cleaner production technologies".

"Some of the changes in the regulations for offshore development in the US Gulf of Mexico post Macondo bring the US requirements closer to those in Norway which somewhat levels the playing field in this dimension." INTSOK adds.

Innovation Norway, which is a Norwegian government organisation set-up to support development of Norway’s enterprise industry, estimates the export value of Norwegian technology to be just below $33bn annually, though the exact Houston number is hard to predict.

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Despite Norwegians and Texans sharing an "ambitious spirit to find a better way to do things" and being "culturally very similar", as Patrick says, she warns that Americans and Norwegians actually have very different business practises and many Norwegian companies have found it extremely challenging breaking into the American market.

"We buy for business reasons, whereas in Norway innovation is the priority," Patrick states.

"In the US you have to tie your innovation and technology to the business objective of the buyer, which can be either financial or strategic."

"They [US companies] are like "I didn’t ask you to make that"; it is a high cost to change."

The Houston offshore oil industry is extremely competitive and despite support from the Norwegian government and Norwegian oil and gas industry organisations, including company set-up lawyers, visa experts, relocation agents and market research/intelligence firms, very few companies make sales in less than two years according to Innovation Norway.

"They [Norwegian companies] think because [technology] is Statoil approved, it ought to sell everywhere, but it is not the case," says Patrick.

"Houston is home to some of the biggest oil companies in the world."

"In the US, it’s a joke that everybody races to be number two – everyone wants [technology] to be field proven."

Many Norwegian companies underestimate the different buying practises in the US. For example, there are a lot more people involved in the decision making process in the US and although a meeting may seem to have gone well because of Texans’ "friendly nature," says Patrick, there will still be other people in the chain to convince.

Culturally, there are differences, too. "Norwegians aren’t good at baseball statistics, put it that way," says Kaalstad, who has lived in Houston for 18 years.

"In the US, the sales process is based on networking and extensive customer contact," says INTSOK. "Norwegians are not good at "small talk."

Networking can also tend to go beyond business hours, like on a Sunday, for example, when all locals will attend church.

Kaalstad says Texas isn’t a "difficult place to get used to living in," apart from the "hot and humid climate" which is both the number one reason to move to Houston, as well as reason to leave, he adds.

Huge potential: Norwegian presence in the years to come

It may be a tough nut to crack commercially but there is no denying the huge potential for Norwegian companies that remain Houston, a prospect that will become even more attractive as North Sea output inevitably begins to decline.

"We see great potential in the US shale business," says Innovation Norway. "Norway offshore technology has proven valuable in several areas after specification has been adjusted to local requirements and with local presence and/or assembly. We also see Mexico opening up to allow foreign operators much quicker than anticipated."

But as more Norwegian companies look to make the move stateside, will more Norwegians actually want to go? Kaalstad says relocation of employees is becoming a problem as it is increasingly tough to find people willing to make the move because they don’t want to up-root their families. Currently, companies only send one or two people, but there will usually be one person – and for business reasons it’s important it’s the right person – who relocates permanently with their family. However, according to Innovation Norway, the number of people working in Houston is relatively low compared to the total employed in Norway.

Although Norwegian companies still face challenges in Houston, Patrick says she has seen some improvement since last year and there is no doubt the number companies will grow.

"I feel as though there is such an incredible opportunity for Norway, in particular, to grab market share," Patrick suggests. "As they learn how to communicate that value better and better they are going to do extremely well.

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