From continental shelf to high street

What connects the Continental Shelf, some 150km off the coast of Lincolnshire, with new apprenticeships in Fife or money being rung through shop tills in Hartlepool? The answer is gas; in particular, the Cygnus field, operated by GDF SUEZ E&P UK with partners Centrica Energy and Bayerngas UK


Studies for Oil & Gas UK mapping the supply chain of the sector as a whole have shown it to be a £35-billion industry, supporting some 450,000 jobs in total across the UK. It is this large and long economic reach that is linking platforms offshore, suppliers on land, individuals in employment and the local retail outlets in which they spend their disposable income.

In the case of the Cygnus field, even before the actual gas first starts flowing towards the end of 2015, the economic benefits of the project are already streaming through the supply chain to UK businesses and their communities, with more opportunity in the procurement pipeline.

In terms of energy generation alone, the Cygnus project is a big story, representing the UK’s largest Southern gas field discovery for 25 years. At peak output, Cygnus will produce enough gas to meet the demand of 1.5 million homes, yet these numbers tell only part of the tale.

According to a report by leading consultancy Oxford Economics, the Cygnus project will add a total of £1.29 billion to the UK economy and support more than 4,820 skilled jobs during its five-year construction period. The initial success of the scheme is immediately manifested throughout the extensive supply chain during project lead-in time, according to Adrian Cooper, chief executive of Oxford Economics.

“The Cygnus North Sea project is already supporting valuable income and employment opportunities in the North East, in Scotland and throughout the UK, even though the gas production process itself has yet to start. The benefits are being felt not just by those directly involved in the design and build of the required infrastructure, but also by suppliers of goods and services of all kinds to those contractors in turn,” he says.

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Providing a geographic breakdown of revenue and employment benefits, the report has catalogued a range of positive economic impacts:
• In Scotland, where a topside, supporting structures and subsea infrastructure is being built in Fife and Invergordon, £323 million will be generated in the economy, securing 1,450 jobs including 15 apprenticeships at yards in Fife;
• Across the North-East coast, direct and indirect effects of the Cygnus project will bring nearly £90 million to the local economy and more than 400 jobs, with particular benefit to be felt in Hartlepool, where the contract for three platforms constitutes the third consecutive offshore project for Centrica Energy won by the town;
• Investment in offshore operations, including transporting and installing the infrastructure for the Cygnus field, and bringing it into production, will boost revenues further by almost £225 million and employment opportunities by nearly 300; plus
• Across the rest of the UK, the overall spending of people employed by the Cygnus partners and contractors will support some 1,540 additional jobs, adding £315.8 million to the nation’s economy.

The Cygnus North Sea project is already supporting valuable income and employment opportunities in the North East, in Scotland and throughout the UK, even though the gas production process itself has yet to start

The cascading benefit of the scheme to domestic industry represents a win-win scenario for Cygnus and its UK supply chain, says Ruud Zoon, managing director, GDF SUEZ E&P UK Ltd. “As operator of the Cygnus field, we are very pleased with the success of UK-based companies in securing over 80 per cent of the contract work in competitive tender. This is testament to the technical and commercial excellence of the UK supply chain. Good progress is being made with the 2014 installation campaign now complete and drilling under way,” he says.

For Colette Cohen, senior vice-president for the UK and the Netherlands at Centrica Energy, the research study captures the extended supply-chain value of the project. “This report underlines how significant an impact the Cygnus project is having across the UK both in terms of investment and jobs, as well as strengthening our security of gas supply. This is a great example of what can be achieved when we invest in skilled people across the UK, creating thriving energy coasts and securing gas for the UK,” she says.

Bayerngas UK managing director Gerry Harrison adds: “This report highlights the significance of our oil and gas industry, and its effective relationship with the UK supply chain. We are delighted to be part of the Cygnus project and will continue to invest, with our partners, in other opportunities offshore UK.”

On a programme of the scale and duration of Cygnus, the roll-call of professional and trade inputs ranges from design and engineering, through procurement and construction, to fabrication and commissioning of everything from platform topsides, bridges and flare towers, to jackets and piles, export pipelines and subsea structures.

The Cygnus project is led by operator GDF SUEZ E&P UK with a 38.75 per cent interest, plus partners Centrica Energy (48.75 per cent) and Bayerngas (12.5 per cent). The development was sanctioned in 2012, following the UK government’s decision to introduce allowances for new large gas fields in shallow water, which provided project partners with the certainty and confidence to go ahead.

Big projects typically require big players and Cygnus is no exception. GDF SUEZ, through its subsidiary GDF SUEZ E&P UK Ltd is an increasingly significant name in oil and gas exploration and production in the UK Continental Shelf. Since entering the region in 1997, the company has built up a substantial portfolio of assets in the Central and Southern North Sea, and West of Shetland, comprising more than 50 licences.

Major partner Centrica is a top 30 FTSE 100 energy company with a growing exploration and production business, including operations in the UK and Netherlands, Norway and Western Canada.