Wind’s $168 Billion North Sea Boom Lures Oil Industry: Energy

April 30, 2012 by  
Filed under Green Energy News

Oil service companies led by Technip
SA (TEC) and Subsea 7 SA (SUBC) for the first time are working with wind
energy developers in the North Sea’s 14 billion-euro ($18.5
billion) a year market.

The offshore engineers plan to exploit the similarities
between building undersea oil installations and constructing
offshore wind farms and have both established renewable energy
units. Petrofac Ltd. (PFC) also offers expertise to wind developers in
the North Sea, where fossil fuels first discovered in 1966 are
being depleted as clean energy demand rises.

“The synergies available between offshore wind and oil and
gas are most apparent in the North Sea,” said Jayesh Parmar, a
London-based consultant at Baringa Partners LLP. “It makes
sense here to be operating in both areas.”

The move into renewable energy comes after Britain’s oil
and gas production shrunk more than half since peaking in 1999
at about 4.5 million barrels of gas and oil equivalent a day to
about 2.2 million barrels now, according to the Oil Gas U.K.
industry group. Production from Britain’s continental shelf has
fallen about 6.2 percent annually the past 23 years.

Drawing on offshore energy expertise and government
mandates to raise the amount of power derived from clean energy,
countries around the North Sea led by Britain plan to have 35.5
gigawatts of offshore wind projects by 2020 from 2.9 gigawatts
today, according to Bloomberg New Energy Finance. The total cost
of the increase will be 127 billion euros and the facilities
would provide 3.2 percent of the European Union’s electricity
demand.

Scotland, North Sea

Britain has about a third of the potential sites for
offshore wind farms in Europe off Scotland and in the North Sea,
more than any other nation.

“The offshore wind developers are now seeing the value of
having the oil and gas companies getting involved,” Subsea7
Renewables Vice President Bob Dunsmore said in a London
interview. “They’re moving into the environment we work in.”

For a 50-turbine offshore wind installation, as much as 25
percent of the capital expenditures are services work that can
easily be done by oil and gas companies, Parmar said.

As wind projects ramp up in size, the crossover with skills
and equipment is growing, said Will Rowley, an analyst at the
private subsea engineering group Acteon. The U.K.’s oil and gas
industry employs about 440,000, according to Oil Gas U.K.

The European Wind Energy Association predicts at least
446,000 will work in industries related to North Sea offshore
wind by the end of the decade, almost double today’s 192,000.

Conversely, countries like the U.S. and Brazil with major
oil and gas basins have yet to develop offshore wind projects of
significance due to permitting delays and local opposition.

U.S., Brazil

While three developers concluded agreements in the U.S. to
sell the power produced by their turbines, none have secured
financing. The Cape Wind project off Massachusetts has been in
development more than a decade.

Brazil, set to become the fourth-biggest wind turbine
market this year, is pursuing onshore farms, which are cheaper
to build for power than coal-fired plants.

So the focus remains on the North Sea for offshore wind and
related grid connections as Britain targets renewable energy for
a 7-fold increase in offshore wind to 13,000 megawatts by 2020.

At least 114 billion euros, and up to 152 billion euros, of
investments are needed in the next eight years to build as much
as 35,500 megawatts of offshore wind in the North Sea, including
Britain and Germany, according to New Energy Finance.

Germany, ending nuclear power production following last
year’s Japan disaster, wants to boost sea wind production to
10,000 megawatts, with turbines contributing as much as 5.7
percent of gross energy production. France wants to go from no
offshore wind production to 6,000 megawatts in eight years.

Shanghai Bridge

China, forecast to be the second-largest market for
offshore wind outside the U.K., completed its first project, the
102-megawatt Shanghai East Sea Bridge, in 2010.

China’s government is targeting 5,000 megawatts of offshore
wind by 2015 and 30,000 by 2020 yet lack of experience and
limited access to capital is likely to result in only 4.2
megawatts getting built within three years, according to BNEF.

Technip delivered the first floating offshore wind turbine
in 2009 and established an offshore wind unit last May after
acquiring the Scottish cable installer Subocean Group.

“We see offshore wind as a natural fit in wishing to
diversify and become a company involved with different aspects
of the energy business whilst still maintaining our core
capabilities,” Ron Coockson, head of offshore wind for Paris-
based Technip, said in an e-mail.

Support Vessels

The world’s biggest oil industry supply and crew ship
fleet, Bourbon SA (GBB), started doing work in the offshore wind
sector in 2010, Chief Operating Officer Gael Bodenes said in a
phone interview. Company crew boats, anchor-handling tugs,
offshore supply and subsea support vessels have worked on
projects in the U.K., Germany and Portugal, he said.

“There is no doubt that offshore wind will compete with
oil and gas for jobs and that’s good in some ways as it will
employ people as oil and gas declines,” SSE Plc director
Alistair Phillips-Davies said in a London interview.

Most of the skills to work on an offshore wind farm,
including installing pipes and cables, are the same as the oil
and gas sector, said Stephen Reynolds, a former oil and gas
engineer for Qatar Liquefied Gas Co. who now installs Siemens AG (SIE)
turbines at the 1,000-megawatt London Array wind project.

Sixty percent of companies recruiting for U.K. offshore
wind positions received applications from the oil and gas
sector, according to research by Trends Business Research Ltd.
for Renewable U.K.

“This is an opportunity to create highly skilled jobs and
that can’t be a bad thing,” Renewable U.K. training network
director Steve Green said.

To contact the reporter on this story:
Kari Lundgren in London at
klundgren2@bloomberg.net

To contact the editor responsible for this story:
Will Kennedy at
wkennedy3@bloomberg.net

Comments are closed.