OGV Energy's Europe Energy Review January 2023

New discoveries and the investment and production activity in Norway, Germany’s new LNG import terminals, and the UK’s new offshore wind agreements and green ports have featured in Europe’s energy sector over the past month.

Oil & Gas

Investments and production offshore Norway increased in 2022 and set to keep a high level in the next few years, thanks to plans for new field developments and extension of the life of producing fields, for which operators have pledged 300 billion Norwegian crowns ($30 billion), the Norwegian Petroleum Directorate said in an annual review of the NCS activity.

“Only rarely have we seen so much oil and gas produced on the Norwegian shelf as was the case last year – and only rarely have we seen such significant investment decisions,” the regulator said.

Norway also awarded 47 new production licences on the Norwegian continental shelf in the licensing round APA 2022.

“Further exploration activity and new discoveries are important to maintain the production of oil and gas over time, both for Norway and Europe,” said Minister of Petroleum and Energy, Terje Aasland.

In company and new discovery news, energy group Parkmead announced the completion of drilling activities at the LDS-01 well in the Netherlands which has encountered gas columns in the primary target horizons. The well has been completed and is now ready for tie-in to production, which will follow the conclusion of the LDS-02 well.

Equinor and its partners Wintershall Dea and Petoro have made a commercial gas discovery in the Norwegian Sea. The discovery, Obelix Upflank, is estimated to hold about 12.6-69.2 million barrels of oil equivalent and was the first discovery made on the Norwegian continental shelf (NCS) in 2023. Obelix Upflank is around 23 kilometres south of the Irpa gas discovery, and 350 kilometres west of Sandnessjøen.

“We will together with our partners consider tie-back of this discovery to Irpa, for which we recently submitted a plan for development and operation,” says Grete B. Haaland, Equinor’s senior vice president for Exploration and Production North.

Following a major upgrade of the platform and the floating storage and offloading vessel, Equinor and its partners are now ready to produce oil and gas from the Njord field in the Norwegian Sea for another 20 years, after the field resumed operations at the end of December.

Vår Energi has announced a new gas discovery in the Barents Sea offshore Norway. The discovery is preliminarily evaluated at 57-132 million barrels of oil equivalent and has the potential to contribute to the future gas supply from the Barents Sea.

The first LNG cargo arrived in early January at Germany’s LNG new terminal in Wilhelmshaven which was inaugurated at the end of December.

Later in January, TotalEnergies announced the start-up of the Deutsche Ostsee LNG import terminal in Lubmin on the German Baltic Sea coast. This project, to which TotalEnergies is contributing a floating storage and regasification unit (FSRU) and supplying LNG, will make the company one of Germany’s main LNG suppliers, the French supermajor said.

Höegh LNG signed in mid-January the second binding 10-year Time Charter Contract with Germany for the FSRU Hoegh Gannet, which will be located at the Elbehafen LNG project in Brunsbüttel operated by Deutsche Energy Terminal GmbH.

U.S.-based Excelerate Energy delivered its FSRU the Exemplar at the port of Inkoo, Finland, at the end of December. The FSRU Exemplar, which is chartered to Gasgrid Finland for ten years, will provide flexible, reliable, and secure delivery of regasified LNG to Finland and other Baltic countries, Excelerate Energy said.

Low-Carbon Energy

The Crown Estate said in January it had signed Agreements for Lease for six offshore wind projects which could begin to generate green electricity by the end of the decade and have the potential to generate around 8 gigawatts (GW) of electricity, enough for more than seven million homes. Three of the six projects are located off the North Wales, Cumbria and Lancashire coast, and three are located in the North Sea off the Yorkshire and Lincolnshire coast. The agreements are the culmination of The Crown Estate’s Offshore Wind Leasing Round 4, adding further strength to the offshore wind sector’s track record in leading the UK's net zero energy transition, the Crown Estate said.

RenewableUK’s CEO Dan McGrail commented, “This announcement represents a major step forward not just for these major offshore wind projects but also for the industry as a whole, as these lease agreements will strengthen our energy security, create jobs and support development of new UK supply chains.”

Inverness and Cromarty Firth Green Freeport and Forth Green Freeport have been jointly selected by the Scottish and UK governments to become Scotland’s first Green Freeports. The two winning bids will be supported by up to £52 million in start-up funding and will benefit from tax reliefs and other incentives through a combination of devolved and reserved powers, the Scottish government said.

“Scotland has a rich history of innovation, trade and manufacturing and as we look to seize the many opportunities achieving net zero offers, the creation of these internationally competitive clusters of excellence will help us to create new green jobs, deliver a just transition and support our economic transformation,” Deputy First Minister John Swinney said.

The UK set a new record of wind energy generation on 30 December, a third record-high in a year, RenewableUK said.

“Wind is now the UK's cheapest source of new power, so every unit of electricity we generate from it helps consumers by reducing our reliance on expensive gas imports. Investing in more wind and other renewables is vital in tackling the cost of living crisis for hard-pressed bill payers,” RenewableUK’s McGrail said.

The new MAXBlade project – funded by the European Union and UK Research and Innovation – will look to develop the world’s largest tidal turbine blades, aiming to ensure the European composite sector becomes the international leader in tidal blade manufacture. The project plans to increase the area harnessed by Scottish tidal technology company Orbital Marine Power to generate power – known as the rotor swept area – by 70 percent, to more than 1,000 square metres.

Marine Scotland has awarded the European Marine Energy Centre (EMEC) with section 36 consent for its grid-connected Billia Croo wave test site off the west coast of Orkney, Scotland. Technologies over 1 MW can now demonstrate at the Billia Croo test site without having to apply for individual section 36 consents. This streamlines the consenting process for EMEC’s clients, reducing the time and cost associated with offshore demonstration.

The share of renewable energy in total German power generation jumped in 2022 to 48.3 percent, from 42.7 percent in 2021, thanks to a surge in onshore wind power generation, the German Federal Network Agency, Bundesnetzagentur, said in early January.

In Germany, bp announced plans to evaluate expansion of Germany’s green energy port with a new hydrogen hub. bp plans to evaluate the construction of an industrial-scale ammonia cracker and utilise repurposed oil/gas facilities to transport hydrogen at the new project, which would be located in Wilhelmshaven. The project is expected to include an ammonia cracker which could provide up to 130,000 tonnes of low-carbon hydrogen from green ammonia, per year, from 2028.

Norway’s Equinor and German energy major RWE have agreed to work together to develop large-scale value chains for low carbon hydrogen. The partners aim to replace coal-fired power plants with hydrogen-ready gas fired power plants in Germany, and to build production of low carbon and renewable hydrogen in Norway that will be exported through pipeline to Germany.

Also in Germany, RWE has signed power purchase agreements (PPAs) for some 1,500 gigawatt hours (GWh) per year with eleven industrial customers and one large municipal utility. RWE’s Nordsee Ost and Amrumbank West offshore wind farms will supply those customers with green electricity starting in 2025.

H2Carrier AS and Greenland-based company Anori A/S have signed a Letter of Intent to develop the first commercial wind farm in Greenland with subsequent production and export of green ammonia. The wind farm is projected to comprise 1.5 GW renewable energy which will supply power to H2Carrier’s floating production vessel for hydrogen and green ammonia.

Horisont Energi has entered into an option agreement on the location of an onshore terminal for the Errai carbon capture and storage (CCS) project in Norway. The receiving terminal for intermediate onshore storage of CO2 will be located in Gismarvik on the west coast of Norway. From there, carbon would be transported through pipeline to the North Sea, where it would be injected and permanently stored in an offshore reservoir. Errai is a key contributor to the goal of Neptune Energy – the other partner in the project – of storing more than carbon is emitted from the production and use of its sold products by 2023.

“We look forward to leveraging both our oil and gas operations capabilities as well as our significant global experience from operating carbon capture and storage activities,” said Neptune Energy’s Managing Director for Norway and the UK, Odin Estensen.

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