The industrial adventure that started over half a century ago with the first billion-barrel oil & gas finds in the North Sea is starting a new voyage, powered by the twin engines of offshore wind-generated clean energy and the accelerating need to slash emissions from hydrocarbon production that accounts for 4% of the UK’s greenhouse gases.
Here an old oil mantra — “Technology saves”, previously applied to solving thorny exploration and production challenges — is taking on new meaning, with offshore wind turbines, battery storage and hydrogen emerging as the keys to decarbonising offshore operations, which have historically relied on diesel- or gas-fired generators for power.
Pioneering projects are fast taking shape, including the first-ever floating wind-powered offshore oil complex, Equinor’s Hywind Tampen, off Norway, where an array of turbines fitted to buoyant foundations will cut emissions from the Snorre-Gullfaks field by a third.
Even more ambitious is a £10bn ($14bn) fast-track plan from start-up Cerulean Wind that aims to decarbonise “the majority” of the UK’s sea-based oil and gas installations via a 3GW fleet of floating turbines, with surplus output to be used for onshore hydrogen production.
“Our journey in the North Sea is really emblematic of our company’s decarbonisation efforts,” says Matei Negrescu, head of North Sea development at Equinor, the state-owned Norwegian oil giant now powering one million homes with offshore wind farms including the world’s flagship floating project, Hywind Scotland, and with a 4GW portfolio under development.
“The world’s energy system needs to transition rapidly to provide energy that is affordable, to continue supporting economic growth, but that is also decarbonised, to be part of the solution to climate change and deliver on the goals of the Paris Agreement [to keep global temperatures to 1.5°C of pre-industrial levels].
“This will require a profound transformation – the greatest transition of energy systems that the world has ever seen.”
The NKr5bn ($556m) Hywind Tampen project aims to be a model for change in offshore oil operations. Using 11 Siemens Gamesa 8MW turbine mated to long cylindrical floating concrete spar platforms, the array will remove 200,000 tonnes of CO2 a year from the Snorre-Gullfaks complex, but the array’s deeper resonance, says Negrescu, is the impact it will have on Equinor’s carbon-neutrality goals and the “example it sets” for the offshore oil industry worldwide.
“There is no single energy source that is sufficient to power our society in a reliable, affordable, and sustainable way in the coming decades, so when we say our ambition is become a net-zero carbon company by 2050... electrification of our oil and gas operations will be a key contributor to delivering on this,” he says, noting that Equinor’s target encompasses emissions from its full hydrocarbon production and supply chain.
“The North Sea — for all companies operating here — offers vast resources and extensive infrastructure to build a broad energy hub that uses different types of energy in an optimal way.
“We believe that future offshore wind together with decarbonised oil and gas operation, energy storage and hydrogen production are all needed to transition to net zero, here off Europe but also globally.”
Cerulean Wind, founded by Dan Jackson and Mark Dixon — petroleum sector veterans who most recently ran a specialist consultancy spun out of GE Oil & Gas and McDermott International — have put a plan to UK authorities for a megaproject that be a quantum leap forward in achieving this, starting as early as 2024.
By wiring together 3GW of floating wind plant off Scotland and a 1.5GW an onshore hydrogen facility, they calculate the development could abate nine million tonnes of CO2 from offshore hydrocarbon production and the same tonnage again from coastal industrial clusters. For context, 18 million tonnes of CO2 is expected to be produced from the hydrocarbon province by mid-decade, according to government figures.
“This [floating wind and hydrogen] scheme would allows the UKCS [UK continental shelf] oil & gas industry to continue operating as it transitions and to develop some very exciting [hydrocarbon] prospects we know are out in the West of Shetland and elsewhere within a net-zero carbon strategy using electrification and green energy,” says Jackson.
It is worth flagging that this last statement flies in the face of the International Energy Agency’s declaration this year that a halt to new fossil-fuel projects is needed if the world is to tread a “narrow but still achievable” path to a net-zero energy system by 2050.
“The proposition is to remove 100% of [UKCS offshore oil platforms’] emissions at a price lower than gas generation... with big wins onshore for industrial applications via direct use of the hydrogen produced... and in the future the prospect of huge hydrogen market potential,” adds Jackson.
“The opportunity is far, far bigger than just the emissions reduction, important as that is.”
Hydrogen — not least after the British government launched its long-awaited sector strategy in August with a vision of building 5GW of hydrogen capacity by 2030 — will be central to the decarbonisation narrative for the UK offshore oil industry.
This shifting reality is travelling out in the regional play, exemplified by a huge 3.2GW green hydrogen generation plant being built by developers EI-H2 and Zenith Energy with engineering services company Worley at the site of Ireland’s Bantry Bay oil terminal that will be powered by future offshore wind farms off the west coast of country.
Energy worlds collide
“Collaboration [between the oil and renewables industries] is what we need to move the needle toward reaching net zero,” says Eoghan Quinn, vice-president for new energy at Worley. “As IOCs [international oil companies] become more like IECs [international energy companies] that integration is leading to a strategy adapted to a carbon-constrained world. This is key.
“In the North Sea the challenge is how to mitigate the very high emissions associated with these operations. There is no ‘silver bullet’. But we have been seeing real opportunities to address this, around the integration of renewable energy via floating and fixed offshore wind, electrification of [oil and gas] assets, green hydrogen, and so on.
“These two industrial worlds colliding — renewables and oil & gas — there is a chance for us to repurpose all the learning and experience from the North Sea to build the infrastructure to make achieving net zero by 2050 possible — though, to be sure, the capex cost will be huge, north of £400bn.”
It will be “all about developing cost competitive assets” in a rapidly evolving energy basin, says Quinn, whether that involves installing power cables to link offshore oil platforms to the onshore electricity grid, building giga-scale floating wind farms, tying in carbon capture and storage systems or hydrogen electrolysers, “it will have to be of a scale to be cost effective — and that means we will have think bigger and broader.”
“What we are really seeing here is an opportunity for the whole energy industrial to fast-track growth and innovation — we have seen floating wind come one at a pace very quickly, for instance.
“But ultimately,” says Quinn — referring to offshore wind’s precipitous drop in its levellised cost of energy (LCOE) to below €50 ($58) per MWh from more than €200/MWh five years ago, and floating now chasing it down the cost curve — “it is going to be about how we all work together to achieve the economies of scale that will bring cost down further still.
“It will be case of ensuring we electrify and decarbonise as one, in the race to net zero.”
Electrify and decarbonise 'as one'
Floating wind’s fast-falling LCOE has been followed closely by many diversifying offshore oil contractors, including Norwegian drilling outfit Odfjell, which has spun off a unit to develop a ‘mobile offshore wind unit’ (MOWU) concept that marries an 11MW Siemens Gamesa turbine with Odfjell Oceanwind’s WindGrid microgrid system to part-power oil & gas production platforms.
The technology is calculated as capable of replacing much of the output from gas turbines on a host of offshore oil & gas installations, but can only cut CO2 emissions by 60-70%.
“To get to 100% you would have to store the renewable energy for longer periods, typically up to 14 days,” Odfjell Oceanwind chief executive Per Lund explains. “This is not practically possible in this scale with batteries. Future solutions like hydrogen will probably bring us there, but technologies are not commercially available yet.
“There is no question that there is about to be a great push to decarbonise the oil and gas industry across the North Sea.
“Part of this about climate action and part about taxation — here in Norway there is a high cost on offshore oil and gas installations [due to carbon taxes] and it will get higher and this gives a good business case for solutions like ours.”
Though, as Lund notes, floating wind-powered oil & gas production is not a new concept — a pioneering project called Win-Win was launched in 2013 by DNV GL but met with a mixed reaction in the energy industry, with renewables purists viewing it as a gateway to the “dirtification” of wind. But he says the economics “have fundamentally changed” since.
“This makes a mobile solution such as the MOWU an attractive solution [for offshore oil operators] particularly if they only have 10-15 years left of economic production at a given field.”
Odfjell Oceanwind is currently in “active discussions” with several companies and expects to have a flagship project up and running “within a year”, with expectations that it will have orders for everything from 1MW to 11MW turbines.
“The financial cost [of floating wind-power emissions reduction] is becoming ever-more attractive whether it is a project like Hywind Tampen or indeed our ‘temporary’ solution — and, after all, these operators don’t have that many other alternatives if they want to keep producing,” Lund tells Recharge.
‘Several critical elements’ remain
The trend is clear. Offshore wind energy-powered oil & gas field operations projects have more than trebled in number in the past two decades, according to research from IHS Markit.
“Oil & gas companies seek to reduce the greenhouse emissions associated with offshore activities, that require several hundred megawatts to power drilling and processing, and this electricity demand is typically covered by gas turbines, with gas normally available on site,” explains IHS analyst Andrei Utkin.
However, he cautions that “several critical elements” remain that could slow the wider adoption of the concept, despite it “sounding like a great solution to decarbonise offshore oil and gas operations”.
“Wind is a variable energy source by nature. Its production output depends on wind speed, [which] varies over time. The power demand of offshore oil and gas installations is not constant either, and can change quickly due to starts/stops of pumps, valves, compressors, etc.
“Given that the power output of floating offshore wind turbines can be low, back-up generation is likely to be [needed that is] sized to meet the maximum potential demand of the platform” detracting from the business case.
Utkin adds: “As the cost of floating offshore wind decreases, in some geographies the attractiveness of this application will improve.”
With floating wind’s cost dropping a rate of knots — calculus from the UK’s Offshore Renewable Energy Catapult point to the technology hitting subsidy-free levels of £50/MWh by decade’s end, down from more than £120/MWh in the mid-2020s — that day looks to be faster approaching than ever.
The idea of using offshore wind to power oil platforms at much lower emissions levels has made first strides in the North Sea, but it also garnering interest in other key markets, including the Caspian Sea and off Canada’s Atlantic coast.
Azerbaijan signed a memorandum of understanding with the International Finance Corporation in April to kick-start a local offshore wind sector, while state oil company Socar has signed a deal with contractor Technip Energies to install a floating wind turbine to reduce emissions at an offshore platform.
The Canadian government is backing commercialisation of a “plug-and-play” floating wind-powered drilling concept developed by sector pioneer Saitec and consultancy Waterford Energy Services, which could be used to cut greenhouse gas emissions from oil & gas operations in the Grand Banks area “and abroad”.