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Norway eyes role for floating wind in offshore oil and gas

IN DEPTH | Norway is set to play a  big part in helping floating offshore wind to drive down emissions from power supplies to the oil and gas sector, writes Beate Schjølberg

Hydro-rich Norway is unlikely to need large-scale offshore wind to meet its own clean power needs, but could play a crucial part in finding a role for floating wind in the oil and gas sector.

When it comes to floating offshore wind production “Norway is uninteresting in one way, and super-interesting in another”, says Sebastian Bringsvaerd, head of domestic oil and gas champion Statoil’s Hywind floating wind-power project.

“It is difficult to find a commercial business case for floating offshore wind as part of the domestic energy mix, because power production is already almost entirely renewable,” says Bringsvaerd. “However, it is very interesting and promising that the authorities have a strategy for offshore floating wind and wants to develop new industry for this in Norway, both as part of the climate commitment and to stimulate innovation.”

With 96% of electricity consumption generated by pollution-free hydropower plants, Norway’s oil and gas industry is the main source of national carbon-dioxide emissions and a thorn in the side of environmentally conscious politicians.

Offshore oil and gas production accounted for 28% of Norwegian emissions of greenhouse gases in 2015, according to the most recent figures available from the country’s statistics bureau.

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Oil and gas operators are required by law to consider electricity from shore as a power source for all new developments, but high costs, long distances and technical challenges have so far only allowed four installations to be electrified: the Troll A platform in 1996, Gjoa in 2010, the new Valhall facility in 2013 and Goliat in 2016.

Two ongoing developments, Martin Linge and Johan Sverdrup, are also set to be powered via cables from shore. At the same time, operators often prefer traditional gas turbines, and use financial and technical arguments when challenged by politicians eager to cut emissions offshore.

Elisabeth Torstad, chief executive of the oil and gas business area of energy and maritime industry advisor DNV GL, expects a shift in the oil industry’s attitude towards electrification as the advantages start to hit home.

“Project managers and platform managers tend to focus on the risk of doing things differently, instead of the advantages,” Torstad says. “But those who have had power from shore for a while say it is a whole new world when it comes to reliability and regularity, and ask why we have not done this sooner. We are starting to hear more of that now.”

While cables from shore have so far been the default option for offshore electrification, Statoil is now looking at the possibility of applying Hywind on its home turf as a possible power source for oil and gas installations, says Bringsvaerd. The company is currently setting up its first five-turbine pilot park off Scotland, and is considering Norway for its next deployment of the technology.

“This is a natural next step for us – after Scotland we need to see how we can develop the concept and achieve utility-scale growth,” Bringsvaerd says. “There is a push for lower emissions from new fields, and using Hywind is an appealing thought. It is robust and has been tested in harsh conditions, and with the spar base it has no limitations on water depth.”

Scale would be important, as well as government support to move the process along, says Bringsvaerd: “We will not put one turbine near a platform to test it, we are beyond that phase now. This would be a park, and synergies would be important,” he says, adding that no decision has been made yet.

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Norwegian authorities should be keen. Since 2015, the conservative-led government has twice been instructed by parliament to encourage offshore wind production by setting up a support mechanism for demonstration projects.

In the 2017 budget agreement with its supporting parties in parliament, the government pledged “to present a strategy for commercial development of floating windmills that can contribute to profitable electrification of the Norwegian continental shelf” in the 2018 budget bill at the latest. The budget is due in early October.

The move was welcomed by environmental groups, as well as by a Norwegian supply chain eager to diversify its business opportunities after the oil-industry slump erased 50,000 jobs in the past couple of years. It was probably no coincidence that an Oslo conference on floating offshore wind in January had to be moved to a bigger venue when the number of participants ended up four times higher than organisers had expected.

Statoil’s Bringsvaerd was a popular man at the conference, spending the coffee breaks taking business cards from supplier representatives eager to get a foot in the door with Hywind. The operator is currently screening all its Norwegian fields to find areas where new and existing facilities could represent enough power needs to make a floating wind park financially viable.

“We would have to look at the cost compared with the other alternatives, including carbon costs, and then make a commercial decision,” Bringsvaerd says. To get economies of scale, a wind park would need to supply several fields, possibly including both new and existing facilities, he added.

While Statoil looks at using wind to electrify offshore platforms, Oslo-based DNV GL and industry partners including Statoil, Eni and ExxonMobil are working on a floating wind-power technology aimed specifically at water injection at oil fields.

For suitable fields, the so-called Win-Win concept consists of a single, floating wind turbine that also acts as a stand-alone system with pumps and basic water treatment facilities. The concept is less costly to install than a traditional water-injection system, particularly when there is limited capacity on the host platform or the injection wells are located far away, DNV GL’s feasibility study shows.

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Though operational costs are higher, the investment cost is often significantly lower, so the Win-Win system will still be cheaper in the long run in many cases – a “golden nugget” for the oil industry, according to DNV GL’s Torstad. The company aims to get industry partners on board for further testing and a pilot project in the coming years.

While offshore wind power has potential to reduce emissions from offshore oil and gas production, floating wind farms for production to the grid are not likely to appear in Norway anytime soon, according to industry observers, as players such as Statoil and Statkraft will choose to build commercial wind farms closer to the markets buying the power.

Even so, the Norwegian government’s commitment to pursue an offshore wind strategy bodes well for the dozens of supplier companies that flocked to the Oslo floating wind seminar earlier this year.

“If we make a commercial decision, and the government gets the right framework in place, there is no reason why this cannot happen within the next few years,” Statoil’s Bringsvaerd says of the possible use of Hywind offshore of Norway. “This could also bring some positive effects for the Norwegian supplier industry.”

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