OGV Energy's Europe Energy Review

New oil and gas discoveries offshore Norway, the UK’s renewables planning policy and increased offshore wind pipeline, and new projects in hydrogen, CCS, and tidal power featured in Europe’s energy sector in the past month.

Oil & Gas

The EU’s embargo on imports of Russian fuels by sea came into force on 5 February, two months after the bloc banned seaborne imports of Russian crude oil. The diesel markets in Europe seemed relatively calm immediately after the ban, partly due to the stockpiling of fuels before the embargo kicked in, and to the milder winter weather in many parts of Europe.

Equinor made in February an oil and gas discovery close to the Troll field in the North Sea. The discovery, the seventh in this area since the autumn of 2019, is named Røver Sør. According to preliminary estimates, the size of the discovery is between 17 and 47 million barrels of recoverable oil equivalent, most of it oil.

“Discoveries close to existing infrastructure are important to maintain oil and gas production from the Norwegian continental shelf. They need smaller volumes to be profitable and can be put on stream quickly with low carbon emissions,” said Geir Sørtveit, Equinor’s senior vice president for exploration and production west operations.

The Norwegian major, on behalf of the Snøhvit partnership, has also awarded Aibel a major contract for Hammerfest LNG modifications in connection with the Snøhvit Future project. The contract is subject to governmental approval of the project. Aibel has been awarded an EPCI contract that involves engineering, procurement, construction and installation of two new processing modules related to the onshore compression and electrification of the Melkøya plant. They will also build a new receiving station for power from shore and carry out integration work at the plant.

Vår Energi ASA confirmed the discovery of oil in its operated 7122/8-1S Countach well in PL229 (Goliat), north-west of Hammerfest. Extensive data is being collected for further assessment, the company said.

Subsea7 was awarded two contracts by Equinor for the Irpa and Verdande field developments in the Norwegian Sea in a consortium with DeepOcean. Project management and engineering will begin immediately at Subsea7’s offices in Stavanger, Norway. Fabrication of the pipelines will take place at Subsea7’s spoolbase at Vigra, Norway, and offshore operations are planned to take place in 2024, 2025, and 2026 utilising both Subsea7’s and DeepOcean’s fleet of vessels.

Germany received in the middle of February its first LNG cargo from the Middle East, from Abu Dhabi’s ADNOC which delivered the shipment from the United Arab Emirates (UAE) to the Elbehafen floating LNG terminal in Brunsbüttel. The shipment of 137,000 cubic metres of LNG is the commissioning cargo for Brunsbüttel and the first-ever LNG cargo to be shipped to Germany from the Middle East.

Low-Carbon Energy

The UK’s National Infrastructure Commission has been asked to review the current approach to National Policy Statements (NPSs) and identify how the planning system could create greater certainty for infrastructure investors, developers, and local communities. The review could speed up consenting for offshore wind farms and large-scale solar projects.

The system has slowed in recent years, with the timespan for granting Development Consent Order (DCOs) increasing by 65 per cent between 2012 and 2021, the UK government said. For example, offshore wind projects have been seen to take up to four years to get through the DCO process.

The UK’s pipeline of offshore wind projects at all stages of development now stands at 99.8 gigawatts (GW) across 130 projects – an increase of 14 GW over the past 12 months, according to new research by RenewableUK’s EnergyPulse data analysts. This includes 13.7 GW of fully operational capacity and a further 13.6 GW under construction or with support secured for a route to market.

While the UK retains the second largest offshore wind pipeline, accounting for 8.5 per cent of the global total, this is the first time that it has fallen below 10 per cent, reflecting the rapid growth of new markets like Australasia and South America, RenewableUK said.

The association also issued in a separate report key recommendations for the UK Government to fend off foreign competition in the global race for renewables. The report warns that as the US and EU are creating far more positive policy and regulatory environments for investors, the UK must offer its share of fiscal incentives for developers and supply chain companies, such as new capital allowances for the clean technology sector.

“We’re urging the Chancellor to look carefully at the recommendations set out in this report ahead of his Spring Budget, as the renewable energy sector is facing a perfect storm this year, with inflation squeezing out already tight profit margins, and fierce international competition for investment, skills and supply chains,” RenewableUK’s Executive Director of Policy Ana Musat said.

“The US and the EU are in a race to offer incentives to clean energy investors, and the UK cannot take its leadership position for granted.”

The Government is launching the UK’s first globally recognised certification scheme to verify the sustainability of low carbon hydrogen, building transparency and confidence across the sector. The Government believes the scheme will help cement the UK’s place in the global race to ramp up hydrogen technology, incentivising hydrogen production, investment and use across the country.

New polling in Ireland, carried out for Wind Energy Ireland by Interactions Research, showed that 80 per cent of Irish people support wind farms, while opposition to wind energy has fallen to just 5 per cent. The survey also found rising positive attitudes towards offshore wind with 83 per cent saying it would help with Ireland’s energy security. However, just 31 per cent felt Ireland was doing enough at present to develop its offshore wind capabilities.

Tidal power, alongside other renewable energy sources, can boost energy security, a new study led by University of Plymouth’s Research Fellow Danny Coles showed. The study, focused on the Isle of Wight and published in Applied Energy, found that installing tidal stream systems, in addition to solar and offshore wind farms, is around 25 per cent more effective at balancing supply with demand than just relying on solar and wind technologies.

In company and project news, Equinor and SSE Renewables are carrying out early scoping work to explore options for developing a fourth phase, Dogger Bank D, of the world’s largest offshore wind farm. The Dogger Bank D proposal would require a new development consent order to progress into construction and could add an additional 1.32 GW in fixed-bottom offshore wind capacity to the 3.6 GW already in construction with phases A, B and C of the project, Equinor said.

Edinburgh-based tidal energy company Nova Innovation has achieved another world-first by doubling the size of their Shetland Tidal Array. After the installation of the 5th and 6th turbines, the array becomes the one with the largest number of turbines anywhere in the world.

Copenhagen Infrastructure Partners (CIP) and Amberside Energy have formed a partnership to develop 2 GW of solar and battery storage projects in the UK. Subject to investment decisions at the time, CIP intends to provide the capital required for the construction of the projects in this portfolio.

Enel Green Power’s company 3Sun has signed a project financing agreement with UniCredit to finance the expansion of 3Sun’s solar panel factory in Catania, Sicily, to the largest GW-scale factory in Europe. The expansion aims to increase the factory’s capacity 15-fold to 3 GW per year from the current 200 MW. The 3 GW production plant is expected to be fully operational by July 2024, making 3Sun the largest gigawatt-scale factory in Europe producing high-performance bifacial PV modules.

TotalEnergies and Air Liquide are creating an equally owned joint venture to develop a network of hydrogen stations, geared towards heavy duty vehicles on major European road corridors. The agreement will lead to the creation of a major player in hydrogen refuelling solutions and contribute to the decarbonisation of road transportation in Europe, TotalEnergies said.

Denmark will grant exclusive licences for exploration of full-scale CO2 storage in the Danish North Sea to TotalEnergies and a consortium consisting of INEOS E&P and Wintershall DEA. The licenses are an important step towards realising Denmark’s Carbon Capture and Storage (CCS) strategy and will kick-start the plan for the development of full-scale CO2 storage in Denmark, the Danish Ministry of Climate, Energy and Utilities said in early February.

Equinor and Germany’s EnBW announced they would jointly pursue German offshore wind opportunities in 2023 as they said they are interested in developing offshore wind together.

Horisont Energi and Neptune Energy have signed a Memorandum of Understanding (MoU) with energy major E.ON with the aim to develop a European CCS value chain.

The MoU covers several areas such as project financing, funding, and the development of a complete value chain for CO2 handling. If Horisont Energi’s and Neptune Energy’s application for CO2 storage for the Errai project is awarded, the intention is that this will be the first joint project, Neptune Energy said.

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