The North Sea Transition Authority (NSTA), founded as the Oil and Gas Authority in 2015, has a range of powers to achieve its remit of maximising the value of the oil and gas industry. Perhaps not something that instantly suggests a drive towards net zero – and yet offshore platform electrification has now become part of its mission. Agreed in March 2021, the North Sea Transition Deal provides “investment to help us move from fossil-fuel dependency to a low-carbon economy in a managed, orderly way”, states the NSTA. That deal, in cash terms, adds up to £3 billion for electrification, £10 million for hydrogen and another £3 billion for Carbon Capture and Storage (CCS).
Electrification – using electricity provided either through power cables from land or by offshore wind turbines as the power source for offshore oil and gas platforms – would signal a massive change of direction for the oil and gas industry. By and large, its platforms are driven by gas turbine power, with the turbines operated on gas collected from the seabed.
“Powering installations using electricity either via cable from shore or a nearby offshore wind farm could cut carbon dioxide emissions from operations by 2-3 million tonnes per annum,” the NSTA states – equivalent to the annual carbon emissions from households in a city the size of Liverpool.
EARLY STEPS TOWARDS TRANSITION
Committing £3 billion towards electrification is a clear sign of the urgency to move away from fossil fuel-sourced energy. Moreover, the resulting power demand from offshore oil and gas electrification could potentially support up to 4GW of new offshore wind power capacity.
NSTA has been actively progressing electrification opportunities in areas including the Central North Sea and West of Shetland, “bringing operators together; hosting workshops with the power sector; and pressing operators for more pace on project delivery.”
The Energy Integration Report found that the UK Continental Shelf could (through a mix of platform electrification, carbon capture and storage, offshore wind and hydrogen) absorb up to 60% of the UK’s entire CO₂ abatement needed to achieve net zero emissions by 2050.
According to the government, the North Sea Transition deal includes reduction in offshore production emissions of 10% by 2025; 25% by 2027; and 50% by 2030, against a 2018 baseline, to meet the sector’s aim of creating a net zero basin by 2050.
North of the border, in its Sectoral Marine Plan for Offshore Wind for ‘Innovation and Targeted Oil and Gas’ decarbonisation (INTOG), the Scottish Government makes clear its intent to target the electrification of oil and gas infrastructure in Scottish waters. “Electrification of brownfield and greenfield oil and gas sites is crucial for the sector’s overall emission reduction, and conversion to green energy is required in this decade to make these conversions meaningful,” the Scottish government points out.
According to global research and consultancy business Wood Mackenzie analysts Lucy King and Neivan Boroujerdi, around two-thirds of platform operating emissions come from power consumption related to production, processing and liquefaction. They see four key barriers to UK electrification:
While carbon prices have increased following the recent gas supply crunch, they are still too low to incentivise electrification. “Without cost reductions or funding support, an eye-watering carbon price of US$250/tonne would be required to cover the capital cost of a typical standalone electrification project,” they say.
“Hub-led solutions have typically reduced costs by 50% on an emissions-saved basis... State grants, similar to Norway’s NOx fund, would bring it down further.”
Treatment of capital expenditure
There is limited tax relief in the UK, compared to Norway. “Uplift on capital spend associated with decarbonisation [not just against supplementary charge payments] would encourage investment,” add King and Boroujerdi.
The UK currently lacks the infrastructure to power offshore electrification, the authors say. “Grid access and regulation around pricing need to be prioritised. Power from the Norwegian Grid is an option, but supply and regulatory concerns could result in push-back. Offshore wind is another candidate and, with costs coming down, it could be an important part of the solution.
“The logistics and economics of platform electrification are undeniably complex and challenging,” conclude the two analysts, “but a combination of more stringent carbon prices, hub-led solutions and an increase in capital solutions could provide the vital spark.”
NORWAY ON THE MARCH
Talking of a vital spark, Norway has clearly stolen a march on the UK when it comes to offshore platform electrification. For example, one energy company with a comprehensive plan to reduce greenhouse gas emissions on the Norwegian shelf is Equinor, which boasts a large oil and gas portfolio. “Our ambition is to lower net group-wide greenhouse gas emissions, with 50% by 2030, aiming for 90% of this to be delivered as absolute reductions,” it confirms.
Equinor cites the alarming report delivered by UN climate scientists back in 2018. That report concluded global average warming is likely to reach 1.5°C (above pre-industrial levels) between 2030 and 2052, if it continues to increase at the current rate, and greenhouse gas emissions must therefore be reduced by 50% by 2030.
Today, most offshore installations produce their own electricity using gas turbines, which account for a quarter of Norway’s total emissions of both NOx and CO₂. “Worldwide, the production of every barrel of oil emits on average 17kg of CO₂. And, on the Norwegian shelf, the average is 10kg,” says the company. But at Johan Sverdrup, one of Norway’s largest oil fields, average emissions are now stated to be a record low 0.67kg.
Significantly, Equinor is also supporting the UK’s energy transition. The Humber region is the UK’s largest emitter of CO₂, with an estimated 37% of CO₂ emissions from the UK’s six largest industrial clusters coming from there. Equinor and the Zero Carbon Humber partnership aim to build the world’s first net zero industrial cluster by introducing a new hydrogen economy to the region.