Over 300 energy leaders today debated the challenges of a sustainable future for the North Sea and explored the potential development of the subsea market over the next 10 years at Subsea UK’s annual London event - Subsea Europe.
Malcolm Webb of Oil & Gas UK, Chris Bird of Centrica Energy, and Rhys Thomas of British Wind Energy Association were among the keynote speakers at the one day conference and exhibition organised by industry body, Subsea UK, which examined the future of European subsea production.
Alistair Birnie, chief executive of Subsea UK, said: “From the conference, it is becoming increasingly clear that the subsea market is changing in terms of both the technologies that we will have to implement for the future and the relationships we need to build within the supply chain.
“It has also become more than apparent that Europe remains a key area for subsea business. It is already the biggest region using subsea systems and has accounted for 30% of all subsea wells completed in the last 10 years. The prominence of this dominant region, although changing in form, will continue for subsea business.”
Mr Birnie added that the energy industry was changing dramatically: “We are increasingly seeing an emerging energy supply from the diverse market. This forms an overall strategic energy policy which takes into account gas supply, renewables and other energy sources. Energy is becoming very strategic with security a key driver for the future. Subsea has a fundamental role to play in securing energy sources in these diverse areas.”
With revenues nearing £5 billion and around 40,000 employees, the subsea sector has been a high-performer in the UK economy and, according to Subsea UK, is key to sustaining the long-term future of the North Sea.
The opportunities in the North Sea from oil and gas field life extension to abandonment and decommissioning were also examined at Subsea Europe along with new renewable energy business streams, particularly in offshore wind.
Alistair said: “Given the efforts to bring down costs in a mature basin such as the UKCS, subsea developments are critical to sustaining production here and increasingly around the world. Indeed, 43 per cent of UK production is now accounted for by subsea wells and subsea goods and services are exported to the value of £2 billion per year.
“The backlog of work is seeing us through but continuing delays on projects, a direct result of the downturn, and the impact of the North American slowdown are hitting the sector hard. Tendering activity may be higher but there is growing evidence of pressure on prices.
“Subsea companies who have been able to deliver services in addition to products, and value-adding activities that are relevant in the bad times as well as good, are proving to be winners. Those with a spread of work across the globe rather than just in the UK are maintaining their position. With the nature of oil and gas partnerships changing, companies who nurture relationships with national operating companies (NOCs) will continue to grow.”
Malcolm Webb considered the achievements and potential of the subsea industry in relation to Oil & Gas UK’s two key objectives. He outlined the contribution of subsea technology to ensuring recovery of the UK’s oil and gas is maximised.
He commented: “In terms of the subsea industry’s contribution to the UK economy, there are certainly two sides to the coin. Firstly, subsea technology has allowed our oil and gas reserves to be extracted much more cost effectively; currently 43% of production is accounted for by subsea wells and this number will only grow in future. Secondly, the sale of our wealth of expertise and technology overseas is earning valuable export revenues for the UK and rising demand around the world offers significant business opportunities. It’s important to consider, however, what the industry and Government need to do together, and individually, to ensure the industry’s potential is achieved.”
Chris Bird added: “We need to look closely at capital and operational expenditure in the industry to ensure we are making investments that will secure a long and vibrant future for the North Sea. This includes investing in renewable energy and already we are seeing gas storage facilities and offshore wind farms being built in the region.
“The challenge is to develop the sustainability of the energy industry in the area for the next 50 to 100 years and one of the North-east’s key capabilities, which can help us achieve this, is our globally-renowned project management expertise.”
Rhys Thomas of BWEA illustrated the scale of the opportunities in offshore wind. He concluded: “The UK leads the way on offshore wind capacity installed. However, the plans for future build dwarf what has already been achieved. This presentation will illustrate the scale of the challenge and the opportunities that will arise to those wishing to supply the growth of offshore wind in the UK"
Sponsored by Dominion Gas and TNEI, the event attracted over 300 decision makers operating in the subsea oil and gas supply chain, wider marine sectors across Europe as well as analyst and financiers.
George Yule CEO of Dominion Gas said: “Representing a key growth area of the UK economy, the subsea sector is essential to the long term success of North Sea oil and gas and events such as Subsea Europe provide delegates with a vital opportunity to view the bigger picture and appreciate the potential of their industry. The exhibition has been an excellent platform for both Dominion, and our subsidiary company Argon Isotank, to promote our services to the wider industry and we are proud to sponsor such an important event in the industry’s calendar.”
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