Oil and Gas Companies Can Power Offshore Platforms With Renewables
This
creates a business case for big oil to power production operations with
renewables, and some companies are beginning to explore it.
Approximately
16 terawatt-hours per year is used to power offshore oil and gas platforms
globally, roughly equivalent to Croatia’s entire annual domestic electricity
consumption. Wood Mackenzie finds that this is a material opportunity for
renewables.
Three
approaches
While
powering offshore oil and gas production platforms with renewables makes sense,
there are some places where this will work better than others.
Where
developments lie close to the coastline, renewables onshore could be used to
power oil and gas platforms. Powering platforms from shore is already used for
some operations near the coast.
In
Norway, projects such as Johan Sverdrup and the Utsira High ring demonstrate
what is possible with renewables from shore.
However, Norway is in a unique position as its principal domestic power source is hydroelectric and many platforms are accessible from land.
Another
approach is securing power from existing offshore sources.
In
some places, offshore wind and upstream oil developments overlap. In time, as
those offshore wind operators look to new markets, providing power to these
platforms could be a viable source of long-term supply agreements.
An
oil and gas platform operator could cut its electricity bill by half in
switching to clean energy via this approach, according to a recent Wood
Mackenzie insight on the topic.
The
last approach would be in-situ renewables, developed specifically to service
offshore platforms.
Equinor’s
Hywind Tampen project, on which a final investment decision was made in October
2019, is an early example of this approach. The project will include an
88-megawatt floating wind farm between the Gullfaks and Snorre platforms, which
will provide 35 percent of the platform's power demand.
Beyond
wind turbines, floating solar has potential. Floating solar doesn’t require
scale to reach a commercial threshold and can operate in any water depth.
Airborne wind (i.e., flying kites) is another potential option, although it is
a nascent technology.
Staying
investible
Offshore
electrification would provide various operational benefits at field level for
oil and gas companies and put more production back into the sales pipeline.
Additionally,
Wood Mackenzie expects carbon taxes to become more prevalent in the coming
years. At Wood Mackenzie’s base case carbon price of USD $40 per ton, the 200
million tons of CO2 the offshore industry produces from power generation will
cost the oil and gas industry around $8 billion a year in taxes. If carbon
taxes are higher, this number will go up.
Using renewables to power platforms would mitigate the carbon footprint of offshore oil and gas operations and the associated costs for operating companies.