10 minute read
News and
UPDATES FROM THE ENERGY INDUSTRIES COUNCIL
news&events
About the EIC Established in 1943, the EIC is the leading trade association for companies working in the global energy industries. Our member companies, who supply goods and services across the oil and gas, power, nuclear and renewables sectors, have the experience and expertise that operators and contractors require. As a not-for-profi t organisation with offi ces in key international locations, the EIC’s role is to help members maximise commercial opportunities worldwide. We do this in a variety of ways: Market insight
Helping members to track global energy projects and assets
Our projects database, EICDataStream, provides extensive information on more than 8,800 active and future projects in all energy sectors. By tracking full project lifecycles from feasibility to construction and then completion, it helps members to identify opportunities and plan their business development strategies. Our operations and maintenance database, EICAssetMap, puts the details of more than 4,000 energy facilities across The Americas, Asia Pacifi c, Europe and the Middle East at your fi ngertips.
High-profi le international events
Connecting members with buyers and partners
The EIC hosts fl agship industry events that bring together supply chain companies with global energy contractors and operators, and bespoke events that keep members informed about projects, sector developments and markets. Our overseas trade delegations and EIC-run pavilions at international exhibitions introduce members to regional energy markets and their major players.
Worldwide business support
Enabling members to expand into markets across the globe
Member companies who want to do business outside the UK can rely on our global network of offi ces to provide regional market knowledge, one-to-one advice and practical support. We also provide virtual and rental offi ces, and facilities for hotdesking, meetings, conferences and corporate events.
Business intelligence
Keeping members informed and raising their profi le
We help our members to stay connected with the world of energy through informative online news, e-bulletins, market reports and industry publications. Our comprehensive directory of member supplier services is also a useful resource for operators and contractors.
Industry courses
Enhancing members’ skills and knowledge
Our quality courses, which can be delivered off -site or in-house, are led by highly experienced trainers with industry backgrounds. We tailor our training to suit a variety of levels and also work with member companies to run programmes, some of which include tours to manufacturing companies.
Events coming up
Energy Exports Conference
When? 28 September – 1 October 2020 Why attend? The Energy Exports Conference (EEC) 2020 is now fully virtual and free to attend!
After the success of the inaugural EEC in 2019, this year’s event will run online across fi ve days, off ering export support and showcasing a whopping total of more than US$500bn in project opportunities.
Organised by EIC and partners, the Virtual Energy Exports Conference (vEEC) will feature more than 20 international delegations alongside operator, developer and contractor updates – companies include ADNOC, Petrofac, Aramco, Total, BP, Equinor, Shell, Bechtel and Wood.
More than 1,000 attendees and 100 speakers will convene online over the course of the conference.
A preview schedule of presentations will run in the three months preceding ‘vEEC Week’, allowing early access to key project information and one-to-one meetings while the week of the event will include thought leadership sessions, C-level panel discussions, Q&As with our speakers, plenaries and workshops.
More than 50 companies within the UK supply chain will virtually exhibit this year. If you are looking to enter or expand into global markets, vEEC 2020 is the perfect platform to raise brand awareness, showcase new products or services and meet buyers.
For more information, visit: exportsconference.energy
New reports out now
EIC Insight Reports: Survive and Thrive Volume IV
The fourth edition of the EIC Survive and Thrive Insight report is now out. Based on interviews with 40 EIC member companies, the report charts the course they have taken to grow against a backdrop of continued market uncertainty, UK-China trade tensions, OPEC disagreements, low oil and gas prices and COVID-19, compounded by very tight margins, fi erce competition, and Brexit.
The strategies more commonly employed by the 40 companies were: diversifi cation, the most popular strategy this year at 49%, followed by: service and solutions (44%), innovation (41%), collaboration (39%), optimisation (39%), culture (33%) and technology (28%). Other strategies were less well adopted: digital surprisingly is down at 26%, while transformation (28%) and energy transition (18%) are low. Once again, export is the least used growth strategy at 15%.
As well as detailing these individual growth strategies and lessons for industry, the report provides invaluable fi rst-hand information from the UK supply chain about what it needs from government to thrive.
The interviews for this research were largely carried out during the COVID-19 lockdown, and although the focus is mostly on growth strategies employed
by businesses before COVID-19 struck, the research does highlight several key post-COVID-19 lessons for industry.
The strategies put in place in this edition of Survive and Thrive have generated a massive £2.4bn, up on the £1.8bn in savings and new orders in 2019.
EIC Insight Report: Decommissioning
EIC’s latest Insight Report for energy professionals showcases the capability and capacity of the UK decommissioning industry and reveals the scale of opportunities in the shifting decommissioning landscape.
Drawing on data from EIC market intelligence tools – DataStream and AssetMap – the report explores market growth potential and tracks UK and international developments.
An estimated US$200bn will be spent on decommissioning globally over the next two decades – with around 49% spent on well plug and abandonment alone.
The report examines the UK, Europe’s largest decommissioning market, and identifi es emerging hotspots in the Middle East, Asia-Pacifi c and Latin American regions, as well as their unique challenges.
As one of the most mature markets, the UK is well-positioned to help set the decommissioning agenda for countries with preparations still at an early stage and export its worldleading expertise.
For companies wanting more information on these reports, please visit: www.the-eic-.com/ Publications/MarketIntelligenceReports
The future of
The giant Groningen gas fi eld has been fuelling Europe’s energy needs for decades. As the Dutch wind down production,
Christian Beasley
at ZTP says Groningen’s volumes can be easily replaced
The signifi cant 1959 discovery of the Groningen gas fi eld – the tenthlargest in the world – had global ramifi cations: fi ring the starting gun for North Sea exploration, the UK’s Continental Shelf Act 1964, the formation of the Brent benchmark, and the economic phenomenon the ‘Dutch Disease’.
Production started in 1963 and increased to a peak of 87.7BCM in 1976. It supplied Benelux, France, Germany and the UK. Unlike other natural gas high calorifi c grades, it had a relatively high nitrogen content, resulting in lower calorifi c value.
In March 2018, after several small but damaging earthquakes, Dutch Prime Minister Mark Rutte announced that production would be phased out by 2030, later revised to 2022. What is the outlook for European gas post-Groningen?
Stepping out from big brother’s shadow
Natural gas is the low-carbon fuel of choice for reaching net zero. It is poised to plug power generation gap left by coal, as the non-weatherdependent choice. The necessity to transition away from coal-fi red generation to meet climate goals is felt acutely in Germany.
The total gas demand in the EU was around 459BCM in 2019. The source of EU gas is shifting: EU production was down 12% YoY, with Groningen production decreasing to 23% YoY, whereas LNG imports increased by 42% YoY.
There is a strong correlation between GDP and gas demand. The IMF forecasts EU GDP to fall 7.1% in 2020, impacting demand for gas, while LNG demand is down 2.3% in the Northern hemisphere.
There is no clear single solution for plugging the gap in European supply demand. Instead there are multiple alternatives, including new gas infrastructure, such as Nord Stream, LNG cargoes and, in the longer term, hydrogen blending.
The beast from the East
The obvious alternative to Groningen would be Gazprom’s Nord Stream II and its 55BCM per year capacity, which roughly equates to Groningen’s production in 2011, or approximately double 2019 production. However, the Russian state-owned Nord Stream does not come without controversies.
The US worries over NATO nations’ reliance on Russian energy exports. Nord Stream II negates the need to transport natural gas through troubled Ukraine; in the event of a potential confl ict, Russia could turn off the tap to NATO nations, similar to the strategy deployed against the Ukrainian Power Grid in 2015. During the past year, Nord Stream has been hit by multiple US sanctions, and there has been no off shore work since December 2019. However, Putin remains resolute that the pipeline will be operational from Q4 2020/Q1 2021.
Unattractive investments
Nord Stream is likely to be the last Northern European major hydrocarbon infrastructure investment we will witness. Given the EU’s push for hydrogen to be a central element in energy system integration, the existence of robust North Sea pipelines and Nord Stream II in the offi ng, there is likely to be no additional demand for further infrastructure.
Besides, major international fi nanciers such as Blackrock, BNP Paribas and state sovereign funds have signalled an end to investments in the carbon economy. Risking the billions required to develop new submarine pipelines is unlikely to be an attractive prospect for reputation-conscious and profi t-hungry investment fi rms.
LNG imports?
In 2019 Europe imported 108 MCM of LNG, much of which was American and Qatari. Natural gas is a by-product of crude production. By 2019, the shale revolution enabled the US to become the world’s top crude producer and a signifi cant LNG exporter. However, by the end of Q1 2020 OPEC+ had failed to agree product cuts, fl ooding global markets with cheap product and causing the WTI crude price to turn negative. As a result, the US rig count has dropped signifi cantly since April, along with the source of cheap LNG.
Looking to the medium and long term, Europe cannot rely on the cheap US and Qatari LNG cargoes to feed demand when supply and pricing fundamentals remain so changeable.
A cleaner future
The rise of the corporate green agenda has seen increased demand for clean energy by industrial and domestic users alike. There is an extreme price premium placed on green gas, making it, for now, non-viable to plug a Groningen-sized hole. However, with technological advances, hydrogen blending may be a feasible option.
Keele University is currently, and successfully, conducting a six-month trial blending 20% hydrogen into the gas supply to feed 100 homes and 30 academic faculty buildings. The 20% blend is one of the highest concentrations in Europe and, if rolled out, could save 6m tonnes of CO2 – the equivalent of taking 2.5m cars off the road. Northern Gas Network and H21 have proven that the current gas network can transport 100% hydrogen. H21 aims to deliver 100% hydrogen (85TWh of energy) to an eighth of the’s UK gas users.
The future is bright but diff erent
The future looks diff erent. The discovery of another fi eld the size of Groningen is highly unlikely, but does Europe need one?
In the short term, European gas storage is relatively full, aff ording a buff er and enough time for the Nord Stream II project to be completed this winter.
In the medium term, supply from LNG and Nord Stream pipelines and North Sea fi elds should alleviate any supply strains.
Longer-term, there will be some degree of hydrogen blending, most likely to start at a 20% blend and then increasing over time to 100% as part of a wider move to decarbonise heating, the economy and our lives.
By Christian Beasley, Risk and Market Analyst, ZTP
Plugging the Groningen gap
European natural gas storage inventories were
73%
full at the end of May 2020
55BCM/ year
Nord Stream II will be able to cover 45% of the new gas imports required in the EU in the next two decades
By 2035, global gas and LNG supply is set to rise to
635BCM
– 50% of which will be driven by the US
Hydrogen could provide up to
24%
of total energy demand in the EU by 2050
