Two energy giants, two green projects: a pair of reservations in the North Sea


  • BP and Orsted clashed over the ‘Overlap Zone’
  • A carbon capture project competes with wind farms
  • The conflict could undermine the UK’s climate goals
  • Similar disputes may arise in the North Sea

LONDON, Jan 24 (Reuters) – Oil major BP plans to build a giant carbon capture project under the North Sea that will be crucial for Britain to meet emissions targets. Energy giant Orsted aims to build massive offshore wind farms to help the country meet its renewable targets.

The problem is that the seabed has a double reservation and something has to give.

According to planning documents reviewed by Reuters, Britain granted initial licenses for both proposed projects more than a decade ago when the nearly 110 sq km of overlap on the seabed was not seen as an insurmountable obstacle for either technology. and UK authorities.

And now BP and Orsted are in a dispute over dominance in this “Zone of Overlap” shared by the Hornsea Four wind farms and Sustainable Carbon Capture and Storage (CCS) sites in Yorkshire, England.

The standoff has been fueled by research highlighting the risk of boats used to monitor carbon leakage colliding with wind turbines anchored to the seabed. Last year, the North Sea Transition Authority (NSTA), which regulates offshore energy activities, concluded that large crossovers between such facilities are impossible with current technology.

“When these rights were granted, it was not clear how the emerging technologies would develop,” Britain’s Crown Estate licensing agency told Reuters, referring to wind farm and CCS licenses granted by the government in 2010 and 2011 respectively.

BP doesn’t want to switch to a more expensive boatless monitoring system, while Orsted doesn’t want to give away the land, saying such concessions would hurt their commercial prospects.

This largely unreported collision could undermine Britain’s desire to meet its climate goals, according to the companies involved and an expert on the North Sea’s green transition. Dayanim’s power alone could account for at least half of the 20-30 million tons of CO2 the country aims to capture a year by 2030.

“Resolving the conflict between renewable technologies and having a proper process to determine whether wind farms, carbon storage or another energy source dominates the overlapping area is vital if the UK is to achieve its net zero targets. John Underhill, director of the University of Aberdeen’s Energy Transition Center and geoscientist, said.

The BP-Orsted standoff could lead to similar disputes elsewhere in the increasingly crowded North Sea, experts told Reuters.

With geological formations favorable for carbon storage and shallow waters for fixed offshore wind farms, Britain’s east coast will become a key battleground for competing green technologies in the coming years.

“Offshore wind has obviously progressed quite rapidly since 2015, resulting in increased pressure on the seabed,” said Chris Gent, policy manager at CCSA, the European carbon capture trade association, adding that it was a real challenge for licensing authorities. is a problem. .

Britain’s BP and Danish renewable energy company Orsted say they are ready to settle their dispute that will come to a head in the coming months; British authorities are due to decide on February 22 whether to give Hornsea Four the final go-ahead, while BP and its partners plan to make a final investment decision on the Stop this year.

It’s not just the climate targets that are at stake, but a lot of money is being spent on projects that will cover about 500 square kilometers of the seabed. BP did not provide a cost estimate for Endurance, while Orsted estimated the wind farm at up to 8 billion pounds ($9.9 billion).

THE BATTLE FOR THE OVERLAP ZONE

The British government has acknowledged the problem.

Asked how two such projects could end up in the same area, the Department of Business, Energy and Industry told Reuters the government had set ambitious targets for offshore CCS and wind farm deployments. Emissions by 2050.

“We know that in some cases there may be technical problems for coexistence.”

To resolve the conflict and avoid future conflicts, the UK authorities established an offshore wind and CCS forum in 2021 of regulators and industry figures to develop better coordination.

BP, Orsted and the Crown Estate told Reuters they had discussed coexistence solutions for several years, although they did not comment on how their views on the risks of overlap with the technologies had evolved over the past decade.

The Orsted planning document, published by UK authorities on 17 January, included a report by a group representing BP and its Northern Endurance Partnership (NEP) project partners, which said the CCS scheme ruled out land sharing.

A July 2022 report by Net Zero Teesside said: “It was originally anticipated that Hornsea Project Four and the NEP Project could co-exist in the overlap zone.” The NEP partners have come to the conclusion that it is impossible to live together in the entire territory of the overlap zone.

BP said it needed certainty about the fate of the zone before a final investment decision to start injecting CO2 at the project in 2026 as planned, saying it doubted a compromise would be reached in time.

A submission to UK authorities in March 2022 says: “It is not realistic to put forward any new robust and reliable solution in this or a comparable timeframe.” In another presentation in March 2022, it added that NEP may not be able to raise debt financing if risks to the project’s financial viability are high.

Orsted said in planning documents published the same month that the sparser turbine layout, which could reduce boat access issues, would reduce Hornsea Four’s annual power output by 2.5%.

“This will have the effect of making the project less commercially competitive,” he said.

The planned 2.6 gigawatts (GW) of wind farm capacity will help Britain move towards its target of increasing offshore wind capacity from 11 GW in 2021 to 50 GW by 2030, a major investment in new offshore infrastructure in the North Sea. is required.

PRECIOUS UNDER-OCEAN PLANS

Despite the obstacles, negotiations continue.

BP said it was committed to reaching a mutually acceptable outcome through ongoing commercial discussions, while Orsted said it was confident an agreement would be reached to allow both projects to move forward.

Regulators and industry experts say there is hope on the horizon for wind and CCS projects.

Even as the NSTA regulator pours cold water on large shared areas, technical advances can change the calculations, he said. He added that alternative methods of CO2 monitoring are still under development or are more expensive, adding to costs in the CCS sector, where profits are already hard to come by.

A leading contender, ocean bottom nodes (OBNs) anchored to the seabed could do much of the work of seismic data vessels. However, Ronnie Parr, NSTA’s chief geophysicist, said that while OBN costs are expected to come down, it will probably cost three or four times more than using ships.

The regulator was clear.

“Based on existing technologies, large physical overlaps between carbon storage sites and wind farms are not currently possible,” he said in an August 2022 report.

NEIGHBORS ON THE NORTH SEA

Next month is looming when government planners will decide whether to give the final green light to the Hornsea Four.

While Endurance and its umbrella project, the East Coast Cluster, also face regulatory hurdles, the cluster is earmarked by the government for a faster development process in 2021.

According to Underhill at the University of Aberdeen, who stressed the need for additional CCS sites if Britain is to hit its carbon capture targets, the same problem could be happening elsewhere, although no progress has been seen between companies.

According to NSTA and Underhill, other similar co-location sites include the planned Acorn carbon project near Scotland, which overlaps with MarramWind offshore wind farms.

Shell and ScottishPowerRenewables, which secured the initial rights to develop MarramWind a year ago, said discussions with Acorn were ongoing. Shell, a developer at Acorn, added that both projects are at a very early stage and the overlap is not significant.

Underhill also pointed to the decommissioned Pickerill gas field as a potential CCS site in the future, but said current plans to build an Outer Dowsing wind farm could pose problems.

David Few, Outer Dowsing’s project director, said the wind farm was on track to power 1.6 million homes by the end of the decade.

Reporting by Shadia Nasralla and Rowena Edwards in London; Edited by Pravin Char

Our standards: Thomson Reuters Trust Principles.

Shadia Nasralla

Thomson Reuters

He writes about the intersection of corporate oil and climate policy. He has reported on politics, economics, migration, nuclear diplomacy and business from Cairo, Vienna and elsewhere.



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