Subsea UK, which represents the interest of the country’s world leading subsea oil and gas supply chain companies, has marked its 10th birthday by hosting its largest every annual industry get-together.
Over 5,300 delegates – a 20% rise on last year – attended Aberdeen Exhibition and Conference centre on Wednesday, Thursday and Friday of last week for Subsea Expo.
The positive mood at the show was reflected in talk of a subsea ‘bubble’, with the sector’s value reaching almost £9bn last year.
Subsea UK chief executive Neil Gordon said the UK’s service companies are leading the way globally.
He said: “We are going through a very strong growth period, the service companies are in the driving seat and it’s a very good time – long may it last.
“The North Sea has always been the test bed for the rest of the industry. What happens here drives the rest of the world; we pioneer, develop and test technology before exporting it globally. Our skill set is unparalleled.
“This is a good time to reflect on what we have achieved. This is a very successful industry
“The easy oil and gas has been had, we are heading into deeper waters and are trying to squeeze more out of the existing reserves, and this is pushing the technology to new extremes.
“The industry needs smart people and smart technology. This is an exciting place to be.”
Scores of North East companies and executives attended the exhibition including representatives of subsea cable, umbilical and flexible pipe protection firm Tekmar.
James Ritchie from the Newton Aycliffe-based company, who were exhibiting for the first time, said: “We have been pleasantly surprised by the valuable conversations and strong leads from the show. It’s an excellent and highly-focused event which has generated major interest in our specialised subsea cable protection systems that will inevitably lead to new business.”
Representatives from Port of Sunderland also attended. Matthew Hunt, Port of Sunderland director, believes the port’s networking presence at the exhibition was vital in helping to further build relationships with industry experts, while establishing Sunderland as a hub for offshore and subsea shipping.
He said: “The Subsea Expo was a great opportunity to be part of the wider European network and was highly beneficial to our city, giving us a platform to really showcase the exciting developments that are putting Sunderland at the fore as a destination for offshore and subsea growth, and indeed for more traditional cargo handling and shipping operations.
“Our aim was to raise awareness of the port’s offering in the subsea sector and we feel we’ve taken strides to help grow our reputation as a destination for offshore renewable energy and subsea engineering businesses.”
Gordon added: “This year’s event has surpassed all expectations. We have attracted more delegates, more international visitors, more exhibitors, more speakers and more young people than ever before, underlining the importance of our sector to the UK and to the global oil and gas industry.
“The UK subsea market is now worth almost £9 billion and this week has demonstrated exactly why our supply chain is envied around the world. Our technology, expertise and experience are unparalleled and Subsea Expo provides a platform for showcasing them.
“The feedback has been tremendously positive with many companies reporting strong levels of new business that will ensure that the sector is well on its way to capturing the forecast £11 billion, a third of the global market share, by 2016.”
How subsea expo helps Quick Hydraulics
Quick Hydraulics managing director Andrew Esson has targeted the subsea sector as the major growth opportunity for his company this year.
Esson’s first visit to Subsea Expo was in 2012, a mission which he described as fact-finding, and one which helped him get a clearer idea of how Quick could develop its presence in the sector.
He said: “I find it helps meeting face-to-face with people you may have spoken to on the phone or exchanged emails with. As we’ve developed in the sector Subsea Expo has become a great way to broaden our network.”
Quick manufactures hydraulic power units which are used in underwater control systems, subsea power exchanges, launch and recovery systems and to power reel systems which are used on board FPSOs. The company works in partnerships with equipment manufacturers and Esson, pictured, believes its subsea accumulator modules, at up to £30,000 a unit, have significant growth potential, as the industry heads towards processing on the ocean floor, rather than on an FPSO.
He believes being based in the North East is an advantage at a time when Aberdeen is over-heating.
He said: “As we are building our network and relationships we are finding the North East is a good place to be.
“The operators know there is a good skills base in the region and they are confident they will have quality people working on their job.
“While we know there is still a skills shortage in the North East it is even more acute in Aberdeen.”
Quick is targeting the subsea sector and its growth curve, and projections are impressive.
Two years ago, when Esson first visited Subsea Expo, the company achieved sales of £6,000 in the subsea sector, last year that reached £103,000 and for 2014 he is predicting sales of £500,000.
He added: “There are a number of new and brownfield projects coming through. Companies operating subsea equipment are turning to us to replace the existing hydraulic power units as they aim to squeeze as much as they can out of their assets.”
While many companies operate out of the North Sea basin Esson is happy to stay close to home for the time being.
“It would be foolish to be anywhere else at the time being,” he said.
“But companies we are working with in Aberdeen are opening overseas operations and it would seem to be a natural progression to follow the same path, but at the moment we want to establish a track-record of achievement here in the North Sea, build up our references then use that as a springboard to look further afield.”
Region has right expertise to offer Brazil's fast-growing subsea market
Ahead of the Subsea Expo event in Aberdeen a high-powered Brazilian trade delegation visited Newcastle to encourage the region’s world-leading subsea sector to explore opportunities in the South American country.
Brazil is the fastest-growing market for the subsea industry and by 2020, 44% of the global-installed deepwater and subsea equipment will be off the coast of Brazil.
Marcelo Vertis, the under-secretary for energy in the Government of Rio de Janeiro, explained to almost 200 delegates at St James’ Park that Brazil plans on spending $90bn a year on its energy industry with two-thirds off this being on the oil and gas sector.
To develop this Brazil needs the technological expertise of the North East and UK subsea sector.
He said: “The offshore oil and gas industry was developed in the North Sea. It was here that we saw the first big move into deep-water production.
“Therefore the UK is where you find the technical people, operators and supply chain.
“The regions of Newcastle, Aberdeen and Stavanger developed into the industrial experts in the manufacture of the technology we need.
“To be able to operate 2,000 meters below the sea then you must have the technical people with the skills to develop and operate equipment.
“In Brazil we need a supply chain and to do that we need to be able to partner with UK companies.”
Vertis says the best way for North East companies to gain a foothold in Brazil is by working in partnership with Brazilian companies.
He said: “Finding a local partner is the best approach, local companies can be allies rather than obstacles.
“We need international help to support our local companies develop, hence our desire to work with NOF Energy and the UKTI.
“There are fiscal incentives on offer to companies looking to establish a presence in Brazil.”
Vertis explained there are local content stipulations this can range from as low as 40% up to 85% depending on the piece of equipment.
Much of Brazil’s future oil and gas industry will come from its pre-salt reserves which lie five kilometres under the seabed, beneath a layer of salt up to two kilometers thick.
The reserves are estimated to contain at least as much as the 60 billion barrels of oil found in the North Sea. The pre-salt area is now producing almost 400,000 barrels of oil a day.
Vertis added: “This has led to the development of new technology that can operate five kilometers below the surface.
“Each well cost $300m to drill as it has to go through a two kilometre bed of pre-salt. We are creating the environment to welcome successful supply chain companies to Rio de Janeiro.”
There are already over 2,000 foreign companies operating in Brazil, including North East outfit GE Wellstream which has a research centre near Rid de Janeiro.
Vertis says Brazil needs support across a wide spectrum of the supply chain including: valves, fasteners, alloys, ROVs (remotely operated vehicles), fabricators, specialist metallurgy, drilling equipment and well-casing.
George Rafferty is chief executive of Durham-based NOF Energy, which looks after the interest of hundreds of North East oil and gas supply chain companies.
He said: “Brazil faces enormous challenges with technology, its supply chain, and there will be hurdles to overcome with regulations but there is no doubt the opportunities are huge.
“They are desperate to maximise the oil and gas industry for the benefit of the Brazilian economy. They cannot do it themselves, they need the skills of the North East supply chain companies and they are reaching out for that help.”
The Newcastle event was organised by Subsea North East, NOF Energy and United Kingdom Trade & Investment (UKTI).
Simon Crosby, lead UKTI adviser in the North East of England said: “The reason UKTI North East sponsored the event is because we recognise the amazing export potential that Brazil has to offer North East companies.
“With over a hundred companies in attendance, the turnout on the day reflected the appetite that local businesses have for at least exploring what the Brazilian market has to offer.
“There is incredible synergy between what the Brazilian oil and gas sector needs and the deep-rooted expertise that the North East has to offer.
“But it is also important that local companies understand that Brazil isn’t the easiest of markets to break into. We felt an obligation to convey the message that success in Brazil requires significant levels of commitment, time and investment.
“If they’re serious about Brazil, we need local companies to understand the rules around local content and how a permanent presence in the market is often the key to being taken seriously. Brazil isn’t a market that you can nibble at.”