Embracing key tools to navigate overlapping oil & gas, offshore wind, and carbon storage areas

As energy transition pursuits are imbued with more vigor, co-location conflicts between oil and gas projects, offshore wind farm developments, and carbon capture and storage (CCS) undertakings have emerged as an issue in the United Kingdom (UK). However, Westwood Global Energy, an energy market research and consultancy firm, has pinpointed strategic planning and cooperation between players engaged in these endeavors as the main pieces required to put things to rights in this offshore energy puzzle.

In the wake of the third tranche of the UK’s 33rd oil and gas licensing round, which offered 31 more licenses made up of 88 blocks/part blocks in the Central North Sea, East Irish Sea, and Southern North Sea, Claire Coutinho, Britain’s Secretary of State for Energy Security and Net Zero, confirmed that multiple licenses have direct overlaps with, or come within 500 meters of, areas already under agreement for offshore wind development.

Coutinho emphasized: “Oil and gas developments and offshore wind developments already co-exist and my expectation is that they will continue to do so. Oil and gas developers and offshore wind developers are already expected, through their respective consenting and stewardship processes, to take account of other projects when planning their developments.”

According to the UK’s Secretary of State for Energy Security and Net Zero, the North Sea Transition Authority (NSTA) has unveiled a new clause, known as ‘Relationship with Windfarms,’ in relevant licenses following discussions with the Crown Estate and Crown Estate Scotland, intending to promote co-existence and reassure affected offshore wind developers that oil and gas licensees will take into account their developments.

“The new clause will require the oil or gas licensee to have a co-location agreement with the affected offshore wind developer in place before any operational activity can take place in that licence area, which includes seismic surveying, drilling exploratory wells or installing subsea or surface infrastructure,” explained Coutinho.

“Co-location agreements will be the way forward for resolving any issues arising from overlaps and I expect all parties to engage constructively, to act in good faith and to behave reasonably when approaching discussions on co-location. Where there are difficulties in reaching a suitable co-location agreement, the parties should first seek independent mediation or discuss a way forward with the North Sea Transition Authority and the Crown Estate or Crown Estate Scotland.”

While acknowledging that the recent licensing round has spotlighted a critical issue in the UK’s offshore energy sector, Bahzad Ayoub, Westwood’s Senior Analyst – Offshore Wind, has highlighted the essential role strategic planning and cooperation have in advancing the UK’s energy goals, minimizing conflicts, and maximizing the benefits of shared marine resources.

Ayoub notes that the NSTA’s batch of 31 new offshore petroleum licenses, which entails 23 in the Southern North Sea (SNS) and two in the East Irish Sea (EIS), increases congestion and necessitates new co-location agreements in the SNS and EIS, which is confirmed by operators that identify co-location as one of the issues holding up the awards.

Furthermore, Westwood’s Senior Analyst is adamant that these oil and gas licenses add to the overall congestion issue, creating additional competition for the seabed, as the SNS and EIS were already congested due to carbon storage licenses lying near offshore wind farms or overlapping such sites.

Ayoub explained: “Although the addition of this clause is a good first step, further legislation will be required to ensure that overlapping projects do not delay each other. In total, 31 offshore wind projects are overlapping or near either carbon storage or O&G licences in the SNS and EIS.

“A breakdown of the current status of offshore wind projects in the SNS shows that 11 offshore wind projects are operational, three projects have a status of EPCI and eight have a status of planning. The makeup of projects in the EIS are six operational wind farms and three projects that have a status of planning.”

For Westwood’s Senior Analyst, the wind farms with a status of planning are the primary projects that will need to maneuver potential issues arising from co-location, as site assessments and construction activities at these wind farm areas carry the possibility of clashes with planned activity at the awarded oil, gas, and carbon storage sites.

Based on Ayoub’s assessment, the potential for conflict stems from the drilling equipment and pipelines that may interfere with the placement and operation of wind turbines. Westwood’s list of examples of such overlaps encompasses the Dogger Bank South wind farm being planned in the north of the INEOS-operated Greater Pegasus area, and the Outer Dowsing project, which overlaps with the Perenco-operated Olympus discovery, where a firm well is planned.

Aside from these, the energy market research and consultancy player mentions the Norfolk Boreas wind farm, which overlaps the Orcadian-operated blocks that include the 50/26b-6 Earlham discovery, which is planned to be developed as a gas-to-wire project, connected to the wind farm.

“We have already witnessed a dispute over an overlapping zone in the SNS between the BP-led Northern Endurance carbon capture, usage and storage project and Ørsted’s Hornsea Project Four wind farm, which took two years for the two parties to resolve,” reminded Westwood’s Senior Analyst – Offshore Wind.

“The developers of the two projects had entered into an Interface Agreement in 2013, to ‘regulate and co-ordinate their activities with a view to managing potential and resolving actual conflicts’, however the dispute still occurred. It resulted in a five-month delay to the Development Consent Order (DCO) for the wind farm, further highlighting that reliance upon an agreement between parties may not go far enough.”

With operations and maintenance (O&M) activity on an operational wind farm leaving room for more co-location clashes due to marine space being required for vessels to navigate around the infrastructure that is put in place for oil, gas, and carbon storage projects, Ayoub is adamant that careful marine planning guidance will be key to ensure all projects can operate without hindrance, reducing the risk of disputes that can delay project development timelines.

Even though the spatial overlap in the SNS and EIS poses considerable operational challenges in Ayoub’s view, he also believes it opens avenues for innovation and collaboration. In line with this, Westwood’s Senior Analyst sees the potential for electrification of platforms via wind farms on shared sites as an alternative route to market for offshore wind projects.

Therefore, the developers could seek to strike a deal with the oil and gas license holder, supplying power to their infrastructure via the wind farms instead of constructing export cables to shore and waiting for grid upgrades to connect wind farms. The oil and gas developers are set to benefit from this approach since power from these wind farms would help them slash production costs alongside emissions.

“Collaboration between project developers across the overlapping areas could take place by sharing data on the characteristics of the site and potentially utilising the same supply chain companies for similar activities. Geological and geophysical surveys as well as environmental assessments are required for all three types of projects, creating a potential area for these synergies,” Ayoub noted.

Westwood’s Senior Analyst points out that wind and oil and gas projects utilize similar components, such as foundations, topsides, and power cables, creating an additional area in which they could co-ordinate on timings for installation activity, contracting the same company to undertake installations for both types of projects across the shared site.

Given the dispute risk the overlapping use of marine space in the SNS and EIS brings to the fore, Westwood is convinced that comprehensive marine spatial planning and enforcing stricter regulations beyond the recently introduced clause will be crucial to mitigating such issues.   

Ayoub concluded: “Promoting collaboration between offshore wind, O&G and carbon storage project developers can enhance efficiency, reduce emissions and streamline operations through shared infrastructure and data.

“These solutions can ensure that the development of these essential projects proceeds smoothly and without unnecessary delays. In turn, this can help the UK to meet its energy goals while minimising conflicts and maximising the benefits of shared marine resources.”