In focus: Post-COP26, offshore energy sector using every lever to support creation of net-zero future

As the dust is settling in the aftermath of COP26 – with plans already in place for the next year’s COP27 event to be held in Egypt’s Sharm El-Sheikh resort – new developments materialised in the offshore energy sector this week, laying the grounds for the net-zero future.

Two of many major developments during COP26 include the resulting document called the Glasgow Climate Pact and a new alliance – the Beyond Oil & Gas Alliance (BOGA) – of 11 national and subnational governments determined to set an end date for their oil and gas exploration and extraction.

The Glasgow pact was adopted by nearly 200 countries and reaffirmed the Paris Agreement temperature goal of pursuing efforts to limit the temperature increase to 1.5 °C above pre-industrial levels.

A crucial element of the pact involved a reference to fossil fuels and their future in global economies as the world is pursuing its net-zero goals, resulting in a call for accelerating efforts towards the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies.

Environmentalist groups were not happy with the results, stating that the line on phasing out unabated coal and fossil fuel subsidies is weak and compromised, but others argued the pact provides a basis for further action, including Scotland’s First Minister, Nicola Sturgeon, who said the key is whether the pact will be implemented fully and with the required urgency.

Scotland, the host of COP26, is also considering joining the Beyond Oil & Gas Alliance as revealed by the country’s First Minister in her comments on the outcome of the summit. Sturgeon also came out against the Cambo oil project off Shetland moving away from its previous calls to the government to reassess the project and now taking a firm stand against it for the first time.

The last couple of months proved to be turbulent for the oil and gas sector with the first post-COP week further proving that the times are indeed changing as oil major Shell revealed a decision to simplify its share structure, which will result in major changes for the company but also allow it to accelerate its energy transition efforts.

Shell will relocate its tax base from the Netherlands to the UK and remove the Royal Dutch designation from its name much to the surprise and disappointment of authorities in the Netherlands. As explained by Shell, the single share structure will allow it to strengthen its ability to rise to the challenges posed by the energy transition, by managing its portfolio with greater agility.

As Scotland is looking to expand beyond oil and gas, two Scottish companies operating in the tidal & wave energy sector revealed important updates this week, which will result in delivering more renewable energy to the market in the future.

Namely, Orbital Marine Power has secured a strategic investment from a major offshore energy services player, TechnipFMC, which will also become a shareholder in the Scottish-based tidal energy business.

The combination of TechnipFMC’s integrated approach, industrialisation capabilities, and project management expertise with Orbital Marine’s tidal energy technology can be scaled-up to meet the increasing demand for renewable energy and significantly lower the cost of delivering tidal energy.

Furthermore, Mocean Energy has recently concluded its five-month sea trials for the Blue X wave energy prototype. Next year, the Scottish-based wave energy company plans to put the device to sea in Orkney again and connect the machine to a subsea battery, which will be used to power a remotely operated autonomous underwater vehicle – with potential applications for oil and gas offshore operators.

As noted by Tim Hurst, managing director of Wave Energy Scotland, the technology has the potential to help decarbonise the oil and gas sector and deliver grid-scale electricity.

Hurst also added: “Post-COP, it is vital Britain puts a ring-fence in place and uses every lever it can to support home-grown technologies which can create a net-zero future.”

Another UK-based player is pushing for expansion beyond oil and gas and transitioning into the renewables market. CRP Subsea has made a large-scale investment in a new manufacturing facility to support its transition from primarily oil & gas into renewables.

The manufacturing facility includes a semi-automated production line for the NjordGuard cable protection system used for offshore wind farms.

Ray Cann, head of operations at CRP Subsea, stated: “We are keen to support the commitments made at COP26 and the drive to net-zero.”

A tangible step towards delivering the UK government’s strategy to achieve 5GW of low carbon hydrogen production capacity by 2030 was made this week through an agreement between the UK’s Wood and HYGEN Energy to accelerate the production of green hydrogen for decarbonising transportation in the UK.

The two companies will develop solutions for future hydrogen production plants across the UK, beginning with the conceptual design for the facility at Herne Bay, Kent, which will generate green hydrogen from existing offshore wind farms. This will then be used in zero-emission mobility transport solutions in the Southeast of England.

Production is expected to begin by the middle of 2023 and, once finalised, the plant will have a production capacity of between eight and nine tonnes of green hydrogen per day.

Efforts to decarbonise the LNG value chain and the shipping sector are moving forward after a reporting methodology to produce a statement of GHG emissions for delivered LNG cargoes has been published by Singapore-based Pavilion Energy, state-owned QatarEnergy, and U.S. oil major Chevron.

This is the first such published methodology that will apply to sales and purchase agreements, providing a calculation and reporting framework for GHG emissions from the wellhead-to-discharge terminal.

The goal is to create a common standard for the reporting and verification of the GHG emissions associated with producing and delivering an LNG cargo as part of a push to drive greater transparency and enable stronger action on GHG reduction measures.

Meanwhile, Danish shipping giant Maersk is doing its part to contribute to the achievement of the UN Sustainable Development Goals (SDGs) and the Paris Agreement following an inaugural $567 million green bond to fund the construction of its first feeder vessel and the series of 8 large ocean-going containerships which will be capable of operating on carbon-neutral methanol.

The 10-year green bond comes under the umbrella of Maersk’s newly launched Green Finance Framework, which is designed to allow the company to issue a variety of sustainable financing instruments which may include bonds, loans, project finance and other instruments. By establishing the framework, Maersk intends to align its funding strategy with its goal to become carbon neutral by 2050.

Patrick Jany, CFO at A.P. Moller – Maersk, explained: “With this green bond, we aim at diversifying our investor base by reaching out to new investors and increasing the transparency of our ESG ambitions and performance even further towards our stakeholders.”

Zero-emission operations are also on the horizon for the dredging sector, which is now looking into zero-emission electric dredge systems. ROHR-IDRECO Dredge Systems has recently announced two new cutter suction dredge models, the Hawk and Falcon, to its product line-up.

These dredges are electrically driven with an add-on diesel generator power unit installed onboard for when there is no access possible to the electrical grid.

ROHR-IDRECO CEO, Fulco Vrooland Löb, explained: “Through the dual-mode – link the dredge to the electrical grid when possible, run on diesel when not – these dredges can be put to work at both to traditional contract dredging projects, as well as to projects in sensitive or urban settings where zero-emission operations are required.”