Opportunities wait in the deeps

Sep 23 2008 by jez Davison, Evening Gazette

THE depth of opportunity in the murky waters of the ‘ultra deep’ sub-sea sector are fathomless, but most Teesside companies are still playing the shallows of the subsea sector.

That’s according to chief executive of NOF Energy, George Rafferty, who describes the sector as the new ‘sunrise’ industry.

While some, including Darlington sub-sea specialist CTC Marine, Hartlepool-based JDR Cables, and Sonhoe at Wilton are developing revolutionary technologies and exploiting as yet untapped energy resources that are getting more precious by the minute, others have yet to capitalise on lucrative opportunities presented by projects taking place as much as 10,000ft below the surface of the big blue.

It’s not without its risks, while the challenges it presents to technology are daunting. But the rewards are immense. In just two years since Sub-sea North-east, a cluster of private companies, formed under the umbrella of NOF in 2006, its importance to the region has grown from a £500m economic engine to a £1bn super-sub.

And it’s likely to go on bringing wealth ashore. According to Mr Rafferty there’s more oil left below the North Sea than has so far been extracted - something like 50 billion barrels.

And in the giant research tanks at the TWI research centre at Wilton, Teesside is leading the way in developing the technology to get them out.

Much of the research - mostly joint partnership projects undertaken with private enterprise and backed by European grants - concentrates on Remote Operated Vehicles (ROVs) which go where divers fear to tread, underwater welding technologies and strength testing of subsea pipe materials at TWI’s Cambridge labs.

With demand for this type of technology soaring, opportunity knocks for Tees Valley’s engineering skills base. Regionally, it already accounts for between 5,000 and 10,000 employees, while

Infield Energy Analysts forecasts that the value of the global deep water market as a whole will grow to $115bn between 2008 and 2012 - an increase of 80% on the previous five years. Sector body Subsea UK claims sub-sea technology alone grew by 90% between 2002 and 2007 across the UK.

Expected to expand by as much as 30% in the next two years, the sub-sea industry has become a commercial gold mine for several Tees Valley firms.

Sonhoe has taken on an ambitious project to build a £2bn heavy oil processing plant at Wilton, while Darlington sub-sea specialist CTC Marine Projects recently embarked on a drive to recruit 50 skilled offshore workers.

Meanwhile JDR Cables, a specialist manufacturer of cable systems for the oil, gas and windfarm industry, has established a 100,000sq ft manufacturing operation at Hartlepool Dock’s deep-water berth, signing a 15-year lease with JDR.

Other Teesside firms hoping to reap benefits are being invited to attend an event hosted by Subsea North-east at Newcastle’s St James’ Park on October 1.

Focusing on the engineering, execution and operation of sub-sea field developments, the event will include speeches by industry representatives including Oil and Gas UK, Chevron and global engineering and construction firm Subsea 7.

Drilling in extreme temperatures and pressures beneath the ocean presents myriad technical challenges, and oil hot from the earth’s core can become so cold upon reaching the sea bed that it cannot move through pumps and pipes. This makes ultra-deep drilling exorbitantly expensive.

In addition, the skills needed for these complex projects are in short supply, although Steve Guest, managing director of Wilton-based recruitment firm TechConsult UK, says Tees Valley is better placed than most.

He says: “Companies are coming up with unique ways to exploit old oil fields that were thought to be redundant. The region is developing high-value skills in engineering design through to oil extraction.

“Sub-sea is a newish concept and a lot of training is done in-house before staff go live”

While these skills are being developed, emerging fields in South America, Asia and West Africa are proving key assets in governments’ race against time to boost energy supplies before the lights go out.

In February next year, representativ3s from many of them will be in the North-east on a trade visit organised by UKTI to meet suppliers. For more details on the week-long visit by missioners from Brazil, Russia, India, China and Mexico, which includes a trip to Subsea 09 in Aberdeen, call 0141 228 3626.