The wider offshore energy sector, including oil and gas operators and wind developers, could invest up to £200bn on UK energy production and technology projects in the remainder of this decade to help deliver government energy targets.
OEUK reveals over £90bn of this could go to UK supply chain companies over the next decade if the roadmap is delivered and both government energy production and local content targets are met.
The roadmap sets out detailed industry, government and regulatory action required in six key areas to build, enable, and then grow and sustain UK capabilities from 2022-2035. Ahead of major project decisions expected in the decade to come, it shows that with the right support, UK companies are well placed to win a bigger share of the work.
Opportunities include the development and licensing of new technologies, the production of equipment, installation and maintenance of assets, and the eventual decommissioning of offshore energy projects.
The report raises key challenges which might impact meeting these goals, including the loss of UK capabilities such as steelworks and the risk of losing investment due to unpredictable regulatory and fiscal environments.
Katy Heidenreich, OEUK Supply Chain and People Director, said: “Delivering the roadmap and building more energy projects in Britain could unlock £90bn of work for our offshore energy supply chain. This will support UK jobs, economic growth and innovation well in the future while we cut emissions and continue to deliver secure supplies of energy. Delivering 100 percent of these projects through UK companies would make the size of the prize even bigger.
As plans from other countries to attract supply chain investment take effect, like the US inflation Reduction Act, OEUK said more emphasis needs to be put by politicians and governments on an energy future built in the UK instead of shipped and sourced from abroad.
The potential to boost the UK offshore energy supply chain through the roadmap is explored through three scenarios. Each considers the impact on the UK supply chain of both the scale of energy projects and the percentage of which is delivered by UK companies over the coming decade.
The best case sees full delivery of the British Energy Strategy, with 50% of those projects delivered by the UK supply chain. This would see 50GW of offshore wind capacity, 10GW of hydrogen production, 30 million tonnes of carbon captured and stored per year and the prioritisation of domestic oil and gas production over imports during this period.
A low investment scenario, where there is no new oil and gas development and a slow pace of investment in new energies, would only deliver £60bn to UK supply chain companies.
Across all scenarios, the tool shows that oil and gas will continue to represent the biggest supply chain opportunity until at least 2027.
Katy Heidenreich adds: “For a country with a proud maritime and industrial heritage, we must question why so much of the nation’s energy manufacturing needs are met from outside of the UK. To deliver an energy future that benefits the UK economy, jobs and innovation, we need both the volume of work and the focus on supply chain companies here winning a bigger share of that work.
“As we build this future, there is no simple choice between oil and gas in one hand and renewables in the other. The reality is that both are needed to keep the lights on and grow the economy. With oil and gas expected to remain a sizeable chunk of supply chain opportunities until at least 2027, we can understand why so many supply chain companies are telling us they are worried about political support for the sector. The supply chain needs a pragmatic and long-term approach if it is to thrive here.
“We need politicians of all parties to support the roadmap and our plans for at least half of these projects to be delivered in the UK. This means putting the UK workforce and industrial capabilities at the heart of decision-making on energy, supporting enduring policies that encourage companies to invest over decades, and championing the talent on our doorsteps to a global market.”
Sarah Cridland, Vice President of Subsea Projects and Commercial & Country Manager UK, TechnipFMC, said: “The UK has long been a key focus area for TechnipFMC, and this remains true with regards to renewable energies. We set ambitious targets as a company to help the world meet its energy needs and are seeing tangible progress, notably and locally in our development of subsea systems, including all-electric trees, to help capture and store CO2 and high voltage inter-array power cables to enable offshore floating wind.
We have a highly skilled workforce here in the UK, working to meet the needs of the energy industry, both now and in the future. What we know and can do now has clear applications in energy transition technologies – our expertise in technology development and integration is an essential part of this transformation. And thanks to our historical investment here, we are in a good position to execute projects in this new frontier.”