FEATURE: North Sea industry looks to renewables for green lease of life

London — The North Sea oil and gas industry is stepping up efforts to reduce its emissions and run offshore facilities from renewable power sources, with a rapid build-out of Norwegian projects serving to underscore the greater challenges faced by the UK's aging oil sector.

Emissions from the process of oil and gas production, including drilling, injecting gas and water into depleted fields, and the daily needs of offshore platforms, account for a relatively modest share of overall emissions, amounting to 4% of UK greenhouse gas emissions, according to industry group Oil & Gas UK.

However, generation of power at offshore platforms, using diesel or gas, is thought to be four to five times more carbon intensive than conventional onshore generation, and accounts for 10% of UK power plant emissions, according to regulator the Oil & Gas Authority. Methane leakage and flaring, which went largely unnoticed in the past, also pose a reputational risk.

Norway, with its high economic dependence on oil and gas and a swath of new oil developments, is implementing several projects to bring hydropower generated in the country's fjords, via subsea cable, to facilities such as Johan Sverdrup, a 2.7 billion barrel oil field that came on stream last October.

By the middle of the decade, half Norway's oil and gas output could be produced using power sourced this way, with Johan Sverdrup acting as a way-station for other platforms, regulator the Norwegian Petroleum Directorate says.

"In a few years, power from shore can allow us to avoid CO2 emissions equivalent to 10% of total Norwegian greenhouse gas emissions," NPD director general Ingrid Solvberg said in June.

Eight Norwegian oil and gas fields now utilize power from the country's renewables-based power grid, with another eight such projects underway, expected to curb CO2 emissions by 3.2 million mt annually in total. Six more such projects are awaiting approval, the NPD says, although it notes the greater drain on electricity supply could reduce Norway's electricity exports and push up domestic prices.

The UK government, while committed to achieving net zero emissions by 2050, is also keenly interested in the sector's survival, not least as a source of well-paid jobs, but also due to industry offshoots such as technology and engineering exports, legal and financial services, and university geoscience programs.

The remote Shetland Islands, which are home to the aging Sullom Voe terminal, loading point for diminishing volumes of Brent crude, are eyeing a role linking renewable projects and electricity interconnectors to offshore oil and gas facilities. The islands face a financial hit as BP ponders whether to stop using Sullom Voe as a way-station for loading crude from its Clair heavy oil field.

But government support for oil and gas is conditional, reflecting environmental policy and pressure from campaigners. And the UK sector faces perceptions it is a "sunset industry": production volumes have revived in recent years, but at 1.1 million b/d oil output is far from past peaks and around half Norwegian levels.

Oil and gas companies should "position ourselves as very much part of the solution, and then, as economic models are put in place and investment happens behind that, people will have a greater understanding because we are driving decarbonization of the country, and not, with our hand out, receiving money to decarbonize ourselves as an industry," Shell's UK and Ireland upstream director Steve Phimister said in June.

Sunset Song

In reality, the UK industry faces a struggle bringing power from renewable sources or subsea interconnectors to platforms that are mostly older and less prolific than Norway's or located in harsh, deepwater locations such as the West of Shetland area.

Questions would need to be resolved over ownership and investment returns when it comes to laying cables, and a separate pricing mechanism may be needed for floating, rather than fixed, wind projects, OGUK says.

Spending cuts since the latest oil price collapse are another barrier; BP had been considering an electrification project for the third development phase of Clair, known as Clair South, but the development is now on hold. Premier Oil had been testing a 'PowerBuoy' at its Huntington oil field that harnesses wave power for sensors and instruments, but the field is now headed for decommissioning.

The Shetland Islands have welcomed a June decision by utility SSE to build the UK's largest onshore wind farm on the islands, contingent on construction of a mainland interconnector, and are hopeful this could engender a "green energy hub" linked to oil and gas facilities.

"Shetland has held a strategic location in the heart of oil and gas fields. We are really positive that with the correct infrastructure investments... Shetland can contribute nationally to net-zero targets," Shetland Islands council leader Steven Coutts told S&P Global Platts.

"There are further medium- and long-term opportunities in the transition to green energy, opportunities that are of national significance, in offshore wind, carbon storage and hydrogen, and the electrification of the oil and gas installations."

Others are similarly optimistic. EnQuest, which manages the Sullom Voe terminal, told Platts it is "committed to contributing positively towards achieving the UK's net-zero target by 2050 and is assessing a number of potential options."

And Les Thomas, CEO of upstream operator Ithaca Energy, said in May some renewable energy companies were already holding talks with operators on providing renewable power to offshore platforms.

Such projects could progress fastest at the shallow-water gas fields of the southern North Sea. But Oil & Gas UK remains cautious, suggesting the main focus for now is on less eye-catching measures to improve efficiency and reduce flaring, and by implication Norway will remain in the lead.

"The technology, offshore renewable resources and infrastructure are not currently in place to facilitate such offshore electrification of either existing or new assets," OGUK said in June. "Enabling this will require significant investment and is likely to take a decade to deploy at scale. At present electrification of offshore assets is not commercially affordable."