Why the Southern North Sea can be an energy superhub – but only if the Supply Chain plays its role

An article by Dave Howlett, Managing Director at SMS

30 May 2022

With the Southern North Sea Energy Conference and Exhibition taking place last week in Norwich, it has been a busy period for the whole SMS team. 

Colleagues on the ground reported back on the positive conversations they had with established clients and prospects as the Southern North Sea energy sector responds to the challenges of providing jobs and growth in the region alongside delivering energy security and a more efficient low carbon sector based on renewables.

This year’s Conference theme of ‘Energy Integrated in the East’ was an important signal to businesses across the Southern North Sea including the supply chain that the region’s energy, industry, and manufacturing sectors must work in unison to deliver on the immense challenges that we face as a country.

In fact, with the energy transition in full swing, we must focus as a sector on making the Southern North Sea region an energy superhub based on a mixture of sources including oil & gas, hydrogen, CCUS, renewable technologies such as offshore wind and solar as well as new nuclear (Sizewell C / SMRs).  

The Southern North Sea region understands the value of the energy sector unlike any other.  I can’t think of another region in the UK with such incredible potential in energy to grow and flourish.

This objective is not so outlandish when you think of the first-class resources we have in the region in terms of hydrocarbons, wind, and most importantly, a highly skilled supply chain and workforce that understands that it has to step up to deliver for the whole energy sector.

If we get this right and have a plan, we will lock in the jobs and investment that the region and its amazing supply chain companies need to fulfil the Government’s goals of ‘levelling up’. 

Optimism is justified

This optimism is not unfounded either.  This week saw the North Sea Transition Authority (NSTA) publish a new report on the positive outlook for the supply chain

The NSTA reported that £5 billion of supply chain work is imminent.  This is a huge boost for companies like SMS, who as hydraulic and electrical specialists, benefit from clarity about future investment. 

The £5bn figure also comes after several years when the Covid pandemic and commodity price decreases have led to less offshore activity.  Investment breeds supply chain confidence.

However, it is not clear where the £5bn will be spent.  Will some of the investment go outside of the UK to foreign manufacturers with cheaper overheads, fewer environmental standards, and fewer regulations?  I hope not.

And does the UK supply chain particularly in the Southern North Sea have the funding it needs to take advantage of the opportunities in the region?

From an SMS perspective, we would like to see international operator and EPC (Engineering, Procurement and Construction) content sourced from the UK supply chain.

By investing in UK companies, the supply chain will be able to develop and deliver cutting-edge solutions tailored to answering the needs of their clients but also help the Southern North Sea become an energy leader by adopting the new technologies it urgently needs. 

Without this, the region’s energy leaders will be left with inefficient and obsolete technology that will soon have to be replaced.

Indeed, UK companies need a model where the capability of their solutions is deployed – the Southern North Sea region is a perfect place to test this.  Only by doing this will we be able to optimise the best of UK engineering talent.

Importantly, UK supply chain companies must make their case heard by explaining the advantages of their solutions in terms of innovation and technology as well as make the case for the Southern North Sea being the ideal launchpad to enable this.  Companies must lobby their case with Government and with their clients to ensure that the message is being heard.

With so many opportunities in the Southern North Sea and £5bn of investment in the pipeline, this is the ideal time for action.

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