Oil & gas players pursuing electrification in Norwegian Sea to curb emissions

Two oil and gas firms operating on the Norwegian continental shelf (NCS) – OKEA and Equinor – in collaboration with license partners have set the wheels into motion to electrify the Draugen field and Njord A platforms.

To this end, the partners made an investment decision and handed over revised plans for development and operation (PDO) to the Ministry of Petroleum and Energy on Thursday. This project is expected to reduce emissions by 330,000 tonnes of CO2 per year and increase value creation from the NCS. OKEA outlined that reaching Norway’s ambition to cut greenhouse gas emissions by 55 per cent by 2030 will not be possible without the electrification of oil and gas fields.

Knut Gjertsen, SVP for Projects and Technology at OKEA, remarked: “OKEA shares the authorities’ climate ambitions. The license partners in Draugen and Njord have a common goal for long-term value creation and at the same time reduce the carbon footprint. The project will result in annual reduction of CO2 emissions of 200,000 tonnes from Draugen and 130,000 tonnes from Njord.”

Aside from reducing CO2 emissions, the project is anticipated to result in a lower cost of operations and prolong the economic life of the field. As an application has been made for the Dragen license extension until 2040, the electrification of this field will increase the attractiveness of potential future resources in the area, underscores OKEA.

Furthermore, the electrification of the Draugen and Njord A platforms is a collaborative project, where OKEA will be responsible for developing the power infrastructure from shore to Draugen and Equinor will be in charge of the cable from Draugen to Njord and modifications and upgrades on Njord A.

Moreover, Draugen and Njord, which will require up to 80 MW annually, will be connected to the power grid at Tensio’s transformer station at Straum in Åfjord municipality, which has an annual capacity of 200 MW. Statnett assesses the connection as operationally sound without the need for reinforcements of the power grid.

OKEA also reveals that the investments for the entire project are estimated to be around NOK 7.3 billion (over $740 million), which are shared between Draugen and Njord licenses. The project is expected to be completed in the first quarter of 2027. The revised PDO and plan for construction and operation are subject to approval from the Ministry of Petroleum and Energy.

In the meantime, OKEA has awarded a letter of intent (LOI) to Aker Solutions and a contract to NKT related to the project. In case relevant government approvals are not granted, the industry-standard cancellation clauses have been incorporated into these deals.

In a separate statement, Aker Solutions confirmed the LOI with OKEA for the Draugen electrification project. This is planned to include “major modifications of the existing platform” to enable it to receive power from shore via an electrical power cable and replace the current power generation from gas turbines at the platform.

The Norwegian contractor expects the LOI to be converted to a full engineering, procurement, construction and installation (EPCI) contract during the first quarter of 2023. Aker Solutions expects this to be a substantial contract, which it defines as being between NOK 2.5 billion (almost $254 million) and NOK 4.0 billion (over $406 million).

Located in the southern part of the Norwegian Sea, the Draugen field in production license 093 lies at a water depth of 250 metres. Originally awarded on 9 March 1984, the Draugen license has been extended until 9 March 2024. OKEA is the operator of the license with a 44.56 per cent working interest, while its partners are M Vest Energy with a 7.56 per cent stake and Petoro with 47.88 per cent interest.

Equinor also confirmed in a separate statement that Njord A would be electrified to cut greenhouse gas emissions from production, based on a collaboration project with OKEA. In addition, the firm underlines that the electrification of Njord will benefit the Hyme, Bauge and Fenja tie-back fields, which help finance the project.

Trond Bokn, Equinor’s senior vice president for project development, commented: “Njord A and the Njord Bravo floating storage and offloading (FSO) vessel returned to the field this autumn after extensive upgrading and will soon be ready for 20 more years of production and value creation. We are now continuing the modernisation of Njord by converting to electric operation. This will cut emissions from production and reduce Norwegian CO₂ emissions by more than 130 000 tonnes per year from 2027.”

The Norwegian giant further points out that around 60 per cent of the power needed by Njord A will be covered by electricity, and the Njord Bravo FSO will be fully electrified. Equinor also highlights that start-up is expected in the first quarter of 2027.

Located in the Norwegian Sea, around 130 km northwest of Kristiansund and 30 km west of the Draugen field, the Njord field first started production in 1997. It was developed with a floating steel platform, Njord A, and a storage vessel, Njord Bravo. Equinor’s partners in the field are Wintershall Dea and Neptune Energy.

The produced oil is transported by pipeline to the Njord Bravo FSO, and from there by tankers to the market while gas from the field is exported through a 40-kilometre pipeline connected to the Åsgard transport system (ÅTS), and from there to the Kårstø terminal.