Tyne is beating Aberdeen in subsea sector

Mar 26 2008 by Peter McCusker, The Journal

North East companies are world leaders in subsea oil exploration and make a significant contribution to the regional economy. Peter McCusker reports.

OVER 70% of the 350 oil rigs currently operating in the North Sea were made here in the North East.

During the construction boom in the 70, 80s and 90s, the banks of the Tyne and Tees resonated with the sounds of cranes, angle grinders and welding machines constructing these giant structures.

These machines are now beginning to make a din once more.

Late last month it emerged that Haverton Hill shipyard near Billingham was reopening with a £150m contract to build two drilling rigs, creating 800 new jobs.

The deal between the Tees Alliance Group and SeaDragon Offshore will see the first rig delivered by 2010.

And late last week George Rafferty, chief executive of the Northern Offshore Federation (NOF Energy) revealed he had been contacted over the possibility of a construction project on the banks of the Tyne.

McNulty Offshore, one of the UK’s leading oil and gas fabricators, is based in Hebburn and Dave Skentelbery, boss of A&P Tyne, said he was following developments in the oil and gas industry closely with a view to possibly securing work.

Rafferty, chief executive of NOF Energy, which represents scores of North East energy companies said: “Many of the foreign yards are full and the focus for some fabrication companies is shifting back to the North East.

“Just this morning I had an inquiry from a company wanting to know about platform construction possibilities on the Tyne.”

However, the River Tyne is still making a significant contribution to the oil and gas industry in what is known as the subsea sector.

Two of the world’s premier subsea companies – Duco and Wellstream – sit cheek by jowl at Walker.

And another leading North East firm, The Engineering Business, is carrying out subsea work at the former Amec yard at Wallsend.

There is also the possibility of a new centre for excellence for the oil and gas industry, jointly funded by the public and private sectors, coming to the river.

The region’s universities have been world leaders in marine engineering since the days of the shipbuilding industry and this is still the case.

Rafferty added: “There is a good chance we will be able to establish a centre of excellence for the subsea sector in the region. We are looking at the banks of the Tyne.

“The universities are fully supportive of the work being done in the sector and we recently had talks with Newcastle University about tailoring courses to meet the needs of our members.

“Next month we are hosting a delegation from Venezuela and in April there is a visit from Norwegians. There is no doubt the North East is recognised as a world leader in the field of subsea exploration.”

He believes the North East is now outrunning Aberdeen in this sector – and it is a view which is gaining prominence elsewhere.

Mr Rafferty added: “There is a grudging acknowledgement in Aberdeen of the abilities of the North East companies in this field.”

Guy Adams, of oil industry publication Oilinfo, which recently established a base in Newcastle as opposed to Aberdeen, said: “The North East has a greater chance to grab an even greater share of the oil market.

“There is an interest in the North East from Norway which hasn’t been seen since the 1970s.

“We already have two leading Norwegian companies based in the region and more will follow.

“Norway is the main oil producer, per square acre in the world, and for the first time we have 35 companies from Norway coming to the region next month actively looking for business partners.

“The North East has the engineering expertise and the banks of the Tyne could be ideal for further development.”

Ray Thompson, One NorthEast’s energy and environment manager, said: “The rising price of oil means the oil companies are cash rich. There is now a good economic case to do further exploration and development.

“The whole oil sector is growing significantly and the opportunities are huge. There is a worldwide boom and the energy market is going off the graph. There is a huge market across the globe for the things that the North East does well.”

Mr Thompson believes the skilled workforce needed to support the sector’s development still exists in the region’s workforce, although some of these workers may now be overseas.

The primary areas for future oil explorations are West Africa, Brazil, Mexico and Azerbaijan.

There is a huge market across the globe for the things that the North East does well.