Electrification of offshore oil and gas via floating wind power is “not for the faint-hearted” said a leading renewables sector analyst as two developer teams swept the board in Scotland’s pioneering INTOG lease round.

Cerulean Winds, with 3 gigawatts, and the partnership between Flotation Energy and Vargronn, with about 1.9 GW, took almost all the TOG — Targeted Oil and Gas — element when the Crown Estate Scotland awarded pre-lease exclusivity on seabed on Friday.

The developers will now have the chance to hone their plans as they advance through planning and financing towards final 50-year lease agreements.

But they face a race against time if they are to help the North Sea oil and gas sector hit defined decarbonisation milestones agreed with the UK government, including a target to slash emissions by half by 2030 against a 2018 benchmark.

Alun Roberts, associate director at specialist renewables consultancy BVG Associates, said: “The stand-out conclusion from the INTOG results is that the electrification of oil and gas platforms using floating wind farms is one for the specialist developer.

“They are faced with the challenge of generating as fast as possible — [to] maximise the revenue from oil and gas producers — but using floating technology that is unproven at large scale.

“INTOG projects are therefore not for the faint-hearted and the results show that it is the specialists that have the ambition to overcome the challenges.”

Before the INTOG auction, analysts highlighted challenges extending across not just the deployment of the floating plant itself, but into areas such as cabling and management of variability.

The Flotation and Vargronn partnership was bullish over its ability to rapidly make an impact with its two projects — Green Volt and Cenos. It claimed they “could begin generating first power from 2027 and 2028, respectively, making them the most advanced projects for electrification and decarbonisation of oil and gas platforms with floating offshore wind in Europe”.

Both partnerships list heavyweight partners in details of their bids lodged with Crown Estate Scotland.

In Flotation and Vargronn’s case, they include Japanese giant Tepco and Eni, the Italian oil and gas group that is part owner of Vargronn.

Cerulean Winds cites partners including engineering multinational Worley, turbine maker OEM Siemens Gamesa and Belgian contracting giant DEME.

Industry organisation Offshore Energy UK (OEUK) said that electrifying UK North Sea oil and gas production will reduce import-related emissions and preserve jobs that will be needed as the energy transition progresses.

“The projects selected in today’s announcement will play a big part in the transformation of the North Sea — providing low-carbon electricity to power oil and gas installations and helping decarbonise the sector,” OEUK chief executive David Whitehouse said.

The organisation said the effort to electrify offshore platforms is motivated by a need to reduce UK energy emissions while preserving local supply.

While half of UK energy demand will still be met through oil and gas “in the mid-2030s”, Whitehouse said, “supplying as much of this demand as possible from domestic production will help to control import emissions while protecting the critical skills and jobs needed for the energy transition”.

The OEUK has also listed some of the questions the wind developers — and their would-be power offtakers in the oil and gas sector — will need to resolve as they advance.

According to Houston-based consultancy Wellingence Energy Analytics, targeting fuel consumption is the main way to reduce emissions at offshore platforms.

“More than 80% of UK’s offshore emissions will come from the fuel consumed at the facilities. That makes electrification the most impactful strategy,” Juan Agudelo, Head of Energy Transition at Wellingence, told Upstream.

He warned, however, of hurdles around project economics and lead times: “Standalone offshore wind project economics are marginal amid rising inflation and supply chain constraints.

“Developing these projects takes time, and production in the UK is mature. It means [that] the longer it takes to develop these projects, the fewer potential facilities to electrify they will have,” Agudelo said.

Majors muted

The initiative has been hailed as a way to help Scotland’s huge hydrocarbons sector decarbonise its production, meeting one of the goals of the North Sea Transition deal the industry signed with the UK government in 2021.

Although the TOG element of INTOG dominated the capacity awarded, the IN — or innovation — element attracted its fair share of big names, including oil supermajor BP which said its 50 MW winning bid will be its first floating wind demonstration project, with the potential to link to the Aberdeen Hydrogen Hub it is developing in the Scottish city.

Richard Sanford, BP’s vice president of offshore wind (UK) said: “This win shows our dedication to further building our global offshore wind pipeline with local suppliers playing a vital role in its delivery. That’s why we’ve launched a dedicated online portal for them to register their interest.”

In comments to Upstream, energy consultancy Rystad noted that the list of winners includes few of the energy majors that have shown interest in developing offshore wind assets, even though the likes of BP, TotalEnergies, Shell and Equinor have oil and gas assets within the INTOG areas.

“This means that they either were unsuccessful in securing a winning bid, or that they did not see the need to take an active role in the power generation itself – some of these operators may already have letters of intent or other agreements in place with some of the announced winners,” Alexander Dobrowen Flotre, Vice President & Product Manager Offshore Wind, and Sonya Bodoo, Vice President Upstream Research at Rystad, told Upstream.

Not everyone was impressed. “The irony should not be lost on anyone that as the fossil fuel industry thinks about attaching wind turbines to oil platforms, they are also pushing to drill every last drop of oil and gas… cutting emissions from producing oil and gas is a drop in the ocean compared to the pollution from actually burning the final oil and gas produced,” Scotland oil and gas campaigner Freya Aitchison said.

(A version of this article was originally published in Upstream’s renewables sister publication, Recharge, on 24 March 2023)