Spotlight on the energy and offshore sector

The Journal’s Energy reports have been a feature of the newspaper and on-line platforms for the last six months and tomorrow we will be producing our second major supplement on the sector. Peter McCusker looks ahead to this publication

Anna Gowthorpe/PA Wire An offshore wind farm
An offshore wind farm

Over the last six months we have aimed to shine further light on the region’s successful energy sector and report on its hopes, aspirations and concerns.

The skills and abilities derived during our days as global centres of coal mining and shipbuilding have shaped the region’s contemporary energy story.

In tomorrow’s 48-page publication leading Northumberland science author Lord Ridley reflects on how the North East developed the processes that powered the world.

He says: “Tyneside was the first place in the world where heat was consistently turned into work on a large scale. The Newcomen steam engines installed at Byker and Oxclose in 1713 were among the first machines in the world that used heat to move things in a controlled way.

“The Newcomen revolution gave Tyneside cheap energy, which was used to produce affordable goods and services for people all over the world – in effect, energy was amplifying the actions of labourers and managers.

“In the early 1700s, the historian Robert Allen has found, Newcastle had energy costs that were a fraction of those in London, Paris, Strasbourg and Beijing. And therein lies a crucial lesson for today. Whichever country has the cheapest energy will get the most and best jobs.”

Over the coming decade an estimated £100bn is set to be invested in the UK oil and gas, offshore wind and emerging energy industries. The North East’s industrial DNA places us in an ideal position to secure huge benefits from this unparalleled level of investment – with the potential to create an estimated 40,000 new regional jobs over the coming years.

An oil rig in the North Sea
An oil rig in the North Sea
 

The Government says that the North Sea oil and gas industry will still be providing 70% of the region’s energy needs in 15 years’ time.

We report how despite falling production levels the North Sea is sustaining record levels of investment.

In tomorrow’s publication Joanne Leng MBE, deputy chief executive of NOF Energy comments: “A lot of attention has been given to the levels of investment targeted at the North Sea oil and gas sector in 2013 and beyond, which will open a new chapter for the UK Continental Shelf.

“This is unsurprising as a record £13.5 billion has been earmarked for North Sea projects in this year alone. When the investment was recently announced, it sparked a surge in activity among supply chain companies keen to secure new work.

“Operators developing new oil and gas fields or extending the lifespans of existing fields are keen to engage with the supply chain and North East companies are well-placed to have a significant role in the enlivened North Sea.  

“For decades, the North East has been at the heart of the oil and gas industry. Seventy per cent of the platforms in the North Sea were constructed in the region and companies have continued to innovative to create a huge range of products and services that are in demand.

“With this new investment come new opportunities, not only for the established energy sector supply chain, but also for companies from other industries that have transferable or complementary skills, products and services.”

At our launch in March we intimated at the time how the North East was set to land a major prize in the shape of the new Neptune Centre for subsea engineering.

Work will shortly start on this centre of excellence on the banks of the Tyne at Walker, cheek by jowl with the cluster of world-leading subsea companies the region is fortunate to play home to.

Neil Gordon chief executive of industry body Subsea UK says: “There is strong competition from the US and Norway but the UK is leading the way in subsea engineering at the moment. The oil majors know the UK is a great place to invest but we cannot stand still.”

“Neptune is a great start but we need more innovation centres if we are to stay ahead of the global competition.

“The North East is strong on manufacturing and engineering, technology and support operations. There is a worldwide demand for subsea technologies. The great thing about the Neptune centre for the North East is that we expect it to act as a catalyst to attract inward investment.”

On the renewables front, new life has been breathed into the becalmed offshore wind sector with this summer’s Government announcement on strike prices.

Andrew Hodgson (pictured below) is a North East LEP board member and chairman of industry body Subsea North East.

He said: “The offshore wind industry is such a big thing and there will be more than enough work to go round for the whole of the east coast of England and Scotland.”

“The Government has come a long way with the strike prices and offshore wind industrial strategy. We will now start to see things happen. We will see thousands of turbines out there in the North Sea and it will be great news for the North East.”

Andrew Hodgson
Andrew Hodgson
 

A further emerging energy industry with great potential economic and employment opportunities for the region is decommissioning.

Binding international conventions stipulate the entire infrastructure in the North Sea has to be removed and the region’s geographical position means there could be at least 7,000 new jobs in this industry, if we can capture just 20% of the market.

We also report on how the North East may see major benefits from the emergence of two new industries in what is now termed unconventional gases. The Institute of Directors say 70,000 jobs could be created in the UK if the shale gas industry gathers momentum, presenting significant opportunities for North East companies currently working in the offshore oil and gas supply chain.

For a number of years now The Journal has been reporting on the activities of Newcastle-based Five-Quarter. This business spun-out of Newcastle University with ambitious plans to establish a new industry in the region based around the use of our extensive remaining coal reserves.

Five-Quarter chairman Harry Bradbury says: “Shale gas has allowed America to steal a march on the rest of the world. It has prompted huge manufacturing revival in America: one which is shifting the global balance of economic power back in their favour.

“The cheap feedstock gases the Americans now have access to have dramatically improved their competitiveness.

“Europe is unable to compete on a level playing field and this is a matter of serious concern for politicians and decision makers.

“But we are confident that the industry we want to develop in the North East will help save the Teesside chemical industry by producing a feedstock gas at a competitive price.”

The supplement reports on how we expect some major developments in this arena over the coming months and there is also likely to be some exciting news coming out of the region on the nuclear front.

Both of these developments could create hundreds, if not thousands of new jobs, if they achieve the ambitious scale envisaged by their founders.

However, two of the region’s senior energy figures – Prof Ian Fells and Lord Ridley – highlight growing concerns over the looming energy crisis facing the UK. Delays in the passing of the Bill, and EU emission’s regulations, will leave the country with little spare capacity from the winters of 2014/15 onwards.

Ian Fells, emeritus professor of energy at Newcastle University, said: “It is a remarkable juggling act, trying to balance increasing the use of renewable energy, particularly electricity, reducing the cost of energy and making it more affordable to consumers by increasing energy efficiency and so reducing demand; and most important of all, maintaining security of supply.

“The laudable aim of meeting the three objectives of energy security, decarbonisation and affordability are going to be very difficult to achieve.”

Tomorrow we also focus on renewable energy, assessing the merits of the current technologies, and gauging which low carbon alternatives have the best chance of succeeding.

In summary the latest Journal Energy review will provide a comprehensive update of recent developments and outline the substantial economic and employment opportunities that lie ahead. Make sure you pick a copy up at your newsagent’s tomorrow.

Journalists

David Whetstone
Culture Editor
Graeme Whitfield
Business Editor
Mark Douglas
Newcastle United Editor
Stuart Rayner
Sports Writer