Wind of change helping East Anglia beat oil crisis

Turbines being installed at the Greater Gabbard wind farm, off the Suffolk coast.

Turbines being installed at the Greater Gabbard wind farm, off the Suffolk coast.

Massive job losses announced by Shell and Centrica highlight the continued travails of the oil and gas industry. However, an energy industry champion for our region insists the potential of offshore wind can still make the future a bright one.

The headline figures make more depressing reading for the oil and gas industry: 6,500 jobs to go at Shell and 6,000 posts being axed at Centrica, the parent company of British Gas.

Yesterday's announcements, delivered with an ominous warning by Shell that it is 'planning for a prolonged downturn' in oil prices, sparked fresh concerns in the East coast ports of Great Yarmouth and Lowestoft where the ripples of the industry downturn have already been dramatically felt.

In the space of a few days this summer, Great Yarmouth-based offshore diving specialists Red7Marine Group went into administration with a total loss of nearly 300 jobs while marine services firm Fugro revealed it had put 107 jobs at risk of redundancy at its base in the town.

Just weeks earlier, Lowestoft had felt the impact when AKD Engineering closed with the loss of 113 skilled jobs.

In its latest response to oil prices being half the $110 a barrel price of a year ago, Shell significantly announced it was cutting investment by $7bn to about $30bn this year, down 20pc from 2014.

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However, James Gray, inward investment director for the East of England Energy Zone (EEEZ), said further belt tightening in terms of oil exploration was likely to hit supply chain companies in Aberdeen far more than the southern North Sea gas-focused firms in our region.

He said: 'We hope there will be no knock-on effects from this latest news. Most of the activity in our region is in gas and that is not quite as exposed as the oil sector.'

Mr Gray, whose role through local authorities-sponsored EEEZ is to market the region as the energy coast, said our unique energy mix - oil and gas, offshore wind and the prospect of new-build nuclear - put us in a strong position.

'Oil and gas will remain very important to us in the medium term but offshore wind is where the greatest long-term opportunity lies,' he said.

Significantly, two of Yarmouth's most successful energy services firms, Seajacks and 3sun Group, are already very active players in offshore wind as well as oil and gas.

Mr Gray said: 'When East Anglia One is built just beyond our horizon it will be one of the three largest offshore windfarms worldwide.

'Other windfarms are planned for the southern North Sea and, increasingly, the people I am talking to from turbine manufacturers and suppliers regard our region as a hub for windfarm work on the continent as well.'

He said major firms working in the sector, including turbine and blade manufacturers, were actively looking at the region as a possible base.

His optimism is reinforced by the projections of regional analyst, Nautilus Associates, which says by 2020 offshore wind will be contributing £5bn to the regional economy compared to the £3.3bn of oil and gas and the £3.7bn generated from decommissioning redundant offshore sites.

The scale of the jobs potential of offshore wind is underlined by an economic impact study commissioned by Seajacks to help it in its fight to secure new work for its fleet of specialist turbine installation and maintenance vessels.

The report by Regeneris Consulting predicts that every new contract secured by Seajacks to install 100 turbines - a project on the scale of East Anglia One - would bring almost 1,000 additional jobs to the region and an extra £80m to the East Anglia economy.

Nationally, it would support 2,100 jobs and add £160m to the economy.

The study was published in the week that Seajacks announced that its latest £200m installation vessel, Scylla, had secured its second lucrative windfarm project - ahead of its launch in South Korea.

While long-term prospects therefore remain bright, New Anglia Local Enterprise Partnership hopes that expert advice from its newly-announced taskforce will support energy firms through immediate problems created by the oil price.

In making its announcement yesterday, Shell chief executive Ben van Beurden said: 'We have to be resilient in a world where oil prices remain low for some time, while keeping an eye on recovery.

'We're taking a prudent approach, pulling on powerful financial levers to manage through this downturn, always making sure we have the capacity to pay attractive dividends for shareholders.'