Press release

Energy Minister sees development of Cygnus Gas Field in action

Michael Fallon visits Nigg fabrication yard, a key construction site for one of the largest Southern gas fields in the North Sea

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

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Energy Minister Michael Fallon today visits Nigg fabrication yard, a key construction site for the Cygnus project, the largest Southern gas field in the North Sea to be approved and developed in the past 25 years.

A partnership between GDF Suez, Centrica and Bayerngas, the Cygnus project was only made possible because of tax incentives introduced by the UK Government. The project is worth approximately £1.5 billion, and supports around 4,000 jobs. Around 95% of the expenditure associated with the development of this field will be spent with UK based businesses. It is expected to produce 85 billion cubic feet of gas per year, providing enough energy to heat millions of homes and pumping over £4 billion back into the UK economy.

Energy Minister Michael Fallon said:

It is great to see our support for North Sea oil and gas translating into real jobs for the people of Nigg. We are continuing to implement the recommendations of the Wood Review to maximise the potential of the North Sea and make sure the whole of the UK benefits.

Ian Conacher, Cygnus Asset Manager GDF SUEZ E&P UK, said:

Cygnus is a flagship for the UK’s excellence in offshore design, engineering and construction. As operator, and on behalf of project partners Centrica Energy and Bayerngas, we are delighted to welcome the Minister to the Isleburn yard today where he is able to view the completed subsea structures as they await the journey to the Cygnus field.

This is a great example of the positive impact of investment in UK offshore construction and how it secures direct and indirect jobs and expertise in local areas.

Nigg yard, which is operated by Global Energy Group, is currently producing the subsea infrastructure for the Cygnus project and is one of three construction sites in the UK. The project started in June 2013 and will complete in the second quarter of 2015.

Roy MacGregor, Chairman, Global Energy Group, said:

We are delighted the Energy Minister has taken the time to come north to see our world class facilities. He will be informed of our ambitious plans for expansion and our capabilities to support the energy industry in its many forms.

We are delighted to be part of the Cygnus project given its importance to gas field development in the North Sea. It is vital the UK government continues to support projects of this nature and good to hear about their support on the views contained in the Wood Review.

I think everyone in the industry appreciates the importance of implementing the findings contained within this positive and important report for the oil and gas industry.

Scottish energy projects like this one benefit from access to UK-wide financial incentives, which provide a stable environment for the industry to plan and invest with confidence.

Today’s visit is part of a number of Ministerial visits across the country to highlight more than 200 projects in energy, rail, road, broadband and flood defence builds due to start this year.

In 2014/2015, £36 billion of public and private investment on infrastructure will support up to 150,000 jobs in construction and tens of thousands more in installation, maintenance and operational support following completion.

There will be further additional investment of up to £15 billion in oil and gas this year and £38 billion in rail starting this year for the next five years.

Note to Editors

  • Construction of the Cygnus project is currently taking place in 3 main locations in the UK; Hartlepool in Teesside, Methill in Fife, and Nigg in the Highlands.

  • Scottish Analysis Paper on Energy

  • The £36 billion of public and private investment is the projected infrastructure investment for 2014-15 in the published infrastructure pipeline, which is in 2012-13 prices and can be found on the DECC website

  • The £15 billion of projected oil and gas investment is based on the OBR forecast of capital expenditure on onshore and offshore oil and gas production in 2014-15 (primarily in the UK Continental Shelf), in 2013 prices.

  • Plans for £38 billion of rail investment were set out in the 5-year plan for Network Rail’s new funding period, which started on 1 April 2014 and includes operation, maintenance, renewal and enhancements spend. The renewal and enhancements spend for 14/15 is included in the £36bn figure.

  • The figure of 150,000 jobs is estimated using the relationship between aggregate employment costs and average costs per employee in the UK construction industry, based on ONS data. This gives an estimate of the number of jobs created per £1 million of construction spend, which has been applied to the projects and programmes within the published infrastructure pipeline that are anticipated to be in construction or active by 2014/15.

Published 22 April 2014