Can the subsea sector keep its head above water?

Results of our poll showed 90% of respondents felt that Aberdeen can remain the centre of subsea excellence. Read on to find out why Aberdeen is expected to retain its title. 

Aberdeen has become known as a hub for subsea excellence in the UK, with Westhill - a thriving Aberdeenshire suburb - dubbed ‘SURF City’ by the energy industry. The area is home to a number of key subsea players with Subsea 7, Technip and the Subsea UK headquarters all based in the town.

When the oil price plummeted in late 2014, oil and gas service companies were first to feel the pinch, more so in the North Sea where operating costs are some of highest in the world. However, subsea contractors seem to stay quietly optimistic amongst the growing unease in the industry.

Outwith the UKCS (UK Continental Shelf) Aberdeen still continues to be the brainpower behind many subsea operations across the globe including West Africa and the Gulf of Mexico. The skilled workers that are based in Aberdeen are second to none in the world, which is why our poll showed 90% of respondents felt that Aberdeen can remain the centre of subsea excellence.

The sector benefits from a large backlog of projects, with many spanning until 2017 and onwards. Extension of existing fields are also underway in a bid to enhance oil recovery in the North Sea. Quad 204 – the redevelopment of the Schiehallion field – is one of the largest in the UK to date. The project, which involves both Technip and Subsea 7, will extend the life of the field enabling production to continue beyond 2035.

Unlike shale projects that can easily be immobilised when the price of oil drops, subsea projects work on a longer time frame and are produced from years of planning, which results in reduced option to ‘pull out’ in difficult climates.

Subsea UK announced last week the launch of a new market intelligence service to help subsea companies’ further exploit global opportunities. The unique online database, SubseaIntel, will provide regularly updated details on almost 1,200 subsea projects worldwide. The database will allow users to delve deeper into current projects and discover upcoming opportunities using intensively researched data. In the challenging climate, SubseaIntel will provide members with valuable business development and analyst support at no cost.

The new database demonstrates Subsea UK’s continued support in the sector, encouraging further exploration and development even in difficult environments such as the North Sea.

 

Original article - published February 2015:

It’s an interesting irony that Subsea Expo, which took place in Aberdeen in February, welcomed a record 6,000-plus attendees, at a time when the industry is going through its toughest period in a generation.

Subsea UK chief executive Neil Gordon spoke to Fifth Ring and acknowledged that times are tough but he said the UK’s outstanding capability to deliver innovation and world-class supply chain processes can mitigate against the chill wind blowing through the industry.

Investment in technology, research and people must continue if we are to retain our position of global excellence in subsea engineering, he explained.

Mr Gordon added: “When challenges come along, that’s when we really can make a difference. Industry will be a bit more receptive towards innovation and technology.”

“The north east of Scotland is a key part of the subsea industry, but the whole of the UK is important as it extends that supply chain. We have to look towards Government support to stimulate the fiscal environment so that investment happens here.”

The long-term prognosis is very, very strong said Mr Gordon but he said the coming months and next couple of years is where businesses will have to look at how they operate, how they do business and how they remain competitive.

He added: “Companies have to look at what the challenges are, and align their service and offering to the actual opportunities. When the scrutiny goes on costs and efficiency that’s when the operators and the projects will have to look at smarter ways of working.

“As an industry we have to look at working with the operators right across the supply chain and agree the best way forward. We need to look at how efficiently we are spending our money to get the best value. Less cost is maybe not the answer, more efficiency in what we spend is the actual real result we’re looking for.”