Axiom EMI: the fixed platform market is forecast to witness c.500 platform installations over the next 5 years, 22% fewer than we expected pre-downturn. In this article, Axiom explores how the electrification of these facilities, and those platforms already in production, can have a meaningful impact on the carbon intensity of offshore oil and gas production.
The above chart highlights Axiom’s view on how the 2020-2024 fixed production market has evolved through February to June 2020.
Recent market conditions have pushed operators to delay, defer or cancel c.240 platform installations over the 2020-2024 forecast. Those projects delayed witness an average schedule slippage of six to twelve months, resulting in shrinking installation market until 2022/2023. The market is not expected to recover to 2019 levels until 2024 at the earliest.
While the number of fixed platform installations is 22% below our pre-Covid expectations, the pace of platform decarbonisation increases. The next generation of fixed oil and gas production assets will need to play their part in reducing greenhouse gas (GHG) emissions. The transition to a low-carbon economy requires an obvious strong push towards renewable energy solutions. However, dependence on oil and gas, as a major component of the global energy mix, will be with us for a long time to come. It is therefore imperative that O&G production has the lowest possible carbon footprint.
Taking Norway as an example. In 2018, O&G production activities on the Norwegian continental shelf contributed c.28% of Norway’s total GHG emissions; this equates to c.13 million tonnes of CO2 equivalent. Over 160 gas turbines are used for platform power generation, partnered with flaring, this accounts for c.85% of the total GHG emission from the Norwegian CS. Equinor and partners are taking a proactive stance to reduce “at source” emissions through the electrification of offshore facilities.
Electrification replaces in-situ power generation through the laying of cables from shore, or from renewable developments, to production infrastructure most suitable for gas turbine/diesel power generation replacement. Power supplied from renewables and gas power plants, with CO2 management, produce far lower GHG emissions per MW than in-situ solutions.
The idea of electrification of offshore facilities is not new. Troll A was the first platform in the Norwegian sector to be electrified in 1996. The Gjøa field, started up in 2010, was electrified from the outset. In 2018 a 163km cable was laid to connect the Martin Linge field with power supplied from onshore Kollsnes, the development is expected to come online within the next few months.
By way of quantifying the impact of electrification on the CO2 footprint per barrel of oil produced, Johan Sverdrup has been electrified from shore and produces 0.67kg of CO2 per barrel. This compares to a Norwegian average of 9kg and a global average of 18kg per barrel. Sverdrup phase 2 will also supply Gina Krog, Ivar Aasen, Edvard Grieg and Sleipner with power from shore through the Utsira High area transmission network. Sleipner is expected to be partially electrified, when power demand is greater than the Utsira High network can supply, Sleipner will use gas turbines to cover power needs. Sleipner Vest CCS is estimated to have captured, inject and store 20 million tonnes of CO2 since coming onstream in 1996. CO2 emission savings from all the fields connected to the Utsira High network are estimated at 1.15 million tonnes per year, with Sleipner’s component being 150,000 tonnes, further reducing the carbon intensity of its CCS operations.
Norway’s next stage of electrification development focuses on supplying power to the Gullfaks and Snorre developments through the utilisation of floating wind technology. The Hywind Tampen wind farm project, located 140km from shore in 260-300m of water, is located between the Gullfaks and Snorre platforms and consists of eleven 8MW floating turbines. The project is expected to supply c.35% of the total power demand of Snorre A and B, Gullfaks A, B and C platforms, and reduce carbon emissions by 200,000 tonnes per year. Hywind Tampen is expected to come onstream in late 2022/early 2023.
Elsewhere in Europe, BP and Shell are both looking at clean power options for facilities in the UK CNS. BP is also working on solutions for the West of Shetland, which could involve offshore wind, power from Norway or the Shetland Islands.
Electrification of the Dutch North Sea sector could reduce CO2 emissions by one million tonnes per year. The Netherlands currently has only one platform electrified from shore, the Q13A-A production platform, saving c.14,000 tonnes of CO2 per year. The K-14 hub platform is also being considered for electrification, this would use power produced from a yet to be developed offshore wind farm; the platform could be electrified by 2023/2024.
Outside of Europe, ADNOC and ADPower are looking to install a HVDC transmission system, connecting ADNOC’s offshore production facilities to ADPowers onshore electricity grid. The partial electrification of ADNOC’s platforms is expected to reduce GHG emissions by c.30%. The transmission system is expected to consist of two independent subsea HVDC links and a converter station supplying 3.2GW of power by 2025.
Offshore facility electrification has the potential to substantially reduce the O&G industry’s CO2 emissions. Successful carbon management at onshore power plants and easy access to wind developments are key to the scalability and sustainability of the solution. Deployment of electrification within Europe is expected to advance with increasing pace through the rest of the decade, as transmission networks expand and standalone floating wind development technologies are proven. Northern Europe also has the advantage of a mature and relatively “O&G industry integrated” offshore wind sector, where future wind developments can facilitate further O&G facility electrification. Axiom expects electrification to become more widespread across other hydrocarbon producing regions. The industry will apply the lessons learned in Europe to both greenfield and brownfield developments worldwide.
Oil and gas production, as an important part of the global energy mix, is here to stay. Electrification is a relatively simple approach to decarbonising offshore production. Electrification, partnered with the synergies of operator portfolio diversification into renewables, CCS and potentially hydrogen, goes a long way to improve the image of the industry, while having a meaningful impact on reducing carbon emissions.
For more information on the underlying data of the above analysis, please contact Axiom EMI.
Source: Axiom – Offshore Platforms Market