Shell to bid for two offshore wind areas in Norway

Dutch oil major Shell has partnered with Norwegian hydropower producers BKK and Lyse to apply for licenses in two areas currently offered by Norwegian government for offshore wind development.

The consortium is now working to prepare applications for projects in the Utsira Nord area, deemed better suitable for floating wind technology, and Sørlige Nordsjø II, which borders with Danish waters and which the three partners see as ideal for a connection to continental Europe.

“We see Norway as interesting both in the perspective of supplying enough renewable energy to Europe and to develop floating offshore wind solutions that can become commercially viable”, said Hessel de Jong, Shell’s General Manager for Offshore Wind in Europe.

The companies have plans to utilise offshore wind energy for electricity supply to the grid in combination with hydropower and for electrification of oil and gas assets.

“The North Sea has one of the best wind resources in the world. When this produces, we can hold back the water in our reservoirs. In calm periods, we can cover the demand for power by phasing in hydro-production”, said Jannicke Hilland, CEO of Statnett-owned hydropower producer BKK.

“We wish to contribute to the electrification of the oil and gas industry and connect the offshore wind potential of the Southern North Sea to relevant markets in Europe. The interaction between offshore wind and hydropower will be an advantage for us.”

Eimund Nygaard, CEO of Lyse, said the three partners had not pre-selected any technologies or suppliers so far, but that their projects would represent great opportunities for the Norwegian offshore industry.

“The global market for offshore wind is growing rapidly and we aim to be a platform where Norwegian suppliers can develop competitive advantages to succeed in international tenders”, Eimund Nygaard said.

Shell and its partners are the latest of several companies and consortia to announce the decision to apply for acreage off Norway, after the government opened the Sørlige Nordsjø II and Utsira Nord areas last year.

A few days ago, British oil and gas major BP was reported to be joining Statkraft and Aker Offshore Wind in a bid for the Sørlige Nordsjø II area, with this consortium also having plans to explore opportunities to power offshore oil and gas facilities with clean electricity.

For Utsira Nord, the award process is anticipated to begin by the end of this year. For the Sørlige Nordsjø II area, the Norwegian government is expected to make award announcements in the first quarter of 2022.

Enova is the vehicle to support the development of floating offshore wind technology. The government will consider increasing its grants to Enova as part of the regular state budget process when the time comes to award concessions to prospective developers at Utsira Nord.

The considerations of financial support will depend on the technological development and the maturity of the floating wind projects.

According to the latest information from Norway’s Ministry of Petroleum and Energy, the government presupposes that bottom-fixed offshore wind at Sørlige Nordsjø II will be built without state aid.

The government is currently working on an assessment of hybrid projects at Sørlige Nordsjø II for which the industry had advocated to allow for the power to be brought onshore both in Norway and abroad, enabling import and export of electricity.