Interview by Moray Melhuish – Founder of Annet Consulting, an Offshore Wind and Subsea Specialist
Can you please introduce Cerulean Winds to us?
We are a green energy infrastructure developer, committed to delivering floating offshore wind developments which benefit the environment and the UK supply chain.
We have a big, bold proposal, which is ready to go, on scaling the green economy, creating thousands of jobs and making Scotland’s oil and gas production the cleanest in the world.
We’ve been working for over two years on a scheme to decarbonise the UK’s oil and gas sector at pace and at scale, using offshore floating wind to provide green power to electrify North Sea platforms with the excess power producing green hydrogen.
We are bidding for four seabed lease sites in Crown Estate Scotland’s INTOG leasing round to decarbonise the UK’s oil and gas sector as this scale will remove more emissions quickly, keep costs lower for platform operators and provide the anchor for large-scale North-South offshore transmission.
With well over £6 billion of investment proposed for each 100-turbine site, the scheme would abate tens of millions of tonnes of CO2 in line with North Sea Transition Deal targets.
FOUR 1.5GW sites for floating offshore wind - decarbonising Oil and gas production in the North Sea and generating 10,000 jobs. That's an incredible vision. For context, that's equivalent to 28% of new capacity delivered by the offshore wind industry in 2021. What timescales are you working to, and what challenges do you see ahead?
The timescales have essentially been set by government in the North Sea Transition Deal whereby the targets are to reduce emissions by 25% in 2027 and by 50% by 2030. Crown Estate Scotland is likely to award the INTOG leases in Q3 of 2023 and developers will have to be at final investment decision (FID) stage in 2024. Our development is bold and ready to go within those timescales.
Over the last two years, we’ve been refining and engineering our scheme and have engaged widely with the supply chain. More crucially, we have already locked in our tier 1 contractor partners.
One of the main challenges is going to be investment in the supply chain. Together, INTOG and Scotwind present a massive opportunity for the supply chain in Scotland and the UK – with many elements in the fabrication and assembly to be carried out in Scotland for the first time. The key question is how do we gear up for this and how much investment can happen in the supply chain in time to meet the timescales? We simply cannot afford any delay as this is all about emissions abatement in a climate emergency.
Who is behind Cerulean Winds?
Myself and Mark Dixon founded the business. We have already announced NOV as our main contractor and have a consortium of tier 1 contractors in place as well as a number of industrial and financial partners, leading financial services groups Société Générale and Piper Sandler, who have robustly engaged the financial markets.
Mark and I have extensive experience in the offshore sector, particularly in deepwater subsea. We’ve held various leadership roles across multinational corporations advising on the planning, construction, and operation of some of the largest offshore projects. We have significant experience managing integrated contracting and project finance to enable funding of major capital projects from the financial markets, including both UK and international development with a variety of commercial models and Build Own Operate Transfer (BOOT) funding constructs.
Assuming you are successful in your bid - and I sincerely hope you are - what's the plan to deliver the projects?
As already outlined, our scheme is fully financed and ready to go. We’ve done the engineering, we’ve engaged with stakeholders, we’ve got our tier 1 contractors in place. We just need the rights to the leases.
How important is sustainability and local content in your design and procurement decision making?
Sustainability is at the heart of our development as it aims to decarbonise oil and gas by producing clean, green energy to electrify platform and produce green hydrogen. With soaring energy prices and a growing reliance on imported oil and gas that comes at a higher carbon price, the energy transition requires oil and gas to be produced while renewable energy is scaled up sufficiently enough to constantly power homes, hospitals, businesses and industries. Taking action now to make the UK’s oil and gas sector’s production the cleanest in the world will remove vast amounts of emissions whilst protecting UK energy security, lowering energy prices and accelerating the green energy revolution, creating thousands of local jobs.
Local content is also critical. We have a genuine intent to create major opportunities for the UK supply chain. Delivering the projects that will come out of INTOG and Scotwind will require investment of a scale not seen in the North Sea for decades. Cerulean, along with its main contractor, NOV, are committed to maximising Scottish and UK content in the delivery of its scheme, far exceeding the target of 50% set through the INTOG process. Together, we have been developing a supply chain strategy with the NSTA and have issued a Request for Information to UK companies to ascertain their capabilities and capacity in complete floating foundation fabrication and assembly.
The deadlines set by the North Sea Transition Deal and the quantity of green energy infrastructure required to meet these, mean that there is a very real challenge in terms of delivery scale and speed. There is a need for a production line approach, much more akin to making a car than an oil and gas facility, so that one unit a week is being produced at peak production rates to deliver the total quantity of units needed within the timescales to maximise the potential emissions abatement.
And with limited fabrication capacity in the UK, every bidder will have to bring in overseas know-how and capacity to meet the timescales. It is Cerulean’s intention that its partners will help to establish fabrication in the UK and work with the yards here. This will present inward investment opportunities as well as help build out capacity in fabrication in the UK, that will help pave the way for what’s required to deliver Scotwind projects.
Ultimately, Cerulean’s ambition is to see capacity of UK yards built out so that both fabrication and assembly can take place in the UK, but this is a longer-term undertaking and must be part of an on-going dialogue with industry, government and other stakeholders. A clear supply chain strategy from government will help.
Meanwhile, Cerulean is using all the levers at its disposal to ensure the UK can fully capitalise on the supply chain opportunity. This includes being smart with the floating foundation designs chosen. By using tri-floaters, which can reside in shallow water, fabrication and assembly can happen in the UK.
We hear a lot about Offshore Wind and Green Hydrogen - tell us about your plans in this area?
Our scheme uses floating offshore wind to provide clean, green energy to electrify oil and gas platforms. The scale – and basin-wide approach - we are proposing makes the project economics appealing for providing affordable green power to the platforms to replace gas and diesel generation through a combination of green electrons from wind and molecules from hydrogen.
Power from wind is intermittent. The excess power cannot go into the national grid so our development has been designed to convert the excess power into green hydrogen which can be easily stored and transported. This “bonus” opportunity mans that we will bring largescale hydrogen plants to Scotland which are capable of supplying hydrogen domestically – particularly for industrial use – but also, potentially, for exporting.
You have mentioned your plans for INTOG offshore Scotland - what other markets do you see as promising for Cerulean?
At the moment we are wholly focused on the UKCS – where there is a high amount of wind and a concentration of subsea expertise for offshore floating wind.
Once our development is proven, we will explore other oil and gas basins where there’s a lot of wind! Other governments globally are recognising that the oil and gas industry has to be cleaned up and we aim to prove that it can be done through schemes like ours.
In 2022, Energy Security for Western Europe has become a major issue. How can the Offshore Wind industry speed up its project cycle?
It’s essentially all about the regulatory framework and the supply chain. The consenting process needs to be streamlined and accelerated and there needs to a clear supply chain strategy between government and industry to ensure that the right investment is made at the right time so that the supply chain can support the developers with major new projects.
What policy changes are needed to make that happen?
INTOG is a result of government listening to industry and creating the right framework and process for bidding for seabed leases to decarbonise oil and gas. We need greater alignment of regulators, industry bodies and government bodies and acceleration of the consenting process to deliver projects at scale and at pace to tackle the climate emergency and deliver a just transition.
The COP 27 Climate Change conference will take place this November, in Egypt. What decisions would you like to see made?
The UK has recognised that oil and gas production must be decarbonised. COP27 should mandate that all oil and gas basins must decarbonise. We can demonstrate that it can be done at scale and at pace, making a major impact on emissions abatement. Egypt has a similar oil and gas industry to the UK, in terms of maturity so that would be a good place to agree this.
Can you talk us through how you came to found the business?
Our DNA is in floating offshore deepwater structures. We’ve got experience in engineering companies at every stage - from FEED through to operation. We’ve also had extensive experience of successfully bringing integrated contracting to the upstream oil and gas sector including contractor-backed project finance.
We spotted the opportunity to bring all this experience and expertise to the challenge of decarbonising oil and gas using floating offshore wind.
What are the biggest challenges you have faced in the Cerulean Winds journey so far?
The biggest challenge was the lack of alignment among key stakeholders.
When we designed our development to decarbonise the UK’s offshore sector, there was no alignment among stakeholders – government departments, regulators, industry bodies etc. It was very difficult to know who to speak to about what was essentially the first integrated energy scheme that would decarbonise oil and gas while producing clean, green energy that doesn’t need to feed into the grid.
We initially put a proposal to Marine Scotland to acquire seabed leases from Crown Estate Scotland. Following significant consultation with Marine Scotland and Crown Estate Scotland as well as the various oil and gas and energy regulators and other government departments, it was agreed that a competitive process should follow. INTOG was designed as a result to be the vehicle to attract and award schemes that will address the challenges of decarbonising oil and gas, reducing emissions and solving energy transmission.
There's an ongoing contest in the UK right now, to decide who will be the next Prime Minister. If it was to be you, what would you do first?
Make sure that schemes like ours which address climate change, while securing energy supply, create jobs and opportunities in the UK supply chain are accelerated.
How do you define success for Cerulean Winds?
Securing all four sites in the INTOG bidding process. This would decarbonise North Sea oil and gas production at pace and at scale in a way that is cost-effective for the operators. Our basin-wide scheme will be good for UK plc – the supply chain and its people - and good for the planet!
After that, it’s about exporting our experience and knowledge globally ensuring the UK becomes a world-leader in decarbonisation of oil and gas, offshore floating wind and green hydrogen.
How would you define success for yourself personally?
That’s easy – being associated with a major project that drives real change by abating emissions and creating jobs and opportunities in the UK supply chain!
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