Europe Energy Review - July 2024

Exploration and further development of Norway’s offshore oil and gas resources, the implications of Labour’s win on the UK energy industry, and the start of many low-carbon projects featured in the European energy sector over the past month.

Oil & Gas

Equinor and its partners Petoro, Vår Energi, and TotalEnergies EP Norge started production from the first Lavrans well in the Kristin South area on 7 July.

This is the first phase of the Kristin South project, for which the partnership submitted the plan for development and operation (PDO) of the Lavrans and Kristin Q discoveries as satellites to the Kristin field in 2021. A new subsea template has been installed and tied into the Kristin platform, now processing oil and gas from the first well at the Lavrans field, Equinor said. The gas will be exported through the pipeline system to the European market, while the oil will be transported to the market by ship via the Åsgard C storage vessel.

Four additional wells are planned as part of the first phase of the Kristin South project, three at the Lavrans field and one in the Q-segment at the Kristin field.

Allseas has said it would install the pipeline and integrated structures for the second development stage of Equinor’s Troll Phase 3 project that will accelerate the production and contribute to maintain the high production capacity utilisation of Troll A Platform and Kollsnes onshore plant towards 2030. Phase 3 development will enable gas production from the Troll West field via subsea tiebacks to the original Troll A platform, northwest of Bergen, Norway.

BlueNord ASA has announced that drilling operations on the Harald East Middle Jurassic well (HEMJ) have commenced with the well successfully spudded by the jackup rig Shelf Drilling Winner.

The HEMJ was spudded in the Harald East area, located close to the Norwegian border and the gas will be exported through the Tyra East facilities. In a success case, the well could deliver production by the end of 2024. The expected gain from the well is estimated to be up to 8 mmboe net to BlueNord of which approximately 80 percent is expected to be gas.

German energy giant Uniper terminated on 12 June its long-term Russian gas supply contracts and thus legally ended the long-term gas supply relationship with the Russian state-owned company Gazprom Export. The decision was made possible after an arbitration tribunal on June 7 awarded Uniper the right to terminate the contracts and awarded it an amount of more than €13 billion in damages for the gas volumes not supplied by Gazprom Export since mid-2022.

Uniper suffered substantial losses due to the Russian gas supply restrictions in 2022, and the company initiated arbitration proceedings against Gazprom Export at the end of 2022.

Low-Carbon Energy

Commenting on the landslide Labour victory in the UK elections, RenewableUK Chief Executive Dan McGrail said, “Labour’s resounding election victory gives them a clear mandate to deliver their clean energy mission, and we look forward to working closely with the new government to speed up the pace of renewable energy development, with a focus on maximising the industrial and job opportunities the sector offers the UK.”

The first steps Labour could take include lifting the effective ban on onshore wind in England and increasing the budget for this year’s Contracts for Difference auction to enable new wind, solar, and tidal clean energy projects to go ahead, McGrail added.

In one of its first actions, the new UK government did indeed remove the de facto ban on onshore wind, and is currently revising planning policy to place onshore wind on the same footing as other energy development in the National Planning Policy Framework (NPPF).

The government is committed to doubling onshore wind energy by 2030. 
According to RenewableUK research, delivering 30 GW of onshore wind by the end of the decade would boost the economy by £45 billion and create 27,000 jobs.

RenewableUK also said in a new report on 8 July that Labour’s plans to set up GB Energy as a state-backed company to invest in new renewable energy projects can play a positive role in supporting emerging technologies and the transition to clean power, as long as it is set up in a way that does not disrupt the energy market.

The report, compiled by consultants Public First, recommends that Labour now outlines a clear vision for GB Energy (GBE) as soon as possible, so that it can begin operating within the next 12 months.

The report suggests that GBE should focus initially on investing in onshore wind and solar projects, as these are quick to build and bring stable revenues.

However, the report is also clear that Labour should also maintain a focus on unlocking the billions of pounds of private sector investment which will be required to deliver Labour’s clean energy mission, including over £100 billion of private investment needed to deliver Labour’s target of 60 gigawatts (GW) of offshore wind by 2030.

The UK retained its second position in global offshore wind capacity behind China, a RenewableUK report showed. China and the UK kept their top positions with 36.7 GW and 14.7 GW operational capacity, respectively. Germany is third with 8.3 GW, the Netherlands fourth with 3.7 GW and Denmark fifth with 2.7 GW.

China also has the largest pipeline (227 GW), with the UK second at 96 GW across 122 projects in UK waters. The USA is in third place with 94 GW, followed by Sweden with 68 GW and Brazil fifth with 61 GW of planned offshore wind capacity.

Germany, Great Britain, the Ireland I-SEM, and Poland emerge as the top four European markets for renewables co-location, a report by Aurora Energy Research showed in June.

“Great Britain stands out due to favourable regulation, granting co-located assets access to multiple markets and offering faster grid access for co-located RES projects,” Aurora’s analysts wrote.

Rystad Energy research and modelling have shown that 137 substations will be installed offshore continental Europe this decade, requiring $20 billion in total investment. More than 120 of these facilities will be installed between 2024 and 2030 at a cost of around $18 billion, the independent energy research and business intelligence company said in June.

In Germany, the latest offshore wind auction saw TotalEnergies, as shareholder of Offshore Wind One GmbH, winning a lease in the North Sea to develop 1.5 GW, while the other concession area went to EnBW to develop a 1-GW offshore wind farm in the German North Sea.

Germany’s onshore wind auction saw bids submitted for nearly 2.5 GW, setting a new record, the federal networks agency, Bundesnetzagentur, said in early July. The auction resulted in 189 bids with a total volume of 2,379 MW being awarded.

“If this positive trend continues then the expansion targets for onshore wind are within reach,” said the agency’s president Klaus Müller.

In company news, Ocean Winds marked the first export of power from the Moray West offshore wind farm on the way to fully commissioning the project. The 882-MW wind farm is nearing the end of the construction phase and will become fully operational in 2025 in line with the originally projected commercial operations date, the company said in early July.

Ørsted has decided to invest in a battery energy storage system co-located with the Hornsea 3 Offshore Wind Farm that will help provide stability to the UK energy supply and reduce price volatility. The Tesla battery storage system, on which Ørsted has now taken final investment decision, has a capacity of 600 MWh (and a 300 MW power rating), equivalent to the daily power consumption of 80,000 UK homes. When complete, the battery energy storage system will be one of the largest in Europe. It is expected to be operational by the end of 2026, Ørsted said.

Wood has been awarded a contract by Centrica Energy Storage (CES) for the redevelopment of the UK’s Rough field in readiness for future hydrogen storage. The Rough reservoir, located in the Southern North Sea, has been used to store natural gas safely for over thirty years and has the potential to provide over half of the UK’s hydrogen storage requirements.

Specialist sustainability consultancy ERM and Dolphyn Hydrogen have launched the UK’s first offshore hydrogen production trials in South Wales.

Shell said in early July it would temporarily pause on-site construction work at its 820,000 tonnes a year biofuels facility at the Shell Energy and Chemicals Park Rotterdam in the Netherlands, to address project delivery and ensure future competitiveness given current market conditions.

“Temporarily pausing on-site construction now will allow us to assess the most commercial way forward for the project,” said Huibert Vigeveno, Shell’s Downstream, Renewables and Energy Solutions Director.

50Hertz inaugurated on 3 July Europe’s largest solar power plant, the Witznitz Energy Park, with an installed output of 650 MWp. The park was built on a former lignite mining site south of Leipzig, Germany.

Zeevonk, a joint venture of Vattenfall and Copenhagen Infrastructure Partners (CIP) through its Energy Transition Fund, has been awarded a permit to build the IJmuiden Ver Beta wind farm in the Netherlands. This 2-GW offshore wind project will include a 50 MWp floating offshore solar farm on site and a new electrolyzer at the Port of Rotterdam which will convert electricity of IJmuiden Ver to green hydrogen.

Maersk is launching Maersk Offshore Wind, a new company to accelerate offshore wind deployment, the Denmark-based firm said on 2 July.

Maersk Offshore Wind plans to provide installation services to the offshore wind market based on a new and state-of-the-art offshore Wind Installation Vessel (Maersk WIV) concept.

“Maersk Offshore Wind’s concept can reduce the installation time of offshore wind turbines by almost one-third, delivering energy to the grid faster and lowering total installation costs increasing the competitiveness of our customers when they bid for new projects,” said Martin Larsen, CFO of A.P. Moller Holding and Chair of Maersk Offshore Wind.

Equinor has been awarded its first CCS exploration permit in Denmark as operator, together with partners Ørsted and Nordsøfonden. The partnership will start surveys to assess if the onshore licence in North West Zealand can be developed into a safe CO2 storage facility.

Norway’s Energy Ministry has announced offers for four new exploration licences for CO2 storage in the Norwegian part of the North Sea. Two of the licences are offered to Equinor, one to a group consisting of Vår Energi ASA, OMV (Norge) AS, and Lime Petroleum AS, and one licence is offered to a group consisting of Aker BP ASA and PGNiG Upstream Norway AS.

The Norwegin Ministry of Energy has also launched public consultation on a proposal for the first licensing round for seabed minerals on the Norwegian continental shelf.

“The world needs minerals for the green transition, and the government wants to explore if it is possible to extract seabed minerals in a sustainable manner from the Norwegian continental shelf,” Energy Minister Terje Aasland said, adding that the ministry plans to award licenses in the first half of 2025.

Read the latest issue of the OGV Energy magazine HERE