LONDON – The UK seeks to emulate Norway’s success in platform electrification to achieve the decarbonisation target.
According to Wood Mackenzie analysts Lucy King and Neivan Boroujerdi, about two-thirds of operating emissions come from electricity consumption related to production, processing and liquefaction.
Norway set to sanction spending of nearly $ 5 billion for the next wave of platform electrification over the next two years, with programs approved by the end of 2022 benefiting from current temporary fiscal conditions .
Electrification has reduced emissions by around 25% and kept absolute emissions stable, analysts add, despite an increase in activity and infrastructure.
Earlier this year, the UK’s North Sea Transition Deal set a target of reducing emissions from oil and gas production in the sector by 50% by 2030, which led to the emphasis on the electrification of platforms.
Norwegian fields generally had 20 years of life remaining before electrification. But in the UK, the associated costs for a minimum remaining life of 10 years would exclude almost 50% of fields, analysts say, while 20 years would exclude more than 90%.
Hubs in the middle of the North Sea in the UK and West Shetlands, where the lifespan in the field is longer, appear to be the best candidates, but this will still require major investment and action. fast to meet decarbonization targets.
Although carbon prices have increased following recent gas supply constraints, they remain too low to incentivize electrification. Without cost reduction or financial support, a carbon price of $ 250 / metric tonne would be needed to cover the capital cost of a typical UK stand-alone electrification project, the authors say.
Therefore, collaboration is a must, with multiple domains and their partners sharing the infrastructure. Hub-led solutions could reduce costs by 50% on a reduced emissions basis and lower the “carbon break-even” price to $ 125 / metric tonne. Government financial assistance, similar to Norway’s NOx fund, could lower it further.
In the UK, tax breaks are limited for such projects compared to Norway. An increase in capital spending associated with decarbonization could encourage investment, while tax loss refunds, similar to E&A spending in Norway, could incent companies that are not in a position to pay taxes.
Another issue the UK needs to tackle is the lack of infrastructure to power offshore electrification, so grid access and pricing regulation should be a priority, analysts suggest.
While taking electricity from the Norwegian grid is an option, access to declining offshore wind power could help advance the electrification of UK platforms.