North of England Energy and Offshore Report

The Journal Energy platform was launched in March in recognition of the crucial role the industry has played in shaping North East history – and in anticipation of the role it will play going forward.

 

The Journal Energy platform was launched in March in recognition of the crucial role the industry has played in shaping North East history – and in anticipation of the role it will play going forward.

In the six months since our launch events have conspired to demonstrate, if further evidence was needed, how many chapters the story has left.

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.

UK technological excellence has secured almost 50% of the global subsea market which is now worth £20 billion and set to rise to £80 billion. The North East currently boasts around 15% of the UK’s contribution.

The Neptune Centre is briefed to help maintain the region’s pre-eminence in the subsea sector and if the region can hold on to that market share then the potential boost to the economy and employment are enormous.

But the success of the Neptune sector and the subsea industry are just part of the story.

The bounce back of the North Sea oil and gas industry is creating huge opportunities with investment levels set to reach an annual record of £13.5 billion this year alone.

Expect to see more arrivals in the region from Aberdeen and across the globe, as companies look to tap into the skills and abilities of the region’s supply chain companies and their skilled staff.

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

Most commentators suggest this is the signal the industry has been waiting for and with thousands of turbines earmarked for the North Sea expect to see some activity in and around the region’s port – and possibly an announcement on the arrival of a major global turbine manufacturer in the region.

Another new industry where the region has expectations is shale gas. NOF deputy chief executive Joanne Leng says there could be plenty of opportunities for regional supply chain businesses with the Institute of Directors saying a UK shale industry could create over 70,000 new UK jobs.

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.

In the next few days Newcastle’s University Science City professor of energy Dermot Roddy will leave academia to work on developing Five-Quarter’s ground-breaking underground coal gasification technology – or deep gas winning as they like to call it now.

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 in this report 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.

The Energy Bill which is currently passing through Parliament may unleash a £100 billion investment bonanza in power electricity generating infrastructure. But the delay 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.

As we report CBI members are becoming increasingly concerned at this bleak picture – coming as it does at a time of soaring electricity bills, and with npower recently warning renewable policies may add a further 19% to electricity bills.

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.

It’s worth remembering that almost three–quarters of the platform operating on the United Kingdom Continental Shelf were made on the North East’s river.

With all this potential in the North East energy sector the fly in the ointment may once more be the serious shortage of skilled workers.

While the region’s marine engineering and mining pedigree has bestowed a bedrock of talent and skills the envy of our global competitors, even now there are not enough skilled workers to go round.

Wages in the oil and gas industry have risen by 15% this year alone with average salaries now in the region of £70,000 a year.

Thankfully the region’s Local Enterprise Partnerships are making this a priority with ambitious plans to train at least 5,000 new engineers and technicians a year.

And these graduates and technicians look set to have multiple employment opportunities in the region’s booming energy industry in years to come.

by Brian Aitken, editor, The Journal

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