Oil and gas expansion bodes well for contractors

Friday 5 July 2013

Contractors in the oil and gas industry have been reaping the benefits of growing investment for some time. With further expansion of some UK projects in the pipeline, it looks like they are in a good position to seize on new opportunities.

The UK Continental Shelf (UKCS) in the North Sea is crucial in meeting the energy demands of both the UK and the world as a whole. GE Oil and Gas has presented the results of a huge £10 million investment programme designed to expand the its subsea systems manufacturing facility in Montrose. Capacity has nearly doubled at the Brent Avenue site, which includes a new assembly and test facility that will allow large deepwater horizontal subsea trees to be made and tested onsite.

Increased activity at the plant is likely to have a ripple effect throughout the Scottish energy sector, but a growing demand for talent has not yet been matched by enough candidates with suitable skills.

Perhaps it is unsurprising that training has failed to keep up with such rapid industrial expansion. According to Subsea UK, the subsea sector has grown by nearly 50 per cent in the last three years and is worth £8.9 billion to the UK economy. Almost half said they expected growth of 20 per cent or more in the next three years. Taking a 45 per cent share of the £20 billion global subsea market and supporting 66,000 contracts and jobs, the UK is clearly the place to be for engineers with subsea expertise.

“Extracting the remaining world’s reserves will increasingly fall to the subsea industry – already almost 45 per cent of UKCS production comes from subsea wells with 70 per cent of new developments planned,” says Neil Gordon, Subsea UK chief executive. “It is therefore of vital importance to the security of the world’s energy supply.”

Although 70 per cent of subsea output does come from north-east Scotland, the rest of the UK is noticing investment in this area, which will only see contractors’ prospects improve. Close to £614 million of subsea output is generated in the east of England, £400 million in north-east England, £126 million in south-east England and the rest spread across the East Midlands, north-west and south-west England, Wales and the rest of Scotland.

But even further north the UKCS is enjoying growing investment. BP is about to invest £500 million in Shetland’s Sullom Voe processing terminal, as part of a large-scale upgrade programme. The workforce, which already includes 200 staff and around 300 contractors, could double over the next eight or more years, as BP prepare the terminal for the next 30 years of heavy investment and high activity.

A report published by the Institute of Directors in May said that shale gas development across the UK could bring in as much as £3.7 billion investment. A further 74,000 vacancies will be created for permanent staff and contractors alike, with geologists, engineers and construction staff among those in fiercest demand. Combined with the growing investment in conventional oil and gas, these figures suggest that specialist knowledge in these sectors will be keenly sought in the next few years. Contractors will be able to benefit from the wealth of opportunity that this creates for them.

By Victoria McDonnell

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