OGV Energy's European Energy Review

Oil and gas discoveries, new licensing rounds in Norway, proposals for pathways to green recovery, and a number of renewable energy and hydrogen projects in the UK were the highlights of Europe’s energy news in the past month.  

Oil & Gas

Norway aims to offer 136 blocks for oil and gas exploration in the licensing round for less explored areas on its shelf, including 125 blocks in the Arctic Barents Sea that are currently not available for drilling, the Ministry of Petroleum and Energy said on 24 June.  

The so-called 25th numbered licensing round – expected to be announced in the autumn of 2020 after consultation on the proposed areas – typically includes frontier parts of the Norwegian Continental Shelf (NCS). According to Norway’s oil ministry, it will be the frontier regions that are most likely to host large new discoveries.

Norway also announced in June the annual licensing round for oil and gas exploration in mature areas on its shelf, expanding the total acreage by 36 blocks west of the Norwegian Sea. 

“Even after decades of activity, there are still opportunities in these areas. Due to new technology and a multitude of new players, I believe we will see new discoveries in the areas available in this year's APA round,” Norwegian Minister of Petroleum and Energy Tina Bru said.

Equinor announced in early July a gas and condensate discovery at the Kvitebjørn field in the one of the most mature areas of the North Sea. Preliminary estimates show the proven reserves are between 3 and 10 million standard cubic metres of recoverable oil equivalent, corresponding to 19-63 million barrels of oil equivalent.

Aker BP and Pandion Energy submitted in June the plan for development and operation (PDO) for the Hod field—one of the first projects under the temporary changes in Norway’s petroleum tax system aimed at incentivising field development during the crisis. Recoverable reserves at Hod are estimated at around 40 million barrels of oil equivalent, and the field will be developed with a normally unmanned installation remotely controlled from the Valhall field centre, with very low CO2 emissions due to power from shore.

Norway’s temporary tax relief package for the oil and gas industry is set to improve exploration and production companies’ short-term liquidity and reduce breakeven prices for future development projects by about 40% on average, Rystad Energy has estimated. 

Aker Solutions said on 17 June it would spin off its wind and carbon capture businesses to shareholders and merge Aker Solutions ASA with Kværner ASA to create an optimised supplier company.

“Aker Solutions has developed technology and taken strong positions in markets for offshore wind and carbon capture, utilisation and storage,” said Aker Solutions chairman Øyvind Eriksen. “However, it has become increasingly clear that these businesses represent value creation opportunities in a world transitioning to green solutions at accelerated speed and have more potential as stand-alone companies than as an integrated part of an oil service business.”

Green Recovery and Alternative Energy

The REA, the UK’s largest trade association for renewable energy and clean technologies, published a report in early July, calling on the government to work for a green recovery. The REA vision for a clean future and net zero by 2050 rests on four pillars—decarbonising power & homes, decarbonising heat, decarbonising transport, and moving to a circular economy, the REA said.

According to the association, low-carbon homes and tax reforms alone would create 176,000 new jobs, save consumers £270 on bills annually, and generate a net value of £7.5 billion to the UK economy.

RenewableUK, for its part, said that if the Government takes steps to maximise the economic benefits of renewable energy, the 2021 auctions for contracts to generate clean power can secure over £20 billion of investment and create 12,000 jobs, mainly in the construction sector.   

In the first quarter of 2020, the share of renewables of UK electricity generation increased to a record quarterly high of 47.0%, up from 35.9% in the first quarter of 2019, reflecting increased capacity and high load factors for wind technologies, the government said in its quarterly energy trends report in June.

Commenting on the record high renewables and wind power generation in the UK, RenewableUK’s Head of Policy and Regulation, Rebecca Williams, said:

“At the coldest time of year, wind and renewables rewrote the record books right across the board, keeping our nation powered up when we need it most. This is the clean energy transition written very large indeed.”

In wind energy, European majors Total and Shell have joined the UK’s floating wind Centre of Excellence which will focus on all areas of floating wind activity in the UK across four key areas – technology development, supply chain and operations, development and consent, and delivering net zero. 

Hydrogen could play a prominent role in the UK’s net zero ambitions, a report from Aurora Energy Research showed. The so-called blue hydrogen – produced from natural gas after reforming to remove carbon content – and green hydrogen from electrolysis are expected to play an important role, providing up to 480 TWh of hydrogen, or around 45% of Britain’s final energy demand by 2050, the report says. 

Trade bodies the UK Hydrogen and Fuel Cell Association, the Midlands Hydrogen and Fuel Cell Network, the British Hydropower Association, HyCymru (Wales Hydrogen Trade Association), RenewableUK, and Hydrogen East called on the UK government to lay the foundations for a UK-wide hydrogen strategy for a clear, strategic plan to unlock private funding in hydrogen technologies and manufacturing across the country, driving growth and generating hundreds of thousands of green jobs.

Global engineering and consulting company Wood said on 15 July it had successfully delivered preliminary engineering design services for gas network operator SGN’s candidate site at Machrihanish, on the west coast of Scotland, as part of the Hydrogen 100 (H100) project which will initially aim to supply energy to homes in Fife, Scotland.

Equinor leads the development of one of the UK’s – and the world’s – first at-scale facilities to produce hydrogen from natural gas in combination with carbon capture and storage (CCS). The project, Hydrogen to Humber Saltend (H2H Saltend), provides the beginnings of a decarbonised industrial cluster in the Humber region, the UK’s largest by emissions, Equinor says.

The EU also has plans for hydrogen as part of its goals to achieve net zero as part of the European Green Deal. The EU unveiled in early July “a hydrogen strategy for a climate-neutral Europe,” setting out a vision of how the EU can turn clean hydrogen into a viable solution to decarbonise different sectors over time, installing at least 6 GW of renewable hydrogen electrolysers in the EU by 2024 and 40 GW of renewable hydrogen electrolysers by 2030. 

Back to the UK, the Scottish Scottish Government granted consent for the High Constellation Wind Farm in Argyll & Bute with planned capacity of 50 MW and 10 turbines. Construction is expected to begin in 2021.

In Scotland, Apollo, Blackfish Engineering Design, Nova Innovation, and Quoceant have secured funding of £1.4 million from Wave Energy Scotland for projects that aim to bring down the cost of wave power.  
In Wales, Marine Energy Wales found that £123.7 million has been invested into the Welsh economy from wave energy. Investments have increased by £27.5 million over the last year, and by £78.3 million since 2015.

In solar power, Macquarie’s Green Investment Group (GIG) and Enso Energy formed a joint venture to develop an extensive pipeline of solar and battery projects in the UK. The joint venture targets to develop an initial 1 GW of subsidy-free solar capacity, one of the largest portfolios of its kind in the UK.

Lightsource bp said in mid-July it had recently secured planning approval for a new solar farm near Castle Eden in Durham, UK. The Hulam Solar Farm will have a power capacity of 50 MW and will provide carbon emission savings of 16,040 tonnes every year, equivalent to taking 3,412 cars off the roads.

Vattenfall announced investments and projects in South West Scotland and Norfolk. The Swedish company proposed two new onshore wind farms in South West Scotland, saying that “New onshore wind is the cheapest way to generate electricity, and Vattenfall’s new proposals for South West Scotland could also make a significant contribution to Scotland’s net zero ambitions.”

Vattenfall was also awarded development consent for the Norfolk Vanguard Offshore Wind Farm in England, which will generate 1.8 GW of clean electricity, enough to power almost two million homes each year while saving over three million tonnes of carbon dioxide emissions – the same as taking around 1.6 million cars off the road. 

The largest photovoltaic park in Italy, a 103-MW plant near Foggia, southern Italy, was connected to the grid at the end of June, the developer European Energy said.  

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