Technology is at the heart of the North East’s excellence in the subsea sector, and two major new developments on the banks of the Tyne are set to boost the region’s world-leading innovation strengths.
On the site of the former Neptune shipyard in Wallsend, now the site of Shepherd Offshore Neptune Energy Park, a £7m subsea centre is currently under construction.
A few miles upstream at Spillers Mill, work will soon begin on a second £10m subsea innovation centre being developed by BEL Valves and Newcastle University.
BEL Valves, which is based in sprawling offices and workshops next to Spillers Mill, is one of the region’s leading innovation companies and a founder member of regional industry body Subsea North East.
Andrew Hodgson, chairman of Subsea North East and chief executive of Wallsend subsea ROV (remotely-operated vehicle) maker SMD says the creation of the two centres – under the banner of Neptune National Centre for Subsea and Offshore Engineering – will cement the region’s reputation as a global hub for the industry.
“The North East and Tyneside in particular the leading world centres for subsea innovation and our aim with Neptune subsea development is to ensure we maintain and build upon that position.
“Our aim is to create a world-leading innovation hub, one which will lead the growth of the industry, both at home and abroad.
“Despite the oil price fall the subsea sector is set for rapid future growth and these centres of excellence will ensure the North East is at the heart of that.”
Working in partnership, the 15 member companies of Subsea North East, the North East Local Enterprise Partnership (NELEP) and Newcastle University have been key to developing the Neptune centre concept.
Professor Nick Wright, pro-vice-chancellor for research and innovation at Newcastle University, said: “This is a real sign of success for the region and reflects both the need for the facility and also the wealth of expertise we have here in the North East.
“Although the two centres are all part of the overall £17m Neptune centre, each has a very specific role to play in the overall project and longer term, the vision has always been to build a third, although that’s some way off.
“What this joint venture offers is a unique opportunity for collaboration between industry and academia, driving up skills and innovation in subsea and offshore engineering.
“Subsea technology is changing at such a speed, but currently many of the companies have to take their research out of the region. The centre will be a location to test out equipment and find out new things.
“Currently there is little in-depth research into the deeper oceans – lower than 4,000 metres – and 75% of all oceans are deeper than that. Our aim is to develop new technologies to operate in those depths.
“The centres will coordinate research into key things such as the reliability of materials in a subsea environment. For how long can high-voltage electric cables survive under water? Large operators want to assurances on reliability; they have to know it’s going to work in 20 years’ time.”
BEL Valves will commence work on the Spillers Mill hyperbaric test facility in the next few months, with staged commissioning of equipment to be completed by 2017.
Richard Dodd, chief operating officer at BEL Valves, said: “This project will see a unique, world-leading facility being built in the North East. This strengthens BEL Valves’ links with local businesses and the university.
“The Neptune National Centre for Subsea and Offshore Engineering is split across two sites – Newcastle University’s research facility and the hyperbaric test facility which is the commercial venture led by ourselves, attracting investment and helping secure jobs for the future.”
While the oil price is affecting investment decisions elsewhere in the offshore industry, BEL Valves is bullish on long-term outlook. Mr Dodd added: “Oil prices are cyclical in nature and we’ve been through this before.
“Here at BEL Valves our strategy is to take a longer-term approach and look at where we want to be in the longer term and what we need to do to get there. The R&D work we are doing through the Neptune centre is fundamental to this.”
The Neptune Energy Park facility will act as Neptune’s headquarters and coordinate research into Neptune’s four key areas of innovation namely materials testing and reliability, component and system reliability, power distribution controls and sensors and high-pressure/high-temperature technology.
The creation of this unique facility has, in part, been thanks to funding from the NELEP, of which Mr Hodgson is vice-chairman. He said one of the strengths of the region’s subsea sector was the close links with the region’s five leading universities.
The day before Subsea North East’s annual conference in June this year its members and academics from the five universities are getting together for a day of presentations, talks and workshops.
Mr Hodgson said: “We want to deliver programmes that can support the entire sector. Collaborations already exist between some Subsea North East members and universities but we want to develop this further and widen its scope.
“Having the national centre here on Tyneside is massive boost for the region and our aim is to now deliver some world-leading products to match our ambitions.
“Our aim is to deliver a constant pipeline of research and testing, building on the existing collaboration between the companies and the universities.
“The industry is currently focused on cutting costs and one strand of our work will be to look at the potential of delivering a greater standardisation of products.”
He foresees Neptune as being an open innovation centre with subsea members working in collaboration with academics and students and interacting with entrepreneurs, engineers and companies in the North East’s advanced manufacturing supply chain.
University engineering undergraduates will be able to use the centre as a base for research and its backers hope they will learn to appreciate the ground-breaking engineering capabilities of the subsea cluster – and attract some to stay in the region, helping to ease the skills crisis.
The North East’s subsea industry began 30 years ago with the growth of the North Sea oil and gas and the telecommunications industries.
Using the region’s expertise in the mining and shipbuilding industries, North East companies began making innovative solutions for these growing industries.
A diverse range of technology supports subsea recovery, including remotely-operated trenching and ploughing and mining equipment, as well as risers, umbilicals, valves and associated hydraulics for powering subsea electrical systems and controlling the flow of recovered reserves.
On Tyneside the cluster of world-leading subsea companies include equipment specialist IHC Engineering Business, Duco (Technip) for umbilicals, BEL Valves, Wellstream for pipes and SMD for ROVs.
These companies joined together to form Subsea North East and they have all experienced rapid growth in the past few years with total revenues doubling to more than £1bn.
While the oil price fall is slowing, growth in the global sector is still expected to more than double in size to £40bn by the end of the decade.
Analysts say the industrialisation of the developing world and global population demographics mean worldwide oil demand is set to grow from 90 million barrels of oil equivalent per day (boepd) to more than100 million boepd equivalent by 2030.
With most conventional and easy-to-get oil and gas already in play, the quest is now on to recover unconventional resources – such as shale oil and gas – and those harder-to-get offshore reserves in deep water and the Arctic.
The price fall has seen a significant reduction in new drilling in the US shale fields which are capital intensive and currently need higher prices to make money, while subsea can wipe its face at a lower price.
Mr Hodgson added: “With a growing worldwide demand for oil, and subsea production being the most cost-effective recovery method, even an oil price of less than $100 a barrel makes the future of the industry look very strong.”
Follow Peter McCusker on Twitter @mccusker60