Energy opportunities for Norfolk and Suffolk

Beneath and far beyond the shores of the Norfolk and Suffolk coast, often beyond sight, is billions of pounds of riches and an energy mix which some say will be a vital part of our energy security in the future.

The East of England Energy Group (EEEGR) predicts at least �50bn of business opportunity within 70 miles of Great Yarmouth in the next 20 years – with the biggest industries in gas exploration, production and decommissioning, offshore wind and nuclear energy at Sizewell.

A 2010 East of England Development Agency report highlighted that the region's low carbon and environment goods and services sector accounted for 10pc of the British market, with a turnover of �12.9bn and 6,200 companies which were active in the sectors employing 103,400 people.

For 45 years, the offshore gas industry has quietly worked off Norfolk and Suffolk and while wind and other renewable industries now dominate headlines, the gas industry in Norfolk is still very much alive – albeit in a different form to 45 years ago, when field yields were high.

John Westwood, chairman of energy research group Douglas Westwood, is chairing Thursday's Southern North Sea conference. His company advises industry, banking and governments worldwide.

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He, said: 'The UK Southern North Sea has been producing for the past 40 years and as a mature province output is steadily in decline. But key production hubs such as the Caister-Murdoch System operated by ConocoPhillips remain important.'

Far from – as some predicted – dying out, as bigger companies have moved out and divested a number of Southern North Sea assets, new and smaller companies are taking up more assets and acreage.

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New technology is allowing them to reach pockets of gas which had been too hard and too expensive to reach.

French-owned energy firm Perenco – which has a base in Great Yarmouth – last year said it had successfully completed the testing of a new well near its Leman platform, which connects into Bacton gas terminal. This may lead to further drilling.

John Sewell, Perenco UK's operations manager based in Great Yarmouth, said: 'SNS gas will contin-ue to make a significant contribution to the UK's energy requirements for the medium to long term.

'This is also very good news for the East of England, where Perenco has its main operations base and spends a significant proportion of its operating and capital budget with local services companies.'

Although put on the back burner because of market conditions, Centrica has said it still believes a joint gas storage project with Perenco UK – predicted by EEEGR to cost around �1bn – is an attractive investment option.

The companies could store natural gas in an existing offshore reservoir, some 86km from the North Norfolk coastline. During times of low demand, gas would be pumped offshore from the National Transmission System via new facilities to be installed within the Perenco UK Terminal at Bacton and during peak demand, the gas would then be transported back into the grid via the new facilities within the Perenco UK Terminal.

Great Yarmouth-based Seajacks' managing director Blair Ainslie – who is sponsoring the conference –agrees that gas is still a key resource for the region.

'People are still finding pockets of gas,' he said.

But as more than 150 platforms in the sea near Norfolk do come to the end of their lives, decommissioning will become big business.

A recent Deloitte and Douglas Westwood report estimated that around �47.5bn of business opportunity was opening up in decommissioning the North Sea's huge oil and gas infrastructure.

With more than 150 Southern North Sea platforms, EEEGR estimates that there will be �4bn to �6bn of work in the Eastern Region over the next 20 years. That's not to mention contracts that companies in this region with the right skills in the whole Southern North Sea can go for.

But EEEGR chief executive John Best believes wind will be a big part of the region's energy future.

He said: 'In essence, wind is the future. There's future expansion. Some of the big expenditure in wind will be the cost of equipment, but there is still a big pay out in terms of the installation and maintenance.'

Despite concerns about the cost and reliability, there has been seismic growth in the offshore wind industry and there has been a view that the skills from gas will be transferred.

Sheringham Shoal continues to be built and the Crown Estates third round has been awarded.

The company awarded the East Anglia round three area, East Anglia Offshore Wind, is expecting to submit a planning application this year.

The company would not be drawn on how much the project will cost or the number of people involved, but it is publically in talks with Great Yarmouth and Lowestoft ports after signing a memorandum of understanding to install and service the windfarms.

With low carbon targets to be met the government looks determined to stay its course on offshore wind, but it is expensive and there are concerns about the level of subsidy in such a new industry. There is a strong lobby against the scale of its expansion, including from Conservative MPs.

John Constable, director of charity the Renewable Energy Foundation which compiles data on the renewables industry, said: 'The scale of pace of wind development is reckless. It is just not realistic.'

He said there were high operations and maintenance costs, but that was expected because of the artificial pace of growth.

He said the charity had published a report which calculated that wind would be subsidised to the tune of �8bn a year in 2020 rising to �15bn with the grid system management.

But Mr Ainslie defended the costs of the industry and said Norfolk was perfectly placed for Round Three.

He said: 'People talk about the costs of offshore wind. When you talk about costs that's the combination of the price and the efficiency. It is not just the price that's the problem, it is the efficiency that's the problem. We are still in the early days of the development of the industry. If you ask people in the oil and gas sector in the 1970s, they had a lot of over-runs and mistakes. We will learn and the efficiency will improve. There are some good examples of projects that have been successful.'

While large-scale gas and wind projects can be roughly calculated, the region is also perfectly placed for other developing industries such as marine and coal gasification.

Mr Best said the most important thing was the region's energy mix.

The whole understanding of a balanced energy mix had changed because 20pc of our energy generation is due to go off-line, he said.

That includes gas, coal and nuclear.

'We are going to have to have another 20pc of generation. In rebuilding our energy infrastructure, the East of England must be the perfect location because of the low carbon mixture of gas, nuclear and offshore wind. Offshore wind will be pushed very hard because of statutory targets. It is not a whim any more.'

He said it was important for the government to provide confidence and security for long term investors.

And he added: 'With the work we are doing on skills, we are all making sure we can create our indigenous workforce. We will be able to take that expertise globally.'

Tomorrow the EDP will look at the issues around skills and what is being done to ensure the region has an indigenous population which can take advantage of the opportunities in the Southern North Sea.

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