A recent report that the booming UK subsea sector could be expecting a jobs bonanza is the latest in a long line of success stories for the home subsea market – widely recognised throughout the world as the leading light in subsea technology, expertise, innovation and skills sets. In fact, the British subsea industry, which generates around £6 billion in revenues and supports around 50,000 jobs, is expected to grow by 40 per cent over the next two years, capturing over a third of the current global subsea oil and gas market, estimated to be worth roughly £20 billion.
While this is an extremely encouraging piece of news it only serves to reinforce the phenomenal rise and success of UK subsea business, which has grown and matured alongside the North Sea oil and gas industry to its dominant position in the global energy industry. Today, the market has one of the most complete subsea knowledge bases, which is backed by the technical know-how and innovative attitude that enables it to export UK subsea services and knowledge worldwide, influencing the growth of the global energy industry.
Furthermore, while much of the UK’s indigenous industry is still struggling with the effects of the economic downturn; the subsea sector continues to grow, fuelling the UK’s economic recovery. This trend looks set to continue for the coming years, particularly as oil and gas development becomes increasingly difficult and companies move away from the ‘less easy’ resources, making the utilisation of subsea technology and wisdom likely to increase exponentially.
When many of us consider oil and gas related activities and the associated technological innovation we somewhat lazily think of the newer, challenging deepwater environments that are witnessing increased activity, or the burgeoning industry in the Far East, rather than the wellestablished and mature drilling market in and around the North Sea. So, against this backdrop how has the UK’s subsea market established itself as the industry powerhouse and the benchmark for worldwide subsea activity, and what position does it find itself in at present?
Of course, while the North Sea maybe entering its twilight and reaching a mature state of activity, its age and pioneering nature mean that it has in fact long been an innovative testing ground for oil and gas exploration companies, providing a mix of difficult reserves in hostile environments with a combination of challenging conditions and unique geography and geology, which leaves little surprise as to why the subsea market has grown so successfully in these conditions.
As early as the 1970s it was recognised in the North Sea that platform based drilling wasn’t the only method of obtaining natural resources, and that as demand increasedand exploration brought a series of new and more difficult challenges, the most effective and efficient way of conducting E&P operations was by placing the equipment on the seabed and carrying out the work underwater. This demand has ultimately proved to be one of the key factors in the success of the sector. While the North Sea doesn’t posses the deep waters of other E&P areas it does offer some of the harshest conditions for E&P operations, particularly in the Northern waters off the coast of Scotland, with many within the industry believing that if it is possible to find success here it can be easily replicated in other environments.
It was these difficult requirements that led directly to the evolution of the UK subsea industry, which as a result was the first to tackle these challenges and realise the technological and developmental requirements of such work. This embryonic industry was extremely successful, to the point where today almost 45 per cent of the production from the North Sea UKCS comes from subsea wells – a figure that, following the introduction of new developments, is expected to rise to around 70 per cent in the near future.
In short, the market sector that in its infancy grew alongside the North Sea oil and gas market has reached a stage where it is no longer dependent on the region, but is in fact dominant throughout the global industry as a whole. While one third of the total revenues generated by the sector are centered on manufacturing, around 56 per cent is directly attributed to export sales, with the market being a key exporter of skills, knowledge and expertise globally.
In recent years, the subsea market has been one of the few in the UK that has successfully weathered the economic downturn; such is the rate of its growth and the demand for subsea activity. Much of this success can be attributed to the continued support and hard work of Subsea UK, which is the industry body responsible for championing the UK subsea industry by acting on the behalf of the entire supply chain and bringing together operators, contractors, suppliers and people in the industry. Through a number of successful campaigns, together with close work with government agencies and potential clients, Subsea UK has been instrumental in supporting the homegrown talent and skill that has propelled the subsea industry into the global forum.
The notion of homegrown talent is one of the key differentiators that Subsea UK, and the subsea industry in and round the British Isles, uses to highlight the importance of the sector. More recently, one of Subsea UK’s main areas of focus has lied in ensuring that the UK maintains its place as the world leader in the subsea sector by pioneering the use of British skills and technology and successfully transferring them to new frontiers.
Subsea UK has made it clear that in order to continue to push the UK subsea industry forward, those involved in the market must place further emphasis on the continued internationalisation of the industry and the export of the valuable skills and know-how present in the British Isles. Writing in the organisation’s latest news magazine on its website, Neil Gordon, chief executive at Subsea UK explained that: “With growth of 40 per cent between 2007 and 2010, the subsea sector is well placed to aid our country’s economic recovery, a point drilled home by our delegation to Westminster last summer, to highlight the importance of our industry to UK politicians.
“Exports now account for over 50 per cent of total UK subsea output and we are therefore focusing our efforts on helping companies further internationalise. For UK subsea companies to continue to grow and to ensure the sustainability of this increasingly important industry sector, we must bolster our export activity. With UK subsea firms commanding a third of the global market and benefiting from an established reputation for subsea excellence, we are in an ideal position to exploit the emerging opportunities in regions like Brazil, Australia, Russia and the Arctic. In the first four months of 2011 more than 100 major subsea projects were executed around the world, valued at £4.5 billion. The UK must maintain its place as the world leader in the subsea sector by pioneering the use of British skills, expertise and technology into new frontiers.”
Of course, as with any industry sector there are a number of challenges faced in attempting to achieve and maintain this success. Despite the aforementioned news of the myriad job opportunities expected to open up in the future, the skills challenge that is felt by many energy industry sectors is a key problem that many subsea operators are concerned with. For example, in a recent survey of 43 companies carried out by Subsea UK, over 50 per cent of comsurvey respondents highlighted their concern that recruiting suitably qualified people was very difficult, with 14 per cent saying that it was almost impossible. The skills gap is broad here, with engineers, project managers and technicians being the most sought after workers, as well as ROV technicians and operators.
Naturally, much is being done at present to ensure that potential young workers are attracted to the industry. Subsea UK, for example, recently launched its engineering scholarships programme aimed at boosting the number of highly skilled subsea engineers entering the industry. “It is vital that we invest in tomorrow’s talent for the future of our sector,” said Mr. Gordon in a recent press statement. “The subsea sector is continuing to experience rapid growth and if the UK is to remain at the global forefront we must build on the existing talent pool to ensure the right skills are in place for the future prosperity of the sector. Graduates coming in now have the chance to really make their mark on the sector, which offers a wide range of exciting career opportunities on a global platform, while the sector needs their fresh perspective and ideas as we push into ever more challenging subsea environments.”
These more challenging environments are not just related to oil and gas exploration. In fact, the depth of technical development involved in subsea applications and technology, as well as the skills available for export from the UK, means that the subsea sector is easily transferable to other areas of the industry. For example, the developing renewable market is one area where increased demand has been noticed for subsea applications and engineering.
With the future potential for subsea applications, there is little doubt that the UK subsea market will continue to grow. This expansion represents opportunities in a number of ways. Not only is the success of the industry buoying the UK economy and driving forward further oil and gas exploration in the UKCS, it is maintaining the technical edge and reputation for quality that has set UK industry apart from many of its competitors. The recent announcement of a jobs bonanza offers great hope to continue this trend with there being little doubt that the tireless work of Subsea UK will ensure that the skills gap is filled for the future. While many other industry areas around the world are also flourishing, for those in the oil and gas sector the choice is simple. When they require the host of skills and technical expertise needed to complete difficult, challenging projects, the UK subsea market is not the first choice, it remains the only choice.Subsea UK
For any further information on the UK subsea market, including news, press releases, upcoming events or companies operating in the sector, European Oil and Gas Magazine recommends readers visit: www.subseauk.com