OGV Energy's Europe Energy Review – November 2020

Europe’s energy sector news over the past month featured an oil workers’ strike in Norway, a plan to make the UK a world leader in green energy, strategy updates from oil majors, and a lot of renewable energy deals.

Oil & Gas

France’s oil and gas major Total confirmed its ambition to get to Net Zero by 2050 and reduce emissions. Total aims to reduce the Scope 3 emissions of its European customers by 30%, in absolute value, by 2030, the group said in its Strategy & Outlook. The company will grow energy production by one third over the next decade, with half of that growth coming from LNG and half from electricity, predominantly renewables. Total will boost investments in renewables and electricity to US$3 billion from US$2 billion per year representing more than 20% of capital investments. The dividend of Total is supported at an oil price of US$40 a barrel, it said. 

Norway’s Equinor and its licence partners Petoro and Wellesley Petroleum have found oil and gas in the Swisher prospect close to the Fram field in the North Sea. Recoverable resources are estimated at 13-38 million barrels of oil equivalent.

Equinor also decided to develop the Breidablikk field in the North Sea together with its partners, with expected production from the field at about 200 million barrels. The development concept chosen for the Breidablikk field is subsea development with 23 oil producing wells from four subsea templates that are controlled from Grane.

“Breidablikk will contribute significantly to maintaining profitable production in one of our core areas on the NCS,” said Arne Sigve Nylund, Equinor’s executive vice president for Development and Production Norway.

While Equinor was submitting development plans for new oil fields offshore Norway, it had to shut down four fields in the North Sea, due to an oil workers’ strike over pay that went on for ten days in October.

Equinor warned that if the strike extended after the second week of October, it could force the closure of the giant Johan Sverdrup oil field in the North Sea due to the scheduled rotation of personnel as there would not be sufficient capacity and competence in key operational functions at Johan Sverdrup.

Equinor and the oil market didn’t have to see how a shutdown at Johan Sverdrup would affect Norwegian oil production because after ten days of strike, trade union Lederne and the Norwegian producers reached an agreement over offshore workers’ pay and the strike was called off.  

Meanwhile, Equinor warned that the pandemic and the weakened Norwegian currency, the krone, pushed up costs for projects under development, postponing the start-up of some projects.

Renewables

Staying with Equinor, the Norwegian firm announced the start of construction on the world’s largest floating offshore wind farm Hywind Tampen. The project will be the first floating offshore wind project to supply renewable power for oil and gas installations. The wind farm with a total capacity of 88 MW is expected to cover about 35% of the annual power needs on five platforms—Snorre A and B and Gullfaks A, B, and C.

In the UK, Equinor, together with eleven other companies and organisations, submitted in early October a joint proposal to create a low-carbon cluster in the UK’s largest and most carbon-intensive industrial region, the Humber.

Just a day before this announcement, UK Prime Minister Boris Johnson set out new plans to make the UK a world leader in green energy.

The UK will make available £160 million to upgrade ports and infrastructure across communities like in Teesside and Humber in Northern England, Scotland, and Wales to significantly boost UK offshore wind capacity, which is already the largest in the world and currently meets 10% of UK electricity demand. The investment is expected to create some 2,000 construction jobs and enable the sector to support up to 60,000 jobs directly and indirectly by 2030 in ports, factories, and the supply chains. Offshore wind is expected to produce more than enough electricity to power every home in the country by 2030.

“Now, as we build back better we must build back greener. So we are committing to new ambitious targets and investment into wind power to accelerate our progress towards net zero emissions by 2050,” Johnson said.

Developing skills and supply chain capabilities will be critical if the UK is to reach its climate ambitions, OGUK, the leading representative body for the UK’s offshore oil and gas industry, said, commenting on the plan. 

“With the essential expertise to power the green recovery and help the UK meet its climate ambitions, the UK’s changing offshore oil and gas industry is committed to making a positive contribution,” OGUK Chief Executive Deirdre Michie said.

“A green recovery with renewables at its heart will be good for consumers and jobs, as well as helping to meet our 2050 net zero emissions target. Support for new floating wind projects will ensure the UK stays at the forefront of global innovation in renewables, and provides new opportunities in the low carbon transition,” RenewableUK’s Chief Executive Hugh McNeal said.

The Offshore Wind Industry Council (OWIC) also welcomed the UK plan, with industry chair Benj Sykes saying:

“Our global leadership in offshore wind, coupled with new support for investment in ports, will help unlock the huge opportunity for the UK to build a world-leading, competitive supply chain.”

Scottish Renewables Chief Executive Claire Mack said: “All parts of the UK can and should benefit from the development of this resource and the renewable energy industry in Scotland looks forward to working alongside government to deliver jobs, investment and innovation as we move towards our ambitious net-zero targets.”

Companies also welcomed the plans. Duncan Clark, Head of UK Region for Ørsted, said that it would “unlock huge opportunities for world class UK supply chain companies, both domestically and overseas, to market the skills and innovative technologies that have been fostered in the UK offshore wind industry.”

Bernard Looney, chief executive of bp, said: “I agree with Boris Johnson - Teesside and the Humber are ideally-placed for the vital expansion of the UK’s offshore wind industry – and central to the country’s aspirations to lead in both carbon capture and storage and hydrogen. Building back greener means building back better, and here at bp we’re excited to get started.”

The Port of Great Yarmouth, with more than 50 years’ experience in delivering major offshore projects, is ready to support Johnson’s pledge to power every home in the UK with offshore wind energy within a decade, Peel Ports, the owner of the port, said.

The Solar Trade Association (STA) urged the UK to show similar ambitions in the solar power sector.

“What we need to see in that strategy is the same level of ambition for solar and battery storage as there has been for wind. Britain needs to triple its solar capacity in the next decade in order to get on track for net zero,” STA Chief Executive Chris Hewett said. Meanwhile, The Crown Estate awarded Agreements for Lease (AfL) to six proposed offshore wind project extensions offshore England and Wales for projects, which together have the potential to deliver 2.8 GW of new capacity.

BP Chargemaster was awarded in early October the UK’s largest ever EV infrastructure contract, worth up to £21 million, by Police Scotland to supply electric vehicle (EV) charging infrastructure across its estates.   
Together with unveiling its future strategy and reaffirming its Net Zero goals, France’s major Total has made several announcements about low-carbon energy deals in recent weeks. 

Total is buying ‘Blue Point London’ from the Bolloré Group, taking over the management and operation of Source London, the largest EV charging network citywide, which includes more than 1,600 on-street charge points. The French firm will also convert its Grandpuits refinery at Seine-et-Marne into a zero-crude platform producing biofuels and bioplastics by 2024. Total signed an agreement with Spanish developer Ignis to develop 3.3 GW of solar projects located close to Madrid and Andalusia. This brings Total’s portfolio to more than 5 GW of solar projects under development in Spain by 2025. The company also became a 20% shareholder in the Eolmed floating wind farm pilot project on France’s Mediterranean coast. 

In Italy, Eni and the Polytechnic University of Turin launched a joint research laboratory to explore innovation in the renewable marine energy sector. 

“Our goal is to optimise existing technologies to make them even more efficient, competitive and therefore accelerate the industrialisation process of marine energies,” Eni’s CEO Claudio Descalzi said.  

Maersk Supply Service and Ørsted will cooperate in testing a proto-type buoy that will act as both a safe mooring point and a charging station for vessels, potentially displacing a significant amount of marine fuel with green electricity. Ørsted has also joined forces with world leading fertiliser company Yara to develop a pioneering project in the Netherlands, aimed at replacing fossil hydrogen with renewable hydrogen in the production of ammonia.

Read the latest issue of the OGV Energy magazine HERE.