Energy Focus Winter 2021 by Energy Industries Council

energyfocus

ISSUE 42 WINTER 2020-21

F ROM T H E E N E RGY I N DUST R I E S COU NC I L ENERGY TRANSITION Australia’s energy overhaul oﬀers opportunities for UK low-carbon solutions

RENEWABLES Floating oﬀshore wind, the key to a net-zero North Sea

OIL AND GAS LNG: The ideal bridge to a lowercarbon future

POWER UK innovation needed to help Morocco meet 100% renewables target

Countdown to net zero INSIDE:

Baroness Brown View from the top

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The call for the 2020s to be a decade of action and progress for sustainable development is loud and clear, but can we deliver net zero by 2050?

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Contents ISSUE 42 WINTER 2020-21

06 FROM THE EIC

ENERGY TRANSITION

5 Foreword

18 Towards a cleaner, smarter energy future

From the Chief Executive

6 View from the top Baroness Brown DBE FREng FRS, Deputy Chair, Climate Change Committee

10 News and events

Miranda Taylor, CEO, National Energy Resources Australia

21 Delivering skilled workers for a low-carbon future

Baroness Brown, Julia King DBE FREng FRS

OIL AND GAS 26 Pathways to a new future – the LNG bridge Christian Beasley, Risk and Market Analyst, ZTP

Big oil to big energy

Chris Claydon, CEO, Engineering Construction Industry Training Board

POWER

Updates from the EIC

20 Powering the energy transition

12 The big question

Karim Wazni, Managing Director, Aggreko – Microgrid and Storage Solutions

What is the role of the supply chain in the energy transition?

RENEWABLES

31 Upgrading Morocco’s electricity system

14 Big oil to big energy

22 Maximising the potential of the energy transition

Nabil Jedaira, Future Energy Leader, World Energy Council, and Senior Business Development Manager, EDF

Lucy Woods asks: can oil and gas majors transform by 2050?

Ralph Torr, Programme Manager, Oﬀshore Renewable Energy Catapult

34 My business

David Clark, CEO, Vysus Group

Energy transition opportunities in Australia

NUCLEAR 32 Delivering net zero Tim Yeo, Chair, New Nuclear Watch Institute

A net-zero North Sea

Nuclear for net zero

The Energy Industries Council 89 Albert Embankment, London SE1 7TP Tel +44 (0)20 7091 8600 Email info@the-eic.com Chief executive: Stuart Broadley Should you wish to send your views, please email: info@redactive.co.uk

Editors Sairah Fawcitt +44(0)20 7880 6200 sairah.fawcitt@redactive.co.uk Mark Risley +44(0)20 7091 8600 mark.risley@the-eic.com Account director Will Hurrell Production director Jane Easterman Senior designer Gene Cornelius Picture editor Akin Falope Content sub-editor Kate Bennett

Energy Focus is the oﬃcial magazine of the Energy Industries Council (EIC). Views expressed by contributors or advertisers are not necessarily those of the EIC or the editorial team. The EIC will accept no responsibility for any loss occasioned to any person acting or refraining from action as a result of the material included in this publication.

Publisher Redactive Media Group, Level 5, 78 Chamber Street, London E1 8BL Tel: +44(0)20 7880 6200 www.redactive.co.uk

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Foreword Stuart Broadley CEO

From the Chief Executive: In this edition we explore the energy industry’s ambitions to move ahead to net zero before and after this year’s COP26 conference in Glasgow

‘People have got the message that this is serious and has to happen.’ These are the closing words of Baroness Brown of Cambridge, this month’s View from the top interviewee. She sums up what many governments, thoughtleaders, activists and, increasingly, industry bosses want 2021 to be about. COP26 will be taking place in Glasgow in November of this year, and with US President Joe Biden now also signing up to net-zero carbon commitments by 2050, it is likely that all the world’s leaders will be there to create the next globally binding series of decarbonisation and sustainability commitments. What a year it could be! The challenge will be how to match the pace of ambition that will undoubtedly come from COP26 with the ability of industry and the behaviour of society. The EIC projects database EICDataStream lists 10,000 CAPEX projects already announced and due to be commissioned globally during the next five years, totalling US$10trn. It makes sobering reading in terms of the mountains we need to climb in order to truly decarbonise the planet. Oil and gas investments, across upstream, midstream including LNG, downstream and decommissioning, will remain by far the largest global energy investment market by value for the next five years and beyond, at approximately two-thirds of total global spend. This underpins the fact that the existing energy supply chain – currently the subject of huge PR campaigns to de-oil – will have to continue to rely on oil and gas clients and traditional hydrocarbon

projects in order to survive for at least the next five years. Mature renewable markets, namely onshore wind, offshore wind and solar PV, are growing fast, largely due to the amazing work at COP21 and the Paris Climate Accord. This now accounts for approximately one-quarter of the market value for the next five years – great progress, but not enough to feed the hungry energy supply chain. Mature renewable projects are typically low margin and fully commoditised, and are the new target of international oil companies that need to diversify fast to meet net-zero commitments. This sector is their stated target for taking an initial low-risk, low-cost turn into the green space. This will make the space crowded and put it under even more cost pressures. Finally, the energy transition market, covering hydrogen, CCUS, energy storage and floating offshore wind, is in its infancy globally and is more than five years from being at scale; its cumulative market value is just 2% of the global market during the next five years. This is a reality check – we all love to discuss the energy transition, but it’s not yet something to exclusively diversify into. It’s a future market: exciting for sure, but companies should look elsewhere in the short term for the majority of their investments and revenues.

Stuart Broadley Chief Executive Oﬃcer, Energy Industries Council stuart.broadley @the-eic.com www.the-eic.com | energyfocus

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From the EIC Q&A Baroness Brown DBE FREng FRS

View from the top Q&A: Baroness Brown DBE FREng FRS

The early legislation of the Sixth Carbon Budget will be crucial

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Q&A Baroness Brown DBE FREng FRS: From the EIC

IMAGE: GEOFF CRAWFORD

Energy Focus talks with Julia King, Baroness Brown of Cambridge, Deputy Chair of the UK Climate Change Committee, the UK’s independent adviser on tackling climate change

Following the recently released Sixth Carbon Budget and Energy White Paper, what is now needed from government? Implementation. We’re going in the right direction regarding renewables: the commitment to deliver 40GW of offshore wind by 2030 is on the way to the Climate Change Committee’s (CCC) ‘balanced pathway’ recommendation of around 100GW of offshore wind by 2050. The Hydrogen Strategy, which is (hopefully) out this spring, will be critical to getting hydrogen into the mix and putting us on the pathway for net zero. But we need to see more action on decarbonising the highestemitting sectors: heating and transport. The forthcoming Heat and Building Strategy from the Department for Business, Energy and Industrial Strategy (BEIS) must be ambitious enough to drive immediate progress. We also need significant policy measures to increase electric vehicle charging points and to support the widespread uptake of electric vehicles. The early legislation of the Sixth Carbon Budget will be crucial as it will both show the Government’s intent and help investors recognise which projects need investment. How ready do you think government departments are to coordinate and deliver the heavy work on policy needed to achieve net-zero goals? While high-quality people are working in these areas, coordination arrangements are still evolving. What is critical is that the Treasury supports all these initiatives from BEIS, the Department for Transport and the Ministry of Housing, Communities and Local Government. It would be good to hear more about how the Cabinet Committee on Climate Change intends to drive cross-government coordination to deliver the policies, measures, and actions needed to get to net zero. Engagement with BEIS, industry, stakeholder groups and working parties is good. Still, I’d like to see more coordination with local authorities, as they can play an important part in decarbonising transport and housing, as well as encouraging businesses and individuals to take action.

What you do see as the key risks that may prevent net zero being achieved? Behaviour change and decarbonising heat. We need to find ways to encourage more people to adopt low-carbon heating instead of traditional gas boilers. The Treasury has to look at how we can make it so that the costs of energy transition are borne by those who can afford to pay, and do not fall unfairly on those least able to pay. Although we need to encourage the use of increasingly green and increasingly cheaper electricity and discourage the use of gas, there’s no carbon price on gas. At the moment, gas is less expensive than electricity. So, the Treasury needs to sort out where the costs fall in this transition, and move costs so that the solutions we want people to adopt become the cost-effective solutions. During COVID-19 we have seen a shift in the focus of the climate change debate. Do you anticipate that the accompanying change in government rhetoric is in danger of stifling export and talent in certain sectors, rather than fostering it? No. We only have 30 years to reach net zero, and we need to see some sectors transforming fast. One great example is Ørsted, formerly DONG Energy. In the last 12 years, the company has successfully transformed its operations from almost wholly oil and gas to renewables. We need to help support new technologies and business models in order to encourage transition. The earlier we can do this in the UK, the more export opportunities it will generate. COVID-19 has shown us that we can accelerate the development and delivery of new technologies. We have enormous advantages in the UK for hydrogen production, and we have a developing supply chain in terms of electrolysis and carbon capture and storage (CCS). These are future export industries for equipment services, capability, and also potentially hydrogen itself. Companies need to look at the skill bases they have and the value of their capability, and then recognise where they can apply that capability in the transition to net zero.

About Baroness Brown Baroness Brown is Deputy Chair of the UK Climate Change Committee and the UK’s Low Carbon Business Ambassador. She is also Chair of the Sir Henry Royce Institute for Advanced Materials, Chair of the Carbon Trust, and a Nonexecutive Director of the Oﬀshore Renewable Energy Catapult. She is a Fellow of the Royal Academy of Engineering and the Royal Society. Her career spans senior engineering and leadership roles in industry and academia. She was non-executive director of the Green Investment Bank and led the 2008 King Review on decarbonising transport. She is a Fellow of the Royal Academy of Engineering and of the Royal Society, and was made DBE for services to higher education and technology. She is a crossbench peer and a member of the House of Lords EU Select Committee.

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From the EIC: Q&A Baroness Brown DBE FREng FRS

pipework costs and so on, clustering is a very sensible approach (particularly around the coast). Clustering can also increase employment in the regions that are most in need of transition support. In the Hull and Grimsby area, there has been a dramatic reduction in male unemployment since the arrival of the Siemens factory and the oﬀshore wind developments.

How can we spur private investment in low-carbon energy infrastructure? By providing clarity and certainty. Legislating the Sixth Carbon Budget would be an excellent stake in the ground, but we also need a long-term view of the support mechanisms. For example, what will happen with the contracts for difference for offshore wind and other new renewable technologies? If we can show how they’re going to work and how long for, then organisations can plan. We also need government commitment to long-term investment in an expanding, high renewables grid. By 2050, the electricity system needs to double in size. How can we incentivise consumers to shift to lowcarbon energy? One of the most problematic areas is heating people’s homes; the challenge is incentivising homeowners. The savings you make from transitioning (medium to long term) are likely to be more significant than the additional cost, so the Treasury needs to think about communicating that. By the 2030s renewable electricity will be cheap, but people still think of electricity as more expensive than gas. Then there’s also the challenge of fuel poverty – transitioning shouldn’t hurt the people who are least able to pay. Are consumers willing to pay for hydrogen-fuelled heating despite potential safety concerns and higher bills? The CCC’s ‘balanced pathway’ scenario has around 11% of UK homes switching to hydrogen-fuelled heating, and these are likely to be near an industrial cluster or offshore wind, so the hydrogen is locally produced. For safety, community information and education campaigns will be important. But we also need to make sure people are using as little energy as possible. We shouldn’t put new technologies into homes until we’ve improved insulation. Looking at how to ‘build back better’, what policies would you advocate to help support UK supply chain companies? Government support for retraining is going to be necessary. The transition will generate many new, high-quality jobs in the UK. For

We need to see more action on decarbonising the highest-emitting sectors: heating and transport example, millions of homes need better insulation and new heating, which could create a huge number of skilled UK jobs and reduce fossil fuel imports. Analysis suggests developing a green economy will also increase the UK’s GDP (compared to business-as-usual). It’s win-win. The ambition for 40GW of oﬀshore wind by 2030 is an opportunity for some UK companies. There will be an auction for 12GW of renewables later this year. There is also funding for CCS projects. Supply chain companies need to be ﬂexible and futurefacing to deliver the upcoming project pipeline. The UK government is eager to develop key manufacturing bases as part of transition. How important are these ‘green energy clusters’? The UK needs CCS. Clustering hydrogen production, power generation and/or the manufacture of fertiliser, cement, and steel alongside CCS is logical. These industries require the same infrastructure, so to reduce

Considering the legacy of UK offshore wind, and the economic fallout from COVID-19, would you advocate for ‘local content requirements’ to protect UK supply chains, or would you suggest other levers? UK content expectation is a good start, alongside support for companies to become more competitive. When seeking new, cost-efficient supply chains, one challenge seen in offshore wind is that companies formerly in oil and gas need to understand the margins in offshore wind are much smaller. Supply chains also need to rethink processes: how to reduce costs to remain competitive, but also so that renewable energy projects can be low cost. If we have high-priced UK content, it could raise renewable generation project costs significantly. The government needs to think about the balance of prioritising low-cost or UK content and how it can assist UK supply chain companies in reducing costs to get the best of both. What can the energy industry do to entice young people, especially women, to join its ranks? The energy industry needs to commit to recruitment changes, to think about how and why and where it recruits. The sector should communicate clearly that it is part of the solution to climate change, as many young women are attracted to the environmental side of the net-zero transition. But it also needs to combat incorrect stereotypes – for example, people in hiring positions assuming women can’t go offshore! We need to update the images of these jobs, especially as we’re now using more remote technologies. Women, minority groups, disabled people – all sorts of people – need to know that not only are these jobs they can do, but they are also rewarding, exciting jobs that are really making a difference.

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Q&A Baroness Brown DBE FREng FRS: From the EIC

While the UK government’s climate roadmap for COP26 has ambition, the government is short on tangible progress. What must the UK deliver in time for the November 2021 conference in Glasgow? The first thing is the Sixth Carbon Budget legislation. It is the first budget that will be aligned with the net-zero target and the UK’s revised nationally determined contribution. It would be great to see clear change in BEIS’s Heat and Buildings Strategy. We’ve got a good story to tell on decarbonising the power system, but we haven’t yet got a good story in buildings. In transport, many of the foundations are in place: during COVID-19, there has been a huge increase in electric vehicle registration, and a significant decrease in the registration of diesel and petrol vehicles. If we can build on that, it will show the UK is starting to move forward – and that’s key for us to influence others.

IMAGE: GEOFF CRAWFORD

Is there an opportunity for the UK, as COP26 host, to lead on decarbonising technology, commitments and investments? We should support other countries’ abilities to adapt, and others’ carbon emission reduction targets – particularly developing countries where we already see extreme climate change impacts. The government is focusing on the UK becoming a green ﬁnance centre to support projects worldwide and help everybody transition to net zero. We need to make progress on trading systems for carbon emissions. Then the UK can potentially buy oﬀsetting services from developing countries – but only to help us go beyond net zero – which can help fund programmes to decarbonise and improve resilience. What happens to UK climate ambitions if the rest of the world delays climate action? We will get to COP26 with most of the global community signed up to net zero for around 2050. China is committing to net zero by 2060, India is starting to move, the new US president supports action. Companies are signing up to net-zero targets in large numbers. We’re also seeing more local and regional commitments. We will have enough momentum by November. People have got the message that this has to happen.

CCC: The 2020s must be the decisive decade of action

78% Polluting GHG emissions must fall by 78% by 2035

2033 End home gas boiler sales by 2033

£50bn Low-carbon investment must scale up to an annual £50bn by 2030

<1% of GDP

All new boilers should be hydrogenready by 2025 5.5m heat pumps installed in homes by 2030

Net cost of net zero during next 30 years

2032 By 2032 all cars and vans sold must be fully electric, including plugin hybrids 280,000 public EV chargers needed by 2030 All new trucks sold by 2040 must be low-carbon

UK aviation to be

Clean electricity grid by 2035 with reliance on offshore wind – build on 40GW of capacity in 2030 to 65–125GW by 2050 Widespread rollout of CCS in the 2030s Hydrogen used at scale in the late 2020s, ramping up significantly to 2045 Build enough new nuclear to replace the current fleet by 2035

net zero by 2050

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U P DAT E S F RO M T H E E N E RGY I N D U S T R I E S C O U N C I L

news&events Upcoming EIC Connect events in 2021 EIC Connect Virtual Clean Energy UAE

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-proﬁt organisation with oﬃces in key international locations, the EIC’s role is to help members maximise commercial opportunities worldwide.

Events EIC LIVE e-vents Last December, the EIC announced the winners of the prestigious 2020 EIC Awards, with 13 companies sharing the top prizes in 12 categories, and one lucky Rising Star winning a scholarship worth £18,500 at the Robert Gordon University. STATS Group picked up the biggest award of the night, the EIC Company of the Year, with the company’s winning submission in the 2020 EIC Survive and Thrive Insight Report highlighting the success of its patented BISEP® technology. Over the next few months, we have some exciting virtual events and conferences to look forward to, many of which are free to attend for EIC members, including EIC Connect Clean Energy UAE in February, and EIC Connect Virtual Vietnam and EIC Connect Virtual Energy US in March. Plus, do not miss the Road to COP26 events we have planned in the lead up to the UN climate conference taking place in Glasgow this November. To ﬁnd out more and book onto our latest events, visit www.the-eic.com/ events/fulleventsdiary

When: 23–24 February 2021 Why attend? Now in its 10th year, EIC Connect Clean Energy UAE will bring together leading national operators, EPC contractors, developers and OEMs to highlight clean energy opportunities across multiple sectors in the UAE.

IMAGES: SHUTTERSTOCK

About the EIC

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From the EIC News and events

This two-day virtual conference and exhibition will provide updates on the current market and deliver supply chain briefings on current opportunities, as well as providing support and guidance for newer exporters.

EIC Connect Virtual Vietnam When: 16–17 March 2021 Why attend? EIC Connect Virtual Vietnam returns by popular demand after three years since the inaugural edition, with 2021 promising to be bigger than ever. With keynote speakers from Vietnam’s Ministry of Industry and Trade and many more speakers soon to be announced, the event promises to highlight actionable business opportunities from leading energy companies in the country. Hear project updates and sector requirements in a series of webinars across the two days, with the chance to meet the speakers in a series of ‘speedy meet’ sessions also available on demand.

EIC Connect Virtual Energy USA When: 30–31 March 2021 Why attend? Join us for the EIC Connect Virtual Energy USA two-day conference on 30–31 March to hear from confirmed speaker companies including

ExxonMobil, Bechtel, BP and many more. Gain a deeper understanding of the project opportunities in the US oil and gas, renewables and energy transition sectors in a series of short webinars, as well as focusing on innovative solutions and market opportunities for small-to-medium enterprises across the energy sectors. To ﬁnd out more and book onto our latest events, visit www.the-eic.com/ events/fulleventsdiary

Vietnam returns by popular demand after three years since the inaugural edition

REPNEW O OUTRTS NOW

Reports EIC Insight Report: Small Modular Reactors The global framework for the nuclear energy market has faced radical changes during the past decade. Small modular reactors (SMRs) display an enhanced safety performance through inherent and passive safety features, offering a renewed overall interest in nuclear energy. With flexible power generation demands and the race to reach net-zero carbon emissions, the development and use of SMRs may lend a helping hand to reach the world’s green future.

EIC Insight Report: Energy g y Storage g The energy storage market has a crucial role to play in the transition to a net-zero carbon emission future, as evidenced by the current projected growth trends across diﬀerent technologies and markets, as well as the ongoing debates on ﬂexibility in energy systems. The EIC Insight Report on Energy Storage offers a high-level overview of some of these key technologies securing interest and attention from the industry. To buy or download your copy of these reports please visit: www.the-eic.com/Publications/ MarketIntelligenceReports www.the-eic.com | energyfocus

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From the EIC Members’ comment

The

BIG question

What is the role of the supply chain in the energy transition?

A sustainable supply chain is now a business imperative and critical to the success of the organisation as a whole. Energy Focus asks four members what the energy transition roadmap means to them. Energy Focus puts the big question to four members

John MacAskill

Stephen Booth

Group Marketing Director at AqualisBraemar LOC

Subsea Managing Director at Crondall Energy

The energy transition is seen as an opportunity for AqualisBraemar LOC. We recognise that sustainability is central to our business. So understanding where we are positioned, and more importantly, where we want to be in 10 years, drives our strategy and day-to-day decision making, and is vital for our company’s future and the world in which we operate. We are an asset-light independent marine, engineering and adjusting consultancy, which lets us respond quickly to changes in market conditions. Our focus is on derisking and driving the energy and industrial transition in energy and the world’s oceans. From de-risking rig operations for the world’s oﬀshore oil and gas majors to accelerating oﬀshore wind growth across the globe, AqualisBraemar LOC works deeply within the energy transition. We see this transition – one that will drive the reduction of carbon intensity of oil and

The transition allows us to innovate new services and offerings gas operations, the development of new marine vessels and fuels, to taking offshore wind deeper and further from shore – as an opportunity for our current services, but also as allowing us to innovate new services and offerings. This approach also drives our mergers and acquisitions strategy. Following the acquisition of the LOC Group, we will be creating a position of Chief Energy Transition Officer to help focus and drive the group’s activities in the energy transition.

AqualisBraemar LOC is a global independent marine, engineering and adjusting consultant working in energy and oceans to de-risk and drive the energy transition, serving the renewables, maritime, oil and gas and power sectors from around 200 global locations.

At Crondall Energy, we believe that the energy transition is both the biggest opportunity and the biggest threat we have faced since starting the business. As with any technical revolution, companies that can react quickly will benefit from first-mover advantage. Other benefits of developing new energy sources and the new exciting work it brings include motivating staff. Energy transition won’t be easy, but it is inevitable, and companies operating in the oil and gas sector won’t survive if they don’t embrace it. As in any new area, there is much to learn, from macro-issues such as ‘what is the best way to transport and store energy?’ to critical detailed issues such as ‘what equipment qualification is required for carbon capture, utilisation and storage (CCUS)?’ All the issues need both leadership and support from the supply chain. Our background is subsea, and pipeline

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Members’ comment: From the EIC

We need both leadership and support from the supply chain engineering and these skills are required to transport hydrogen to market or transport CO2 for injection into storage sites. On this latter point, don’t forget CCUS. There is an increasing emphasis on hydrogen from offshore wind, but it remains clear that CCUS has a crucial role to play, at least until 2050. At Crondall Energy, we see hydrogen and CCUS as complementary paths to achieving the energy transition. The energy transition is the most significant challenge in our time, and our business decisions reflect this.

Crondall Energy is a leading independent consultancy focusing on energy projects that use pipelines, subsea and ﬂoating production technologies. Operating within four business streams, Field Development, Technical Consulting, Business Consulting and Technology Development, Crondall Energy provides a range of services that span the energy project life cycle from concept to late life.

David Cole Director of Project Solutions International at KBR As the UK transitions from its current energy system to a low-carbon landscape amid economic challenges, the speed and capabilities of the supply chain will be pivotal to achieving energy transition goals. The role of the supply chain is to embrace this change as an opportunity to diversify and shape the future. The roadmap for the UK energy system provides a method of helping everyone to transform. This means we have the direction and ability to allow us all to move forward

sustainably in terms of the energy we generate, the businesses we shape and the jobs we create throughout the supply chain. KBR Project Solutions has been delivering projects within the energy transition for four years. We believe the technology-based switch from fossil fuels to renewables oﬀers great opportunities for those who can move with this change rather than ﬁght against it. We see new partnerships and inspired collaborations as key to unlocking

The speed and capabilities of the supply chain will be pivotal to achieving energy transition goals opportunity across the supply chain, while also managing the risk of innovation. Be brave with your commitments for net-zero targets. Work with partners, suppliers and customers to go renewable and identify beneﬁts that you can drive throughout the whole value chain.

KBR is a global provider of diﬀerentiated professional services and technologies. The company employs approximately 24,000 people worldwide, with operations in more than 40 countries. Operating across the asset and programme lifecycle KBR operates in the two synergistic global businesses of Government Solutions and Technology Solutions.

Finding the right local talent is important to the success of any new clean energy project the sector spans 50 years. In that time, we’ve supported thousands of innovative and cutting-edge projects, as they powered the progression of the energy industry, by delivering compliant global workforce solutions. NES understands how important finding the right local talent is to the success of a project and that the next generation of clean power projects will require the same world-class engineering, construction, and management talent as traditional oil and gas projects have done in recent decades. Companies must partner with suppliers that know where the talent pools are and have the broad reach to find the best local staff to drive their business forward to a new energy age. NES Fircroft has been operating in Asia since 1995. In that time have built up an established network of 15-plus offices across the entire continent, from Japan, China, Taiwan and South Korea in North Asia to Vietnam, Thailand, Singapore, Malaysia, Indonesia, Brunei and the Philippines in the South East.

Paul Robinson Business Development Director at NES Fircroft At NES Fircroft, we’re excited to see how the energy industry is transforming and adapting to new energy sources. Our depth of expertise in

NES Fircroft is proud to be the world’s leading engineering staffing provider spanning the oil and gas, power and renewables, infrastructure, life sciences, mining, automotive and chemicals sectors worldwide. With over 100 offices in 45 countries, we provide tailored staffing solutions, sourced from a global talent pool by a dedicated, discipline-specific team of consultants.

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Special report Big oil to big energy

Can big oil R A N S F O R N T O B I N E R G Y B

The United Nations says the world has little time to adapt; the next decade will be crucial in completely rethinking global systems to be net-zero carbon emission to avert unreversible climate chaos. But how will big oil do it? Lucy Woods asks the experts what is being done, and if the great energy transition will be successful in time

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Big oil to big energy: Special report

hanks to ambitious, international climate change legislation, European oil and gas majors are taking industryleading steps to transition into net-zero emission energy companies by 2050 (see Figure 1). But manoeuvring oil and gas majors into the diverse, technologically relevant zero-carbon energy companies required for a climate-stable future is a monumental challenge, and will demand a complete overhaul of the infrastructure, systems, traditions and culture of multibillion international corporations.

(Above) Technicians inspect natural gas pipelines at a gas storage station of China Oil & Gas Piping Network Corporation (PipeChina)

IMAGE: GETTY

Can oil and gas majors transition in time? ‘Yes,’ said Ben van Beurden, CEO of Royal Dutch Shell, in a September 2020 interview, when asked if Shell could change. The European oil and gas major – which reported a revenue of US$344.9bn in 2019 – announced in April 2020 that it will be net-zero by 2050. A spokesperson told Energy Focus that Shell’s ‘whole company strategy is based around a transition to a cleaner energy system’, which will start with the reduction of product carbon emissions by 30% by 2035. One of the most impressive net-zero carbon commitments aﬀecting oil and gas majors came from China: in September 2020 at the UN General Assembly, China announced it will be carbon-neutral by 2060. This will include China’s governmentowned oil and gas majors – some of the largest in the world. Following the trend, in August 2020, BP announced that it is changing from an international oil company to an integrated energy company and, like Shell, is aiming for net-zero emissions by 2050. By the end of this decade, BP vows that it will have lowered its operations’ emissions by 30–35%. However, even the most idealistic environmentalist would agree that the entire planet cannot turn net-zero overnight. Until net-zero can be reached, oil and gas majors have emissions – and these need to be oﬀset. They can be neutralised by putting carbon back in the ground: either via carbon capture or through planting trees. This has led to companies such as Shell, BP, Total, Eni, Equinor and ConocoPhillips investing in what are called ‘nature-based solutions’ (NBS).

Alongside emissions offsetting, oil and gas majors need to dramatically and quickly divest from fossil fuels: a monumental financial restructuring of some of the biggest companies in the world Offsetting emissions through nature-based solutions NBS is ‘everything related to forest protection, forest restoration, and reforestation, everything to do with growing trees’, explains Adriaan Korthuis, co-founder of net-zero emissions advisory firm Climate Focus. Stefano De Clara, Director of International Policy at the International Emissions Trading Association (whose members include BP, Chevron, Eni, Equinor, Shell and Total, alongside many others in energy industry) told Energy Focus that NBS has ‘definitely been a stronger trend over the last few years.’ As NBS is not a new technology that needs to be invented, it can act as a ‘bridging solution’ while oil and gas majors

work on the more expensive long-term technologies that still require development and research (such as carbon capture and storage), he continues. However, the NBS trend exists in predominantly voluntary commitments, mostly from European oil and gas majors that are driven not by compliance regulations, but ‘by their own commitments,’ says De Clara. Additionally, governments and NGOs have criticised organisations that are investing in NBS solutions, worried that this investment could potentially be used as a way to avoid responsibility for transitioning, and result in the double counting of emissions. ‘But if you turn it around,’ says De Clara, ‘we must also acknowledge that funding from oil and gas is going right into protecting our forests; it is very impressive, massive and unprecedented.’ There is still one surprising hurdle when it comes to new NBS investment: a skills gap. ‘The money – the blessed money – to protect our forests is so, so much that there are not enough hands on the ground to actually carry out these nature protection projects,’ says De Clara. To ﬁll the gap, oil and gas majors could take on NBS project development themselves, – ‘there is plenty of opportunity there,’ Korthuis points out.

Less fossil fuels Alongside emissions oﬀsetting, oil and gas majors need to dramatically and quickly divest from fossil fuels: a monumental ﬁnancial restructuring of some of the biggest companies in the world. www.the-eic.com | energyfocus

14-16 special report_Winter 2021_Energy Focus 15

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Special report: Big oil to big energy

Figure 1. Power plays: energy majors’ transition strategies

Ambition ranking

Nov-20 ranking

International oil companies had already made in roads into the renewables space at the start of 2020. The coronavirus pandemic has only accelerated the trend in Europe, while US-based companies continue to focus on traditional fossil fuel assets. The power plays ranking is based on current operational assets across renewables, CCS, downstream energy retail, sustainable transport and battery storage. The ambition ranking is based on stated renewables capacity targets. Total installed renewable capacity* Installed renewables capacity targets

CCUS Downstream Sustainable Battery (million energy transport storage mt/yr) retail Total | Wind | Solar Large | Moderate | Minimal presence

Total

5,100 MW Large focus on solar, with interests in batteries, wind, retail 7 GW by 2020 No breakdown of wind and 35 GW by 2025 solar. Larger solar focus

Shell

2 6

Inroads into retail power and sustainable transport No explicit capacity target

3 2

Existing focus on solar, wind and EV charging, ambitious renewables targets

0.13

922.55 MW 0.95 1.1

486 MW 436.55 MW 2,500 MW 1679 MW

821 MW

50 GW by 2020

Repsol

4 4

ENI

5 3

Large biofuels producer, with ambitions in solar and wind Over 25 GW by 2035 Over 50 GW by 2050

Equinor

6 5

Aims to become global offshore wind major 4-6 GW by 2026 12-16 GW by 2035

Chevron

7 7

1,078 MW

Ramping up renewables in Spain and Chile, targeting 699 MW (hydro) green H2 in Spain 5.2 GW by 2025 L 379 MW 12.8 GW by 2030

Leveraging downstream networks for low-carbon gas, liquid fuels No explicit capacity target

276 MW 220 MW

48 MW 500 MW 71 MW 0.75 (356 MW planned) 386 MW (8100 MW planned) 18.41 MW 1.91 MW

1.7 2.1

16.5 MW

ExxonMobil

Focus on CCS and R&D on low-carbon technologies

0 MW

8.86 9.86

No explicit capacity target Methodology: The power plays ranking is based on current owned, operational assets across renewables, CCS, downstream energy retail, sustainable transport and battery storage, with greater weighting given to renewable generation capacity. The ambition ranking is based on stated renewables capacity targets. Listed installed capacity is calculated based on owned share and is correct as of Nov. 30, 2020. Footprints shown by colored circles have been assigned based on best available qualitative and quantitative information, focusing on currently owned assets and active large-scale projects and businesses. Source: S&P Global Platts, ©2021 by S&P Global Inc.

*Total renewable capacity includes solar, wind, hydro and geothermal

Last year BP stated it is implementing ‘a new financial frame to support a fundamental shift in how it allocates capital’ so it can put more money towards transitioning. This includes increasing low-carbon investments 10-fold by 2030. It has also said a fifth of its capital will be employed in transitioning, and its board is putting in place a ‘new distribution policy’ fixing share prices at 5.25 cents per share per quarter. Its board believes setting a dividend at this level provides ‘the flexibility required to invest into the energy transition at scale.’ In 2020, BP also stated that through the restructuring of its portfolio, fossil fuel production is to decline by 40% by 2030. There will be no new fossil fuel exploration, and its oil and gas production will reduce by one million barrels of oil equivalent a day. Van Beurden stated that Shell’s net-zero mission will also mean a ‘dramatic change’. By 2050, Shell will have fewer than 10 refineries, compared to 55 around 15 years ago. Its transition will also include cutting between 7,000 to 9,000 jobs by the end of 2022 to help achieve ‘a sustainable annual cost saving of between US$2–2.5bn’, according to van Beurden.

More renewables To transition in time, oil and gas majors must switch over to renewables. Shell is already delivering renewables to UK customers, and it has teamed up with Dutch natural gas supplier Eneco to win the 2020 oﬀshore wind tender Hollandse Kust (Noord). In November 2020, BP created a partnership with Ørsted to develop a renewable hydrogen project in Germany, and by 2030 it aims to have developed 50GW of renewable generating capacity.

But will oil and gas make it in time? Although reaching the 2050 net-zero targets ‘will be challenging’, according to De Clara, net-zero commitments are likely to increase between now and COP26. ‘And with the Biden administration in the US supporting net-zero transition, just counting China, Europe and the US, we have already covered a good chunk of global emissions.’ ‘If both countries and companies’ pledges align towards net-zero by 2050, there is a pretty good chance we will get there in time,’ says De Clara.

16 energyfocus | www.the-eic.com

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14-16 special report_Winter 2021_Energy Focus 17 Krohne FP.indd 1

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Energy Transition Western Australia

estern Australia (WA) is already a global powerhouse in the world of liqueﬁed natural gas (LNG) and has other signiﬁcant competitive strengths that it can leverage as the state emerges from the COVID-19 pandemic – the most severe economic shock since the Great Depression. The WA government and industry are working together to regenerate the economy, transforming from being heavily commoditybased and emissions-intensive to a more diverse, technology-led and decarbonised economy. And a major part of this regeneration plan is to grow technology supply chains and develop and scale clean energy solutions. This presents exciting new opportunities for collaboration between local and international businesses.

Natural gas dominates Australia’s gas industry, domestically and through LNG export, contributes substantially to WA’s economy, with more than half of Australia’s LNG export capacity located in the state through 12 LNG processing plants and all associated oﬀshore, LNG export infrastructure and capabilities. As a cleaner alternative to other fossil fuels, LNG will play a key role in reducing global greenhouse gas emissions, particularly for our Asian trading partners across the Asia-Paciﬁc. However, this needs to go hand in hand with other solutions to reduce local emissions at the point of production. Carbon emissions occur at many points along the gas value chain, and so there are numerous opportunities to reduce those emissions, including: the deployment of renewables technologies (e.g. large scale solar and battery storage) to

reduce the need to consume gas as the energy for processing and converting into LNG the implementation of carbon capture and storage (CCS) to remove the entrained CO2 from natural gas production and store it in naturally occurring geologic formations improving the energy eﬃciency of LNG plants and other gas assets through research into new processing techniques and the increasing deployment of artiﬁcial intelligence and machine learning the use of methanation and reformation technologies to combine produced and recovered CO2 with hydrogen to generate synthetic gas and other products

Clean energy hub plans While WA currently relies overwhelmingly on gas to supply the bulk of its energy needs, the state is transitioning from a large, centralised

Towards a cleaner, smarter

energy future Australia’s transition to a less carbon-intensive energy system presents exciting new opportunities for the UK supply chain, says Miranda Taylor at National Energy Resources Australia (NERA) 18 energyfocus | www.the-eic.com

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IMAGE: CHEVRON

Western Australia: Energy Transition

Looking to grow your business in Australia? Local supply chain gaps The EIC can help export, continuing to leverage WA’s substantial export capabilities.

system heavily reliant on fossil fuels, and with limited use of digital technology and data, to a system that is cleaner, smarter, more distributed and consumer-focused. According to the WA government, energy from wind and solar now accounts for around 16% of electricity supply in WA’s South West Interconnected System (SWIS), up from around 4% a decade ago. WA, along with the whole of Australia, has committed to clean hydrogen as a key future fuel and an energy storage solution. WA knows how to scale a global industry – it has with LNG – and there are many hydrogen projects in early engineering design and approvals phase, such as the Asian Renewable Energy Project in WA’s far north. With a planned 10-year project construction and a 50+ operational phase, this hub will create signiﬁcant new manufacturing opportunities and generate cheap, clean power, enabling new and expanded mines, downstream mineral processing and large-scale production of green hydrogen products for domestic and export markets. The state is also already host to the Yara Pilbara Fertilisers Plant, one of the world’s largest ammonia production sites, exporting ammonia to domestic and global markets, mainly to be used in fertilisers for food production. Yara’s future ambitions are to transition ammonia production away from the use of gas towards renewable alternatives for producing hydrogen and ammonia for

to secure the WA LNG sector’s global competitiveness in an increasingly competitive market.

Alongside the rapid growth of If you are thinking about Australia’s LNG and mining UK opportunities doing business in Australia, industries, a large and dynamic WA’s oil and gas producers our team in Kuala Lumpur technology and services supply are on hand to help. For face significant challenges, chain has also grown to support more information on the including a relatively the operations, maintenance high-cost jurisdiction, low projects and developments and decommissioning phases commodity prices, mentioned in this article, of LNG project lifecycles. increasing global please contact Azman. Suppliers to the LNG sector competition for export Nasir@the-eic.com. have secured more than markets, social licence issues US$8bn in Australian and the urgent need to operational contracts annually, and decarbonise. To address these challenges, WA thousands of domestic suppliers have is looking to accelerate and deploy digital and emerged in the past two decades to compete low emissions technologies and solutions. alongside larger, more mature global firms. These technologies and capabilities are This domestic supply chain has been an increasingly being transferred across different important source of value to the WA industry sectors, for example across energy, economy, developing globally competitive mining, space, defence and agriculture in areas technologies and solutions in such areas as such as automation of remote operations automated remote operations, maintenance (vehicles, drones etc) and AI and robotics of subsea and offshore infrastructure, long technology for monitoring, maintenance and subsea tiebacks, and floating and LNG repair. In a rapidly changing digital world, this production. However, there are significant rapid cross-industry technology transfer, growth opportunities, both local and global, adaptation and adoption will be essential if as the WA supply chain has not yet realised WA is to compete in global markets. its full potential – heavily concentrated as it In addition, the rapid growth of a diverse is in relatively low complexity and local range of renewable energy projects is creating advantage technologies and services (see new opportunities, and the number and scale of Figure 1). Innovation by suppliers is needed hydrogen projects will also enable the creation of new supply chains for the manufacturing and assembly of equipment for wind and solar Figure 1: Oil and Gas Supply Chain and Opportunities generation and hydrogen production. Concentration of Australian capabilities

Enabling transition High

Moderate

Low

Pipeline design

Local Western Australian supply chains have been focused in less complex, local advantage and lower value-add capabilities

Gas compression services Operations and maintenance Pipeline Drilling services installation Exploration services

Well service Training and risk management

Health and safety

Transport and logistics

Equipment rental

Automation and monitoring software

Engineering services Geophysical services Small scale, specialised manufacturing

Large-scale manufacturing (e.g. turbines, compressors) Drilling equipment Pipeline equipment

Production and processing equipment Basic manufacturing (e.g. valves, fitting)

Extending to areas of lower local advantage would enable Australian suppliers to develop capabilities that are exportable and less dependent on Australia’s oil and gas investment cycle

In 2021, fostering innovation and supporting collaboration between the energy producers, supply chains, innovators and entrepreneurs will become ever more critical if WA industry is to adapt to and beneﬁt from a rapidly changing digital and energy technology landscape and be globally competitive. As an independent growth centre for Australia’s energy resources industries, NERA, is playing a central role in creating opportunities for that innovation, collaboration, and helping commercialise and scale technology solutions to create a greener, cleaner and smarter energy future for WA. By Miranda Taylor, CEO, National Energy Resources Australia (NERA) www.the-eic.com | energyfocus

18-19 western austalia_Winter 2021_Energy Focus 19

02/02/2021 11:01

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20-21 skills transition_Winter 2021_Energy Focus 20

02/02/2021 11:01

Energy Transition Skills

eaching net-zero greenhouse gas emissions by 2050 is an ambitious and achievable goal, bolstered by recent government announcements around investment in green energy infrastructure. The post-COVID-19 economic recovery provides an opportunity to accelerate the transition to a green economy. Encouragingly, the government’s recent Ten Point Plan, Energy White Paper and new National Infrastructure Strategy start to illuminate the policy levers that will be deployed to ramp up decarbonisation.

Act now or miss 2050 target However, we need to act now because on our current trajectory we will miss the 2050 target. According to a recent report from Atkins, UK clean energy projects are only at 43% of the build rate required. In addition, the UK’s ageing nuclear power ﬂeet needs replacing, but only one plant is currently being built. News that the government has entered into formal talks with EDF Energy on Sizewell C, as well as support for Small Modular Reactors, is therefore welcome. Thirty years may seem like a long way oﬀ, but the size of the task demands greater action now both to build the infrastructure and train the workforce required.

IMAGE: GETTY

Skills transfer from oil and gas The UK’s engineering construction supply chain already has most of the skills and expertise needed to deliver net zero. This network of companies designs and delivers industrial-scale projects in the UK and internationally, building clean energy generation capacity in offshore wind, nuclear, hydrogen and waste-to-energy, as well as early engineering work on carbon capture, utilisation and storage (CCUS) projects. According to the Energy White Paper, this green energy sector could support around 220,000 jobs in just a decade. However, the economic fallout of COVID-19 will see parts of the industry experiencing workforce contraction and a significant skills outflow in the short term. Oil and gas in particular is

Delivering skilled workers for a

low-carbon future To meet net-zero targets, the UK needs a vibrant and skilled contracting industry to deliver the technologies and infrastructure required to decarbonise the energy industry, says Chris Claydon at the Engineering Construction Industry Training Board forecast to lose up to 30,000 workers – a ﬁfth of the workforce. Clearly, there is an opportunity to retain and mobilise this existing skills base. The UK government has pledged four lowcarbon clusters and 5GW of hydrogen production capacity by 2030, creating more than 40,000 jobs. However, despite the commitments made in the Energy White Paper, there is a lack of shovel-ready projects to take on redundant oil and gas engineers. If these workers exit the sector for good, as many may, we risk a shortage of skilled labour by the time projects start.

Bridging the gap Crucially, the governments in both Westminster and Holyrood need to help bridge the gap between current and future skills requirements. The UK government’s Green Jobs Taskforce, which the Engineering Construction Industry Training Board (ECITB) is a part of, will address the transition of workers from high-carbon to low-carbon roles. Similarly, the Scottish government’s recent Climate Emergency Skills Action Plan will prepare the low-carbon workforce in Scotland, as well as provide new opportunities for existing workers. In 2021 we expect the long-awaited North Sea Transition Deal, which will

provide further clarity on measures to decarbonise and repurpose oil and gas operations. The UK government’s Hydrogen and Industrial Decarbonisation strategies are also promised this year and will set out more detail on the commercial frameworks necessary to drive private sector investment in CCUS and hydrogen.

The low-carbon skills challenge The need to retain and develop UK-based skills and the ambition to create a high-skill economy is vital for longer-term UK prosperity, especially in light of the challenges posed by the pandemic and Brexit. The ECITB’s focus is to ensure the workforce is ready and equipped to work on the green infrastructure projects at the heart of the energy transition. This work has started with partners in industry, government and academia to identify the skills requirements and deliver timely and targeted training and skills solutions – and more is to come in 2021. Net zero is an opportunity to enhance domestic economic performance and the UK’s global footprint, but only if we retain and develop the UK engineering skills base to meet the challenges ahead. By Chris Claydon, CEO, Engineering Construction Industry Training Board

www.the-eic.com | energyfocus

20-21 skills transition_Winter 2021_Energy Focus 21

02/02/2021 11:01

Renewables Net-zero UKCS

Transitioning to a cleaner energy system will not be easy. The UK needs an integrated approach between all stakeholders to deliver net zero and develop a strong, sustainable and resilient economy in the process, writes Ralph Torr at Offshore Renewable Energy (ORE) Catapult

Maximising

the potential

of the energy transition 22 energyfocus | www.the-eic.com

22-24 floating offshore_Winter 2021_Energy Focus 22

02/02/2021 11:02

Net-zero UKCS: Renewables

An integrated netzero UKCS: supply chain opportunities

he UK has committed to reaching net-zero carbon emissions by 2050, with Scotland targeting the same by 2045. Similar targets exist across the world. In the UK, this will require the transformation of the energy system. In the context of offshore wind, this includes the requirement to develop larger, more technically and commercially complex and highly integrated projects. In the oil and gas industries, it includes the requirement for organisations to not only decarbonise hydrocarbon operations, but also transform business models to take advantage of opportunities within the developing energy system. In doing so, what is now the oil and gas sector will be subsumed into a broader, more diverse, more integrated energy sector – as will the offshore wind sector.

Offshore wind Offshore wind, as a low-cost, low-carbon energy source, will be fundamental to delivering net-zero. The UK set ambitious targets for the deployment of 30GW of offshore wind by 2030, subsequently revised up to 40GW by 2030, with a minimum of 1GW being floating offshore wind. The latest guidance from the Climate Change Committee now proposes a target of 100GW by 2050, revised up from 75GW. With just over 10GW of installed capacity today (installed during the past 20 years),

What is now the oil and gas sector will be subsumed into a broader, more diverse, more integrated energy sector – as will the oﬀshore wind sector

the UK has not had to deal with some of technical and logistical challenges it will face from now until 2050. Currently, the vast majority of offshore wind projects are fixed-bottom and near to shore (typically between 10 and 50km). However, most offshore wind turbines deployed before 2050 will be far from the shore (more than 50km, and often more than 100km), with potentially more than 40% having floating foundations. A proportion will not be directly connected to the electrical grid,

Offshore renewables Dynamic cable systems for floating offshore wind farms; mooring and anchoring systems for floating offshore wind farms; assembly, commissioning and installation of floating offshore wind turbines; HVDC cables connecting floating wind farms to the shore; standardisation of floating foundation designs; operation, maintenance, monitoring and inspection of floating offshore wind turbines

Hydrogen Development of integrated desalination and electrolysis units to couple with oﬀshore wind turbines for utility scale generation of green hydrogen; improve yield and CO2 capture eﬃciency of blue hydrogen reactors; development of hydrogen pipeline and storage facilities

CCUS Improve eﬃciency of capture technologies and CO2 conversion processes; scale-up and deployment of direct air capture

Oil and gas Subsea cables and HV substations; retrofit gas turbines to run on ammonia-hydrogen blend; integration of offshore renewable energy with existing oil and gas assets to decarbonise offshore operations and provide additional revenue streams; design of subsea equipment that can be re-used and integrated with renewables

www.the-eic.com | energyfocus

22-24 floating offshore_Winter 2021_Energy Focus 23

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Renewables: Net-zero UKCS

Floating Oﬀshore Wind Centre of Excellence

instead using green hydrogen and other energy vectors to store and transport low-carbon energy.

Maximising the economic opportunity While there are significant challenges for both the offshore wind and oil and gas sectors, there are also huge opportunities. The biggest opportunity for government and industry is to develop and deliver a net-zero energy system which maximises sustainable economic growth here in the UK. To do this, an ‘industrial strategy’ approach is required, whereby a combination of policy, technology innovation and supply chain development are used to develop a vision for the future energy system, as well as the capability and technology to develop and deliver this. One of the key considerations when developing such an industrial strategy (in a regional context) is the existing capability, skills, and experience within that region, how these relate to the requirements of the developing industries, and how these might be effectively augmented through technology innovation support, infrastructure and the development of key supply chain capability. A recent publication, Reimagining a Net Zero North Sea: An Integrated Energy Vision For 2050, sets out three different scenarios for how the energy transition might play out in the North Sea. This publication, from OGTC and ORE Catapult, identifies key areas of opportunity for industry, quantifies the benefits to government of investing in these areas and highlights the critical role of a coordinated industrial strategy approach in delivering these. In the UK context, and its advanced manufacturing, chemical engineering, oil and gas, marine engineering and offshore wind energy skills and experience, floating offshore wind and green hydrogen production stand out as areas of opportunity. Both are described as ‘critical’ to an economically prosperous energy transition in the UK, and offer significant economic opportunities internationally. To ensure the UK can maximise the potential of the energy transition, ORE Catapult has established two industry leading programmes: the Energy Transition Alliance (ETA) and the Floating Offshore Wind Centre of Excellence (FOWCoE).

The biggest opportunity for government and industry is to develop and deliver a net-zero energy system which maximises sustainable economic growth here in the UK Energy Transition Alliance Established initially through a collaboration agreement between ORE Catapult and OGTC, the energy transition alliance supports the transition of technologies, skills and expertise from oil and gas into a fully integrated net-zero energy system. Launched in early 2020, it is already working on a range of relevant projects, including: looking at the electrification of offshore oil and gas assets; modular AC/DC power conversion for use offshore; design of floating offshore wind substructures for use in powering oil and gas assets; floating offshore wind supply chain requirements and how these map onto existing capacity and capability in the oil and gas industries; and offshore wind decommissioning. The ETA is currently building a portfolio of further relevant project activity and establishing formal partnerships with relevant industry and stakeholder organisations.

With less than 100MW installed today, the UK has set a target of at least 1GW of floating offshore wind by 2030. It is estimated that more than 40% of the 100GW of installed offshore wind capacity by 2050 could be floating. In 2019, to ensure the UK can maximise the industry’s potential, ORE Catapult established the FOWCoE. This industry-led collaborative programme will accelerate the commercialisation of floating wind in the UK and internationally, support the delivery of a cost-effective net-zero, and drive industrial activity and economic growth in the UK, both by maximising UK content in UK projects and through the development of world-leading and internationally competitive products and services. The FOWCoE has 13 industrial partners, which work with ORE Catapult to develop and deliver a range of relevant project activity. Partners include global energy companies Equinor, Total, EDF, RWE and Shell, UK utilities ScottishPower Renewables and SSE Renewables, and specialist renewable energy and offshore wind developers Copenhagen Infrastructure Partners, OceanWinds, ESB, GIG/RIDG, Mainstream Renewable Power and Northland Power. Working across four workstreams, the FOWCoE is identifying and addressing barriers to commercialisation and exploiting opportunities for the floating offshore wind industry to reduce costs and accelerate deployment in the UK and internationally.

An integrated approach is key It is clear that the energy transition and our journey towards a low-carbon and highly integrated energy system is well under way, but we have much more to achieve in the next 30 years than we have in the past 20. Key to addressing the challenges, exploiting these opportunities and delivering this future energy system will be an equally integrated approach between industry, government and other relevant stakeholders. The ETA and FOWCoE are prime examples of the integrated approach we require to ensure our journey to net-zero is an economically prosperous one. By Ralph Torr, Programme Manager, ORE Catapult

24 energyfocus | www.the-eic.com

22-24 floating offshore_Winter 2021_Energy Focus 24

02/02/2021 11:03

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02/02/2021 08:27 11:03 21/01/2021

Oil and Gas LNG

t will come as no surprise that the future is bright, and it is also green. Oil majors are accelerating their pivot from hydrocarbons to clean energy. Political economies are dominated by pledges and road maps to achieve net-zero by the mid-21st century. The next industrial revolution is unfolding in front of us, powered by clean energy and developed through big data.

The need However, pledges are precisely that: pledges. There is no single silver bullet, no panacea. Wind and solar alone will not reliably power the world. There is work to be done to improve the fuel mix – globally, within Europe and, to a lesser extent, in the UK. Both hard coal and lignite (brown coal) make up significant proportions of Germany and Poland’s generation mix. Both are large energy producers and consumers.

Although a hydrocarbon, with natural gas, and by extension liquefied natural gas (LNG), there is a large disparity in CO2 grams per kilowatt-hour. Natural gas produces 200–365g of CO2 equivalent per kilowatt-hour (gCO2e/KWh), compared to lignite and hard coal’s 400–718g, depending upon the efficiency of both the coal and the plant. So, what happens when the sun does not shine and the wind does not blow? In short, there are technologies to be developed and applied – notably, hydrogen for fuel and carbon capture and storage (CCS). The EU has committed to signiﬁcant funding of both these technologies. The UK continues to trial hydrogen as a domestic fuel. Studies suggest that CCS, coupled with gas generation, could see gas generation at 140 gCO2e/KWh. In a world where emissions trading schemes and tax regimes are only going to get stricter, marginal gains here could see signiﬁcant rewards and returns.

Pathways to a

new future – the LNG bridge Liqueﬁed natural gas is the ideal enabler for a sustainable energy system, writes Christian Beasley at UK energy consultancy and software specialist ZTP

There is not only an apparent moral imperative, but also a ﬁnancial incentive.

The floating pipeline In 1970, the world produced 3bn cubic metres (BCM) of LNG. In 2011 this had risen to 330BCM, and 400BCM in 2019. In 2020, despite the pandemic, LNG is still expected to have exceeded the 2019 figure. Traditionally LNG trade has focused on North East Asia, Japan, South Korea and Taiwan. LNG, primarily a maritime commodity, offers the ability to act as a waterborne pipeline, moving ‘stranded assets’ in the Arab peninsula to other islands and peninsulas where conventional pipeline infrastructure is not practical.

Development Why was there such a dramatic increase in the LNG product? One answer is the rise of China and its increased energy demand to support its economic and industrial development. The other side of the coin lies in North Dakota. The shale revolution offered the US energy security, and eventually the opportunity to flip from being a net importer to a net exporter. While the primary aim was crude oil, there was a secondary product: natural gas. And instead of flaring – burning off the gas at the wellhead, which releases carbon, the simple solution was to monetise the methane and export it. During the past five years there has been significant investment in infrastructure and business models, spearheaded by terminal developers such as Cheniere – the largest LNG producer and exporter in the US. This has had a cumulative effect on Henry Hub pricing, a mainstay of US gas pricing, giving it a larger role and more influence in the fundamental pricing of LNG.

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LNG: Oil and Gas

Purchasing

MAJOR PROJECTS TO WATCH Commonwealth LNG Liquefaction and Export Facility Value: US$4bn Startup: Q2 2024 Stage: Pre-FEED Status: Planning consent applied Driftwood LNG (Calcasieu Parish LNG Liquefaction Plant) Value: US$16bn Startup: 2025 Stage: EPC Status: Contract awarded Energia Costa Azul (ECA) LNG Terminal Liquefaction Conversion Phase 1 Value: US$2.5bn Startup: 2024 Stage: EPC Status: Contract awarded Goldboro LNG Liquefaction Plant Value: US$7.45bn Startup: Q3 2025 Stage: EPC Status: Contract awarded Lake Charles LNG Liquefaction Plant (Trunkline LNG Export) Value: US$12.3bn Startup: Q3 2025 Stage: EOC Status: Tendering and bidding

IMAGE: GETTY

Rovuma LNG Liquefaction Plant Value: US$22.4bn Startup: 2024 Stage: EPC Status: Contract awarded

Traditionally the LNG market has been dominated by long-term procurement deals, typically 20–25 years, seeing huge arbitrage potential as a product of relatively static pricing. The development of Platts Japan Korea Mark (JKM) has set LNG on a liberalisation trajectory. There are signiﬁcant incentives for major exporters, notably the US, Australia, Qatar and Russia. Why is LNG important to Europe and the UK? Markets, logistics and storage. The UK National Balance Point and Dutch Title Transfer Facility (TTF) are mature liberal gas markets. TTF is sometimes called the Brent of Gas, and Europe acts as the balancing mechanism underpinning global pricing. This is supplemented by the duration of transit for each voyage. Qatar has the geographical advantage: on average, it takes 12 days to reach South Korea, and 14 days to reach the UK through the Suez Canal. The US voyages take 22 days to reach the Korean Peninsula through the Panama route, whereas transatlantic voyages are just over 10 days, depending on weather. In North West Europe, including Amsterdam, Rotterdam, Antwerp and the UK, there is ample storage and domestic demand to absorb cargoes.

The path ahead LNG continues to go from strength to strength. Despite the pandemic, it has attracted attention as one of the few energy commodities to exit 2020 stronger than it entered the year. Although only one project – Mexico’s Energia Costa Azul (ECA) LNG export plant, phase one – had been sanctioned at the end of 2020, the next two years will be pivotal, with many developers having delayed ﬁnal investment decisions to 2021 and 2022.

As the world transitions away from an oil-based economy to clean energy and technology, gas will become the dependable lowercarbon alternative Financing remains a concern for some of the smaller players involved in the sector, and the price increase of LNG may help these projects move forward again. At time of writing, tight LNG supply and rising demand have seen JKM trading between US$8.50–9.00 MMBtu – close to two-year highs – while freight costs have strengthened to two-year highs following disruption and delays in the Panama Canal. Investors are more comfortable with taking a risk-on position, and investment decisions are being made. There are numerous ongoing infrastructures in the US, on the Gulf Coast and the Eastern Seaboard. Total has confirmed its participation in the ECA LNG phase one project. Globally, there are potential LNG projects in Mozambique and Papua New Guinea. In November, China’s offshore oil and gas producer CNOOC Group set out to add a further 1.62 MCM LNG storage at the Binhai Terminal, in the eastern province Jiangsu. As the world transitions away from an oil-based economy to clean energy and technology, gas will become the dependable lower-carbon alternative that enables the world to traverse the challenges of achieving net-zero. LNG will continue to play an important role, and with increased investment in infrastructure, trading is set to see LNG cargoes increase in the foreseeable future. The future is bright for LNG, meeting clean energy requirements globally and turning a tidy profit for those in the trade of this exciting and fashionable commodity. By Christian Beasley, Risk and Market Analyst, ZTP www.the-eic.com | energyfocus

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Power Energy storage

Powering the energy transition

Battery storage solutions offer the flexibility required for safe and stable use of wind and solar power and increase energy efficiency, writes Karim Wazni at Aggreko – Microgrid and Storage Solutions

mid the climate emergency, decarbonisation is seen by many as the main driver of the energy transition. While it is critically important, at Aggreko, we believe digitalisation and decentralisation are paramount to achieving low-carbon goals and satisfy energy demand, driven by a fourth ‘D’ – demographic change. Decentralisation enables quicker deployment of energy to where it is needed, more efficient use of assets, and much-needed flexibility and support to grids having to cope with higher demand and a more volatile supply. Meanwhile, digitalisation provides us with the sophisticated systems and controls needed to integrate an ever-wider set of energy sources while ensuring stability, reliability and maximising efficiency. Both decentralisation and digitisation are key features of our mobile and modular battery storage solutions and help bring clean, smart and reliable power everywhere fast.

IMAGE: ISTOCK

Unlocking battery value It is easy to assume that we need batteries to store energy when the sun does not shine and the wind does not blow. In reality, the most critical aspect of batteries is that they

allow us to remove concerns around system stability from changing energy provision. They can also serve as a wireless alternative to upgrading existing transmission and distribution infrastructure or help customers bridge the gap until grid constraints are removed permanently. Specifically, batteries provide three services that are particularly critical at this stage of the energy transition: spinning reserve displacement, renewables integration and transient response. Firstly, with their ability to automatically provide grid services within milliseconds, batteries replace both the rotating mass and the spinning reserve of traditional generators with ‘synthetic inertia’. The battery ensures system stability by controlling frequency, voltage as well as providing other critical grid services. This removes the need for constant fossil fuel-based generation and the need for extra generators on standby while also providing for an even higher degree of efficiency and stability – at a lower overall cost. Secondly, this ability to switch off fossil generation when it is not needed enables energy users to safely integrate more renewables, saving both emissions and money. It allows users to choose the most

efficient fuel mix – independent of any technical concerns. This may typically be a hybrid microgrid system for remote mines, using solar or wind power, backed up by a gas or diesel generator and battery units. Finally, by providing a transient response, batteries help manage abrupt load or generation changes and meet the high-power quality demands of critical or susceptible machinery such as computers. Data centres, in particular, are often built much faster than grids can be extended. It often makes sense to combine efficient gas engines with fast-responding batteries to provide such buildings with high quality and cost-effective power.

Removing barriers The energy transition is far from complete. New technologies keep emerging, needs of energy users keep changing, and there is much regulatory uncertainty. As the world moves towards a target of net-zero carbon emissions, there is an increasing need for companies to use an ever-growing and quickly-evolving technology portfolio while also avoiding stranded capital and adequately understanding and managing technical and obsolescence risks. Consequently, we believe energy-as-aservice is, more than ever, relevant to the power industry. It is crucial in removing many hurdles to adopting batteries, so that this rising versatile asset class can be made accessible and scaled up fast within risk levels defined and tailored to each type of customer. By Karim Wazni, Managing Director, Aggreko Microgrid and Storage Solutions www.the-eic.com | energyfocus

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ENERGY SPECIAL ACCESS SOLUTIONS Palmers special access and scaffolding solutions offer reduced work at height risk via bespoke engineering design solutions on leading energy, nucelar, waste to energy and power station projects. Our extensive experience in the energy sector and highly trained scaffolding operatives help offer our clients safe, on time and on budget innovations right across the country. Palmers Scaffolding: One of the countryâ&#x20AC;&#x2122;s oldest scaffolding companies delivering ultra-modern special access and scaffolding solutions. Palmers Scaffolding UK Ltd. // 331 Charles Street, Glasgow, G21 2QA, UK // P +44 141 553 4040 // F +44 141 552 6463 /// info@palmersgroup.co.uk // palmersgroup.co.uk 30-31 Morocco_Winter 2021_Energy Focus 30

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Power Morocco

orocco’s National Energy Strategy 2009–2030 has bolstered its energy transition and investment in renewable energies, making the country a global leader in sustainable energy development.

On track for 100% clean energy Driven by the need to meet increasing energy demand and reduce its reliance on costly hydrocarbon imports, Morocco has invested more than US$5.65bn since 2009 in developing clean energies, and has plans to spend just as much in coming years. Thanks to steady investment and consistent policies endorsed at the highest state level, it is set to become one of the ﬁrst African countries to run on 100% renewable energy. The ongoing programmes put Morocco on track to reach 42% of clean energy capacity installed in 2021 – almost 10 years earlier than expected. The country is heading toward increasing its share of renewables above 52% by 2030 and has the potential to reach 100% renewables by 2050. Alongside ambitious solar energy developments such as Noor Solar Power Station in Ouarzazate – the world’s biggest concentrated solar power (CSP) project – and the Noor Midelt scheme, which will exceed Ouarzazate in overall capacity, Morocco continues to expand its wind and hydropower generation capacity.

IMAGE: WWW.ONE.ORG.MA

Power grid upgrade needed Building Morocco’s new energy system – one that leans heavily on naturally ﬂuctuating supplies of renewable energies – will require the modernisation of the electricity network, the development of regional and international interconnections and the promotion of energy storage. As a bridging fuel, natural gas will play a major role as a ﬂexible backup to respond to the intermittency of wind and solar. In need of a new strategic domestic gas supply source, Morocco’s state power and water utility ONEE has signed a memorandum of understanding with UK-based Sound Energy, which covers the sale of natural gas from the Tendrara concession in Eastern Morocco to ONEE for its power plants. While mature energy storage solutions such as pumped-hydro storage and CSP

Upgrading Morocco’s electricity system A pioneer in renewable energy, Morocco is looking for international collaboration as it moves to a smart, flexible low-carbon future, writes World Energy Council’s Future Energy Leader, Nabil Jedaira thermal storage have already been implemented, the focus is now on new technologies including utility-scale battery storage, hydrogen and Power-to-X (PtX). The country is currently developing a roadmap for hydrogen, and devising several pilot projects. To this end, the government has stressed the need for international cooperation in green hydrogen and has called for an exchange of expertise and technologies with European countries to boost innovative developments. In June 2020, Morocco and Germany signed a joint agreement that will enable Morocco to build Africa’s first plant to produce green gas. The bilateral partnership aims to set up necessary structures and to advance scientific research in the production of green hydrogen and PtX products. Interconnectors are also an important source of flexibility. The country currently cross-border trades electricity with Algeria and Spain, and has plans to integrate further into other markets in North and sub-Saharan Africa and Europe as part of the Sustainable Electricity Trade Roadmap. The country is also working on consolidating the national electricity transmission and distribution network. A smart grid-aided electricity network will be essential to facilitate the country’s

transformation to a low-carbon economy and achieve energy security and aﬀordable energy. To this end, construction has started on a new research centre for smart grids at the Green Energy Park in Ben Guerir in central Morocco.

UK opportunities As Morocco continues to overhaul its energy mix to meet the ambitious 2030 targets, many opportunities exist for UK investment – particularly in the ﬁelds of renewable energy, hydrogen production, natural gas and research and innovation. Other areas of common interest include launching an electricity market between Morocco and the UK through solar links and cooperation between the two countries’ private sectors. Morocco hopes to attract investments during COP26. Now is the time for companies to position themselves in anticipation of developments in the Moroccan and African energy markets. Successful market entry requires forward planning. Therefore, it is advisable to start laying the groundwork now, getting the necessary structures and networks in place. By Nabil Jedaira, Future Energy Leader, World Energy Council and Senior Business Development Manager, EDF

(Right) Morocco’s 460-MW pumpedhydro storage facility in Afourer

www.the-eic.com | energyfocus

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Nuclear Advanced nuclear energy

Delivering net zero Advanced nuclear energy must play a role if we are serious about decarbonising society, says Tim Yeo at the New Nuclear Watch Institute

(Right) A crane lifts a prefabricated steel containment ring into position at the nuclear Reactor Unit 1, at Hinkley Point C

he need to increase both the scale and speed of humanity’s response to climate change becomes more urgent every day. Total decarbonisation of all our societies is now widely accepted as the goal. Agreement on how to achieve it is more elusive. The fall in global emissions forecast by the International Energy Agency (IEA) for 2020, the year when the COVID-19 pandemic has wreaked economic havoc in almost every country and destroyed millions of jobs, is only slightly higher than the reduction now needed every year until 2030 to prevent average surface temperatures from rising by more than 1.5˚C.

Embracing system ﬂexibility Driven by the imperative of climate action and supported by the development of new low-carbon technologies, both the appearance and function of power

systems across the world have been transformed in recent years. This trend is likely to accelerate as the use of fossil fuels to generate power continues to be phased out and a wider range of sectors and processes are decarbonised through electrification. This change will require a far greater level of integration between sectors, such as power and transport, than is currently the case. As a result, power systems will have to become much more flexible in terms of both their ability to respond to an external stimulus, such as temporary fluctuations in demand, as well as the services and products that they are able to provide. Only in this way can the security, sustainability, and affordability of our energy avoid being compromised in the years ahead.

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Advanced nuclear energy: Nuclear

The value of nuclear

The nuclear industry should start lobbying for nuclear energy to be endorsed by COP26 as an essential part of the world’s answer to climate change

net zero

UK government puts nuclear at the heart of clean energy transition plan

£385m Advanced Nuclear Fund created with up to £215m to develop domestic SMR design

Closing the net zero intentionaction gap Many countries who signed the 2015 Paris Accord failed to reach the emission reduction targets they set themselves. As a result, close attention will now be paid to how the more ambitious goals for net zero by mid-century can actually be achieved. There is a yawning gap between the lofty intentions expressed by politicians and delivery of the actions that are needed. Nuclear energy can help close this gap as long as it is allowed to do so by its irrational and sometimes entrenched opponents, some of whom masquerade as environmentalists. Three steps are needed. First, in the immediate future, as the IEA has pointed out, the fastest and cheapest way to cut emissions at a stroke is to extend the life of existing nuclear plants wherever safe to do so. Shutting safely operating nuclear plants prematurely makes net zero harder to reach. Second, the construction of new large-scale plants must be accelerated and expanded substantially. If done promptly, this will prevent the decline in worldwide nuclear capacity that would otherwise result from the closure of the oldest plants by the end of this decade. Third, the development of advanced small reactors must be encouraged by governments around the world. In this way they will be able to comprise a meaningful proportion of global low-carbon electricity production in the 2030s. By Tim Yeo, Chair, New Nuclear Watch Institute

£170m for AMR R&D programme

£400bn estimated worth of SMRs and AMRs by

2035

£400m towards new UK fusion programmes

IMAGE: GETTY

In this context the system flexibility that nuclear energy can deliver represents a valuable way of facilitating, and indeed easing, the much-needed transition to a decarbonised world. Until now the flexible operation of existing nuclear technologies has been limited to the moderation of generation output in response to the needs of the grid. This has allowed for a greater penetration of intermittent renewables and for the maintenance of system stability. GW-scale reactors of the type already installed across the world can also provide other forms of flexibility. Hitherto these have not been harnessed to full effect but they offer significant decarbonisation potential. Nuclear plants, in addition to generating electricity, are sources of clean thermal energy and chemical production. Two notable applications are the use of thermal energy to provide district heating and the use of electricity to produce low-carbon hydrogen via electrolysis. Both these applications represent low-carbon alternatives to the main ways currently used to produce heat and hydrogen. Advanced nuclear technologies offer an even greater range of flexibilities than the GW-scale reactors in operation today. Their smaller size is better suited to replacing fossil fuel-powered plants and allows them to be sited in smaller grids and isolated areas. Their modular design and factory-built parts should cut installation times and their lower upfront capital costs makes them more affordable. Moreover, a number of advanced nuclear designs are capable of producing greater thermal energy than those based on water-cooled reactor technology. This expands the range of possible thermal applications to include the hightemperature production of hydrogen, a more efficient source of low-carbon hydrogen than low-temperature electrolysis, and major

Nuclear energy for

industrial processes at petrochemical plants, reﬁneries and others. The UK government has rightly acknowledged the signiﬁcant potential of advanced nuclear technologies. It has included them in its recent ‘Ten Point Plan for a Green Industrial Revolution’ and new Energy White Paper, and earmarked £385m for an Advanced Nuclear Fund.

Call for action The relative success of COP21 in Paris in 2015 owed much to the careful preparatory work of the French hosts, led by former Prime Minister Laurent Fabius. The nuclear industry should take a leaf from his book and start lobbying for nuclear energy to be endorsed by COP26 as an essential part of the world’s answer to climate change. In that way, good intentions will translate seamlessly into effective action. www.the-eic.com | energyfocus

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EIC Member Focus Vysus Group

MY BUSINESS

David Clark, Vysus Group

What services do you offer the energy industry? Our portfolio is broad, as is our client base. Often our clients come to us with a symptom, we identify the problem and formulate the right solution. From design to decommissioning, our specific services include asset performance management; risk management; geo-engineering; well project management, engineering and operations; rig inspection; survey and data management; grid connection and power engineering. We will continue to diversify into new industries and are actively involved in renewables projects. To date, we’ve supported around 50% of the UK’s offshore wind projects, and 60% of grid-scale wind and solar projects in the Australian National Electricity Market. What’s a typical day like? No two days are the same, as no two projects are the same. Our client’s projects are diverse, adding to the excitement of each day – from ensuring business continuity for critical data centre infrastructure, to providing well project management to Denmark’s first exploration well drilled in five years, to characterising a windfarm site through subsea geotechnical

And you? With everyone moving to home working this year, my colleagues and customers, have had a view into my home oﬃce and so have seen some of my music collection on the walls, and my very under-used drum kit.

CEO David Clark takes Energy Focus behind the scenes at Vysus Group and ground modelling. The projects we’re involved in have allowed us to build a serious skills base and cross-sector insight, unrivalled by most engineering consultancies. COVID-19 also turned the ‘average’ day on its head. Within weeks of the global shutdown in March we had pivoted our proposition to focus on remote presence and optimisation, allowing clients to manage their risk and performance from a distance. What would it surprise our readers to know about Vysus Group? Our broad capability. When people dig deeper they realise we’re a treasure chest of deep technical and regulatory expertise with a really impressive portfolio of projects and solutions delivered across the years. They may know us from some of the legacy businesses integrated over the 20-odd years and they may not be aware of how these have all come together under the name Vysus Group – derived from the Latin word Visus, which means vision and looking forward to the future.

How have you been able to maintain good mental health and wellbeing in the workplace amid COVID-19? We’ve tried to manage uncertainty on all aspects through regular communication. We’re cognisant of family life, the pressure of home schooling, working from home, employees not able to see loved ones and the general anxiety that creeps in for many of us amid a global pandemic. But our employees have been incredible – I’m in awe of how many of them have juggled the situation with little, if any, impact on their job. Not only did we have to work in a new way and deliver projects remotely, we also completed a huge strategic carve-out successfully, and that’s testament to their hard work and commitment. How do you plan in these times of unprecedented uncertainty? Our services and solutions are sector agnostic, so while one industry dips, another may plateau and others may grow. For example, we’ve seen signiﬁcant demand for our grid connection, power engineering, survey and geotechnical solutions during the course of 2020. You must be prepared and agile in a cyclical market, but I’m conﬁdent 2021 will see more stability and growth opportunities. How will the industry deliver net-zero? There’s no single panacea. It’s a combination of leveraging the transferable skills, investment, policy and aligning buyer behaviour with intent. As a sector we need to proactively engage with the wider society, as the oil and gas sector needs to be a partner in developing and delivering the solutions needed to meet the climate change goals.

IMAGES: GETTY

Can you tell us a bit about Vysus Group? Vysus Group is a leading engineering and technical consultancy. We deliver asset performance, risk management and project management expertise across complex industrial assets, energy assets (oil and gas, nuclear, renewables), the energy transition, rail and road. We’re 650 employees strong, spread over 30 oﬃces worldwide. Following a strategic carve-out from the Lloyd’s Register (LR) Group in November 2020, LR’s Energy business became Vysus Group, retaining LR Energy’s entire capability and full suite of technical, regulatory and operational expertise globally.

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AssetM

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