Norfolk and Suffolk’s smaller oil and gas firms can be key in sector’s resurgence

Mark Routh, chief executive of Independent Oil & Gas. Picture: IOG. (Image: Archant)

They point to a crop of leaner firms, working on a smaller scale, emerging to take the place of larger operators with higher overheads, who see less value in the mature basin of the Southern North Sea (SNS) amid continuing low oil prices.

It comes just days after a major report from Oil and Gas UK showed the green shoots of confidence in the industry nationally, with 60% of employers expecting a rise in recruitment next year.

North sea production company Independent Oil and Gas has been able to secure three satellite hubs at fields in the SNS and earlier this year purchased a decommissioned gas pipeline for £1 to bring the fuel ashore at Bacton in Norfolk.

The firm put forward its field development plan yesterday and has announced Offshore Design Engineering will be a key contractor for the project from its Great Yarmouth base.

Simon Gray, chief executive of the East of England Energy Group (EEEGR). Picture: DENISE BRADLEY (Image: Archant)

David Rowan, managing director at offshore personnel firm Epic International, said there was a step-change taking place with major businesses now looking to smaller firms to fulfil their needs. He said: 'What we are seeing now is opportunities for larger companies are coming to the smaller players.

'Businesses that would not have dealt with us before now are dealing with us, and we are seeing some projects broken up between two or three smaller firms to fit their specialisms.

'They are looking to companies which don't have a huge structure or shareholders to satisfy, so can keep the price down.'

Mr Rowan said bigger companies had cut their cloth according to the $50 a barrel oil price and said the industry had 'come full circle' with lower operating costs sparking a resurgence in drilling globally.

Simon Gray, chief executive of the East of England Energy Group, said the region's smaller supply-chain companies were poised to benefit. 'Big operators like Shell and BP will be looking for massive developments globally and small reserves like the SNS, a very mature basin, have not got the scale that can sustain them. Smaller businesses can capitalise on these and I think increasingly we will see that happening.'

A change in the industry

David Rowan, managing director at Epic International which provides technical, maintenance and project management personnel for the sector, said he thought there was a step change taking place with major businesses now looking to smaller firms to fulfil their needs.

He said: 'What we are seeing now is opportunities for larger companies are coming to the smaller players.

'Businesses that would not have dealt with us before now are dealing with us, and we are seeing some projects broken up between two or three smaller firms to fit their specialisms.

'They are looking to companies which don't carry the burden of a huge structure or have to satisfy shareholders so can keep the price down.'

Mr Rowan said bigger companies had cut their cloth according to the $50 per barrel oil price and said the lowering of operational costs appeared to have sparked a resurgence in drilling internationally.

'It comes full circle,' he said, 'if we can cut the operational costs then it becomes more likely they can make a project operational.'

Growing business

Norwich-based Sitek Engineering has benefitted from the upturn in the sector, winning contracts to upgrade helipads on rigs and taking on more than 45 additional contractors.

The firm, which has a turnover of around £4m now employs in the region of 80 staff with the bulk of those offshore workers.

General manager Glynn White, who joined the company four months ago, said the firm's flexibility had helped it to find work.

He said: 'Because we are a small firm we are able to move quickly, we can get personnel offshore within a day of getting a call.

'We have our own training in-house so if we have an electrician who needs offshore qualifications we can get it done and get him out there the next day.'

Mr White said backroom processes, including electronic systems for logging and managing workloads, meant the firm was able to operate with lower costs making it more competitive for tenders.