OGV Energy's Europe Energy Review – September 2022

Heightened uncertainty over Russia’s pipeline gas supply to Europe, soaring gas and power prices, a major gas discovery, development plans for oil and gas fields offshore Norway, and a lot of investment in clean energy projects have been the key themes in the European energy industry in recent weeks.  

Oil & Gas

Russia continued to keep gas flows to Europe via Nord Stream at low levels after the maintenance on the pipeline ended at the end of July. Since 24 July, Gazprom has been sending gas at just 20 percent of the pipeline’s capacity and further warned in the middle of August that all flows through Nord Stream would be halted for three days between 31 August and 2 September. European officials are concerned that flows could be further reduced after 2 September or stopped altogether, which stoked another rally in Europe’s natural gas and electricity prices to fresh records.

At the same time European companies are drilling for more gas and oil offshore Norway, proposed new field developments, and made a massive gas discovery offshore Cyprus. 

Italy’s Eni, operator of Block 6 off Cyprus, announced on 22 August a significant gas discovery, with preliminary estimates pointing to about 2.5 TCF of gas in place. 

“The discovery paves the way for the development of new gas resources in the Mediterranean region and is part of Eni's successful efforts to support the supply of additional energy to Europe,” the Italian company said.

Neptune Energy began drilling at the end of July at the Ofelia exploration well in the Norwegian sector of the North Sea. In case of a commercial discovery, the Ofelia prospect could be tied back to the Neptune-operated Gjøa platform and produce at less than half the average carbon intensity of Norwegian Continental Shelf fields.  

At the end of August, Neptune Energy and its partners announced a new commercial discovery at the Ofelia exploration well and encountered oil in the Agat formation. The preliminary estimate of recoverable volume is in the range of 16-39 million barrels of oil equivalent. In addition to the Agat volumes, north of the well there is an upside of around 10 million boe recoverable gas in the shallower Kyrre formation, which brings the total recoverable volume to approximately 26-49 million boe. 

Neptune Energy also announced the safe and successful drilling of four development wells on the operated Fenja field in the Norwegian Sea, in preparation for production start-up. Fenja is scheduled to come on stream in the first quarter of 2023 and will produce around 28,000 barrels of oil equivalent per day (boepd) at plateau.

Wintershall Dea has started production from the Nova oil field in the Norwegian North Sea, which comes on stream at a time where Europe needs every additional barrel it can get. 

Sval Energi signed in early August an agreement with Suncor Energy to acquire Suncor Energy Norge AS.

“The Norwegian Continental Shelf is still attractive, and we are building a strong cash-generating business in Norway with producing assets, future developments, and exciting exploration opportunities. We are executing our strategy and transforming into a significant player on the Norwegian Shelf,” Sval Energi CEO Nikolai Lyngø said.

Vår Energi has increased its acreage positions offshore Norway and took new operatorship in the Balder area through several transactions. 

“We have a long-term, hub-oriented growth strategy in the North Sea, and these acquisitions add new opportunities to an already robust portfolio. The acquired licenses will be worked as part of further development of the greater Balder area,” said VP Field development & Projects in Vår Energi, Bjørn Thore Ribesen.

Aker BP and its partners submitted in early August a plan for development and operation for Trell & Trine in the Alvheim area of the North Sea.

“From an operational perspective, the Alvheim area is one of the most cost-effective on the Norwegian shelf, and the resource base has expanded dramatically since the field came on stream,” Aker BP CEO Karl Johnny Hersvik said.

Aker BP also awarded Subsea 7 a sizeable contract for the Trell & Trine field development. The project involves a subsea tie-back of around 21 kilometres to the Alvheim FPSO, via the existing East Kameleon subsea manifold.

Aker Solutions has also been awarded a contract from Aker BP to provide the subsea production system for Trell & Trine. Aker Solutions will deliver a subsea production system including three horizontal subsea trees, two manifolds, control systems, close to 30 kilometres of subsea umbilicals, as well as associated equipment and installation work. The work will start immediately with final deliveries scheduled for the first quarter of 2024.

Low Carbon Energy

In low-carbon energy solutions in Europe, Crown Estate Scotland opened on 10 August the Innovation and Targeted Oil and Gas (INTOG) offshore wind leasing process. Under the leasing round, offshore wind developers are being invited to put forward projects for the rights to build small-scale innovative offshore wind projects, of less than 100 MW, and projects which will provide green electricity to oil and gas infrastructure to reduce their carbon emissions.   

OEUK welcomed the new wind leasing round in Scotland, with OEUK’s Energy Policy Manager, Will Webster, saying:

“Integration of offshore wind production with our vital oil and gas facilities means we can reduce emissions from production, ensure the industry remains a reliable and clean energy partner during the transition, and accelerate the drive to a more sustainable future.”

Later in August, Crown Estate Scotland said that three projects would be offered seabed agreements for offshore wind projects following Crown Estate Scotland’s

ScotWind clearing process. The three projects selected are all floating and are expected to generate 2.8 GW of electricity once operational.

“Taking these three into account, the 20 ScotWind projects now total up to 27.6GW with initial supply chain commitments indicating an average of £1.4bn investment in Scotland per gigawatt of capacity built,” Colin Palmer, Director of Marine at Crown Estate Scotland, said. 

The rise in the UK Energy price cap shows an urgent need to switch to renewables faster, RenewableUK said, commenting on Ofgem’s announcement at the end of August.

“Let's be absolutely clear - the cause of this unaffordable increase in household bills is the cost of gas. So we urgently need to see a greater level of emergency support for consumers from the Government to get through the winter, and we need to switch to low-cost alternatives much faster,” said RenewableUK’s Chief Executive Dan McGrail. 

TotalEnergies and its partner SSE Renewables announced on 23 August first power generation from the Seagreen offshore wind farm, 27 kilometres off the coast of Angus in Scotland.

ScottishPower Renewables started onshore construction for East Anglia THREE offshore wind farm. Part of the East Anglia Hub, East Anglia THREE will have a capacity of 1,400 MW of green electricity – enough to power around 1.3 million homes.

Investment and asset manager Downing LLP said it had been selected by Yorkshire Water to develop, design, build, and operate a portfolio of 28 solar sites across Yorkshire. The first phase of solar deployments, an investment worth around £25 million, will generate a total capacity of approximately 21 MW.

bp said on 1 August it planned to invest up to £50 million in a new, state-of-the-art electric vehicle (EV) battery testing centre and analytical laboratory in the UK. bp has previously announced its intention to invest up to £18 billion in the UK’s energy system by the end of 2030, and this additional new investment is a further example of bp’s commitment to the country, the supermajor said.

Renewable energy development investor Magnora has entered the UK solar and battery storage services market by investing in the development of a 60 MW solar PV project and a 40 MWh Battery Energy Storage System (BESS) project, as a first step.  

“We will continue to monitor further opportunities, and subject to a successful development in this first step, we will consider further investments in the UK solar PV and BESS market,” said Erik Sneve, CEO of Magnora ASA.

Network Rail has signed an agreement with EDF Renewables UK which will see enough solar energy to power 20,000 homes used in offices, depots and railway stations across the UK.

Stillstrom by Maersk, a newly launched offshore charging company, has announced that it will collaborate with Port of Aberdeen on a pioneering project to significantly reduce emissions from vessels on standby outside the port. Stillstrom and Port of Aberdeen will conduct a joint feasibility study into an innovative offshore renewable charging hub.

Spain’s Iberdrola has put into operation the 'Francisco Pizarro' project in Extremadura, the largest photovoltaic plant in Europe and the largest facility of this type operated by the group in the world. The plant has an installed capacity of 590 MW.

Iberdrola has also signed an agreement with bp to collaborate to accelerate EV charging infrastructure and green hydrogen production. Together, the companies intend to collaborate to significantly expand fast EV public charging infrastructure, as well as to develop large scale green hydrogen production hubs in Spain, Portugal, and the UK. 

bp has also opened its first ultra-fast-charging facilities aimed at medium and heavy-duty electric trucks to support the decarbonisation of the sector.  The retail site at Schwegenheim in Rheinland-Pfalz, Germany, now has two state-of-the-art 300kw ultra-fast chargers intended for electric trucks, powered by 100% renewable energy, bp said.

A consortium of TotalEnergies, Corio Generation, and Qair has been pre-selected by the French Directorate General for Energy and Climate (DGEC) to participate in a competitive tender to develop two floating wind farms in the Mediterranean Sea. The two projects of about 250 MW each could supply enough clean energy to meet the annual electricity consumption of almost one million people, TotalEnergies said in early August.

Wintershall Dea and Nord-West Oelleitung (NWO) will collaborate on Wintershall Dea's BlueHyNow project, part of the EnergyHub currently under construction in Wilhelmshaven, Germany. Wintershall Dea plans to build a plant for the production of large volumes of low-carbon hydrogen using Norwegian natural gas. The hydrogen produced can be delivered by pipeline to industrial customers for use as a decarbonised energy source or as a raw material, reducing their CO2 emissions. 

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