Subsea potential

A new research institute could help UK companies capitalise on a global subsea market worth a potential £40bn.

The National Subsea Research Institute (NSRI) has been established by industry body Subsea UK, along with Aberdeen, Dundee and the Robert Gordon Universities via the Northern Research Partnership in Engineering.

The aim is to ensure that the UK retains its market-leading position and captures a significant share of the global market, which is worth £25bn at present and is estimated to grow to more than £40bn by 2011.

With 40,000 employees in 750 companies contributing £4.5bn to the economy, the UK subsea sector leads the way around the world. However, Subsea UK has long been campaigning for a national framework for research, development and implementation of technology that brings together industry, academia and government to make sure the sector remains at the forefront.

‘Subsea skills and technology are vital to the recovery of oil and gas reserves around the world, particularly in mature offshore and deep-water provinces,’ said Alistair Birnie, chief executive of Subsea UK. ‘Industry led and demand driven, the NSRI will address the longer-term challenges the subsea industry faces.’

Prof Albert Rodger, vice-principal and head of the College of Physical Sciences at Aberdeen University and chief executive of the NSRI, added: ‘NSRI will combine industry and academic funds to support its national programme and will link technology projects to other national and international programmes to avoid duplication and ensure a co-ordinated approach.

‘Research will be channelled through projects aligned to specific industry needs, some of which have been identified as fluid recovery at 3,000m of water depths at economical cost, platform-less developments, long-distance tiebacks, subsea process facilities, pumping and separation,’ he added.

Scottish Enterprise is providing support to the NSRI, which has also captured the imagination of the industry, with five companies – BP, Chevron, ConocoPhillips, Subsea7 and Technip – already pledging funds and several others about to commit.

A not-for-profit company limited by guarantee, NSRI will be chaired by Subsea UK chairman Bill Edgar.

Seperately, Oil & Gas UK warned yesterday that urgent measures are needed to prevent the effects of the global recession and the banking crisis from dampening new investment in the recovery of the UK’s oil and gas reserves.

The Oil & Gas UK 2008 Activity Survey, which summarises planned expenditure on the UK continental shelf (UKCS) by 75 oil and gas companies, reveals that the combination of low oil prices and the freezing of capital markets will have a marked effect on exploration and development activity over the next 12-18 months. While the province is mature, its remaining reserves of up to 25 billion barrels of oil and gas equivalent (boe) give it the potential to produce large volumes.

Malcolm Webb, Oil & Gas UK’s chief executive, said: ‘The UKCS is clearly a mature oil and gas province but production has responded to a step-up in investment in 2005-06 and, as a result, the annual rate of decline has slowed from 7.5 per cent to 5 per cent in 2008. This year and next, however, capital investment in exploration and development is forecast to drop, thus hitting future production. We cannot stand by and simply allow the decline rate to accelerate.

‘Of the UK’s remaining 25 billion boe, the survey tells us that companies have plans to invest £44bn to recover 9.6 billion boe,’ he added. ‘Our research shows that if investment could be sustained at around £5bn per annum, the industry could hold production decline at 4-5 per cent a year on average. However, if investment falls, that decline will again accelerate.’