UK Supply Chain Must Grasp the Nettle

04 July 2011

The UK could lose supply chain work to overseas firms if companies do not step up to the mark, an industry event was warned in Aberdeen.

A briefing run by industry body Subsea UK was told that the number of offshore wind turbines being built off UK waters will rise from 600 this year to 2,000 a year, from 2015.

But the industry faces major pinch points in the supply chain, not least vessel availability, according to Scott Hamilton, a renewables analyst at ODS-Petrodata in Aberdeen.

He said: "The next couple of years will really define what happens.

"If the supply chain doesn’t mobilise the windfarms would still get built but it would be through importing a lot of work and equipment.

"And there would still need to be expansion in the supply chain.”

Major work on offshore windfarms is likely to ramp up on the major deeper Round Three windfarms by 2015.

While there are just a few installation vessels in the market at the moment – commanding high day rates as a result – there are 22 vessels due to be delivered next year, which could saturate the market, Mr Hamilton said.

Most are from non-UK firms, including troubled joint venture Beluga Hochtief but also MPI, Fred Olsen and RWE.

The pinch points would be in cable-laying vessels and operations and maintenance jack-ups, said Mr Hamilton.

Companies are unwilling to order new vessels because there are not framework agreements in place, making any investment speculative.

To supply offshore wind operations and maintenance demand, there will need to be an additional 15 to 20 new jack-up vessels built by 2014, said Mr Hamilton. By 2020, another 45 jack-ups will need to have been built.

Cable maintenance is another issue. At the moment, work is done ad hoc when there is a failure, meaning vessels or even parts are not readily available.

Others in the industry agree capacity is limited.

A subsea contractor at the lunch said the market would not be able to meet targets of 32GW of installed wind by 2020.

He cited the huge opportunities in offshore cable laying and maintenance.

But he said the industry needed to think differently to oil and gas. But without knowing what sort of vessels would be needed, what foundations would be used and port and wharfage availability, it was hard for contractors to plan.

Developers and manufacturers were also called upon to be more open with contractors about their plans and allow firms to map their future.

There is also a need for more players in the turbine manufacture market, skilled personnel and collaboration between offshore supply chain firms, delegates heard.

But the economic climate and access to investment also need to ease.

Kevin Moran, who recently joined DOF Subsea as vice-president of renewables, emphasised that the region had the subsea skills needed for the market.

But Bill Edgar, chairman of Subsea UK, added: "It is almost like deja vu from the 1970s in the North Sea. You could say the markets are confused at the moment. But with confusion comes opportunity.”

A floating accommodation firm has been launched by Liverpool-based Sanderson Maritime.

The Seatel venture focuses on a concept which could house up to 70 bedrooms and facilities on a barge which it says could be based up to 70 miles offshore.

Seatel is a joint venture with global marine services firm Svitzer UK, a subsidiary of the AP Moller-Maersk Group, which has its UK headquarters in Liverpool.