A press statement issued by Global Energy Group on January 25, said: “Plans to transform a North Sea fabrication yard into a key energy industry hub, serving the renewables and oil & gas sectors, have taken a major step forward.”
The firm had just been formally named preferred bidder for the long moribund platform yard at Nigg, on Scotland ‘s Cromarty Firth.
Global, a local company, with head offices in Aberdeen and Inverness, predicts redeveloping the yard could create more than 1,500 skilled jobs on the 238-acre site, and deliver a huge, sustainable boost for the supply chain and local businesses.
Indeed, Roy MacGregor, founder and chairman of this successful indigenous Scottish group, described the potential renaissance of Nigg as “offering the opportunity of a real step-change in the Highland and Scottish economies”.
In a statement, he said: “We are committed to realising the vision of creating an international manufacturing and service hub in the Highlands, building on the region’s unrivalled expertise and experience in both oil & gas and renewable energy.
“This plan has the potential to put Nigg – and Scotland – firmly on the global energy map, creating jobs and prosperity for generations to come. There is a real window of opportunity for this development.
“It has the ideal location, with deep-water berths, a local workforce, and the necessary range of expertise and experience.”
That’s funny; it was as if MacGregor (for whom I have considerable regard) was reading from a study into future options for Nigg that was prepared by Mackay Consultants for Highlands and Islands Enterprise, and the Highland Council, nearly two years ago.
Mackay examined a variety of options in considerable detail and concluded that there was a future for Nigg in the right hands, and that maritime renewables would complement oil-related activities including, potentially, significant new projects fabrication, rig servicing and decommissioning.
The big question for HIE and the council, was how on earth to break the years-long impasse with incumbent KBR and the Wakelyn Trust. Regular readers of Energy and the Press and Journal may recall that the situation had become so bad that compulsory purchase was a contemplated option.
Hopefully it will never be necessary to test that option because, pound to a penny, there wouldn’t be sufficient public money available anyway; not in penurious Britain.
Mackay was clear that Nigg is important for Scotland’s energy future, and Energy has said as much on a number of occasions.
Last year, the yard was named as one of the key sites in the Scottish Government’s rather poorly constructed National Renewable Infrastructure Plan (NRIP).
Also last year, KBR began to get its act together by inviting proposals for the yard, and the understanding is that the bid process came down to a race between three local consortia.
It seems months since it emerged that the front runner was not Global partnered by Cromarty Firth Port Authority, but primary rival Nigg Energy Park Ltd (Port Services Invergordon with other local interests).
For now at least, it is not at all clear why there appears to have been a change of mind at KBR. The important point is that decisions have been made.
Global is clearly raring to set its teeth into the challenge of making Nigg a hive of energy activity once again. Of course, the company is no stranger to the site, and has made regular use of some of the facilities for fabrication work.
MacGregor said he envisaged the yard playing a key North Sea role. For maritime renewables, the plan is to carry out fabrication of subsea equipment for offshore wind developments; on and offshore wind structure assembly; turbine manufacturing, wave and tidal device fabrication and associated R&D.
Services at the facility for the oil & gas sector would include: rig inspection, repair and maintenance; topside module fabrication, subsea module fabrication and rig conversion and modification.
I’d like to think that Nigg might yet again build large oil & gas production platforms. There is a pipeline of North Sea projects gestating, that is reckoned to require up to 40 fixed and floating structures over the coming decade. Most of them are modest, though some could be quite large.
Surely some North Sea operators will see the value in building such structures in Britain; not that they can be compelled to, because Brussels wouldn’t allow it, more’s the pity.
Of course, there is not yet a deal between Global and Nigg’s owners, but that is probably only a matter of a few months away. I doubt very much that KBR would have allowed a statement to be issued unless discussions had reached an advanced stage, including with secretive Wakelyn. If successful in taking the site over, Global says it will step up efforts to secure partners and investors for the project. If anyone can pull this off it is surely Roy MacGregor.
Changing tack slightly, to an upcoming northern North Sea heavy oil development that might, just might, put business in Nigg’s direction. I’m referring to Bentley, which is now regarded as a dead cert and will, for stage one, make use of a new Rowan super-gorilla class rig, kitted out with a production package. First commercial oil is expected before the end of the year.
A production test was conducted in the run up to Christmas, and succeeded against the odds, including poor weather. Also, a damaged transfer hose prevented the rig carrying out the test to transfer produced oil to the Betty Knutsen, a shuttle tanker booked for the job. Undaunted, the Banchory-based Xcite management team, led by CEO Richard Smith, found a creative solution by producing the 9/3b-6z horizontal well into “tote tanks” fitted aboard an offshore support vessel.
A so-called “Competent Person’s Report” from specialist consultancy RPS Energy, is due out at the end of this month. Expectation is that Bentley reserves will be upgraded and, even though tote tanks were used instead of a tanker and the production trial was shorter than planned, the way will be clear to push ahead with development.
It’s all a long way from the impact of the 2008 credit crunch when Xcite was struggling for survival.
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