Amerada Hess is a semi-submersible that is anything but sinking, a North Sea stripling which the City loves. Helen Kay sees for herself.
Aberdeen's primary schools have been sending in artistic illustrations of an oil platform for the Amerada Hess competition. "Stop whaling the whales," says one particularly right-on, if rather muddled, entry. Another boldly states: "Amerada Hess cares. Other oil companies don't." This blatant attempt to win brownie points elicits gales of laughter. But the entry which really catches my eye is the arrangement of four finished loo rolls plus cardboard lid, splotchily painted in marine blue. It is a valiant effort, though technically inaccurate, for the pride and joy of the North Sea's ninth largest player, measured by assets, is actually a floating production facility.
The AH001 is a semi-submersible vessel moored centrally between the Ivanhoe and Rob Roy oil fields, a good hundred miles to the north-east of Aberdeen. The Bristow Tiger which makes the daily flight is crammed with men in neon orange survivor suits, who sit reading The Sun and the Daily Record, or quietly dozing.
An hour later the AH001 comes into view, its colourful topside layout resembling the entrails of a radio, as it bobs up and down in the sea. From a distance it could indeed pass for a toy - a neatly assembled piece of Lego, perhaps - though with a £350 million price tag, and daily throughput worth well over $1 million, it is anything but childs' play. The helicopter hovers like a giant dragonfly above the landing pad, the power from its blades whipping the puddles into a frenzy of little waves. We touch down and scramble out to walk over the rope netting on deck, well clear of the rotating blades. On a winter's day it would be easy to lose one's footing and get blown overboard; today the wind is as fierce as a flick knife.
Immediately inside, the men hand in their personal IDs and head for their muster points, where a second set of cards records their presence. In an emergency this is where they report, moving their cards into another slot to let others know they are there, before piling into the lifeboats nearby. With the precision drilling of soldiers, it is the first thing that everyone, visitors included, must do, and a reminder that this is a business for men, not boys.
Yet both Amerada Hess Ltd and its managing director are mere striplings by the reckoning of other North Sea oil operators. AHL began life in 1983 when Sam Laidlaw, then a youthful 28, returned from a three-year stint at the New York headquarters of Amerada Hess Corporation to set up a UK subsidiary. Since then Laidlaw has turned water into oil with almost miraculous frequency. AHL now operates 28 blocks and has interests in a further 100, with assets worth £1.6 billion and turnover reaching £334 million in 1990.
Laidlaw himself has all the right credentials: a father and grandfather in the oil industry; an education at Eton, Cambridge and INSEAD; and a voice that would crack crystal, so impeccably upper class is its pitch. It is hard to imagine this slight, self-effacing intellectual, of such obviously British extraction, hitting it off with Leon Hess, the former truck driver who founded the American parent. But hit it off they nonetheless did.
Hess, an earthy man who invokes "the good Lord" on a regular basis, started in business by delivering fuel oil throughout post-Depression America. The Lord must truly have been on his side, for by the early 1950s he had successfully expanded upstream with a first refinery, and in the early 1960s went public. Then, in 1969, he bought the British Government's stake in Amerada Petroleum, founded 50 years earlier to seek oil in America and Canada (as the amalgamated name implies), and the two companies merged to become Amerada Hess.
The merger brought with it a non-participating role in the North Sea, where Amerada had been involved in a consortium from the very start. But, explains Laidlaw, as profits shifted from refining and marketing to exploration in the early 1980s, the corporation had diminishing control of its capital budget. In short, he elaborates, "we were investors but not in control of our own destiny".
At the same time Amerada Hess was generating a positive cash flow from its existing interests in the North Sea. In 1983 the infant UK subsidiary therefore applied to become an operator and in 1985 the development of the Ivanhoe and Rob Roy fields, a happy acquisition from Monsanto's North Sea portfolio, commenced.