New research from Westwood Global Energy Group (Westwood) reveals that the availability of emission-lowering upgrades for offshore rigs has been on the rise but adoption of these new technologies is slow outside of Norway and the US Gulf of Mexico due to limited regulatory and financial incentives.
In a new report launching today, the specialist energy market research and consultancy firm reveals that the biggest users of rigs fitted with emission reduction technology are those with ambitious emission goals of their own, driven largely by Equinor’s Norway and Brazil operations. Between 2020 and 2032, Equinor’s contracted days of low emission upgraded rigs is 33,618 (92 rig years) compared to the combined number of days for all other operators, which is 43,600 rig days (119 rig years).
Teresa Wilkie, RigLogix Director, Westwood, says, “Drilling contractors, and the industry as a whole, are starting to realise that oil and gas will be imperative to energy security over the coming years. But that doesn’t need to come at the detriment of the energy transition. Rig operators have ambitious scope 1 reduction targets, and eco-friendly rig technology is keeping pace. The next step is for regulators to work with the industry to ensure that the framework is there to facilitate adoption of these new technologies in a financially sustainable way.”
Wilkie continues, “Norway is dominating as the biggest user of low-emission rigs, driven by the country’s carbon taxation regulations as well as incentivisation. Pair this with Equinor’s ambitious emission reduction targets and you have a ripe environment for low-emission rig adoption.”
Since the downturn in 2014, newbuild rig orders have almost come to a halt due to lack of demand, a mass oversupply of rigs and a resulting stack of newbuilds left abandoned in shipyards with no work. There is still a lack of appetite to invest in costly newbuilds and therefore a deluge of “green” newbuild rig orders is unlikely. Instead, it is expected that we will continue to see more of the current fleet retrofitted for lower emission operations.
Wilkie concludes: “Some drilling contractors are at the beginning of their emissions reduction journeys, while others have been working on emission-reducing technologies, projects, and studies for several years. By amalgamating the industry’s different and increasing efforts regarding this complex topic, we can better understand the trajectory of the industry, highlight new technologies and identify the areas of opportunity.”
Read the latest issue of the OGV Energy magazine HERE
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