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Page added on March 23, 2017

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Big Oil Replaces Rigs With Wind Turbines

Alternative Energy

Big oil is starting to challenge the biggest utilities in the race to erect wind turbines at sea.

Royal Dutch Shell Plc, Statoil ASA and Eni SpA are moving into multi-billion-dollar offshore wind farms in the North Sea and beyond. They’re starting to score victories against leading power suppliers including Dong Energy A/S and Vattenfall AB in competitive auctions for power purchase contracts, which have developed a specialty in anchoring massive turbines on the seabed.

The oil companies have many reasons to move into the industry. They’ve spent decades building oil projects offshore, and that business is winding down in some areas where older fields have drained. Returns from wind farms are predictable and underpinned by government-regulated electricity prices. And fossil fuel executives want to get a piece of the clean-energy business as forecasts emerge that renewables will eat into their market.

“It is certainly an area of interest for us because there are obvious synergies with the traditional oil and gas business,” said Luca Cosentino, the vice president of energy solution at the Italian oil producer Eni, which is working with General Electric Co. on renewables. “As the oil and gas industry we know, we cannot get stuck where we are and wait for someone else to take this leap.”

Even as oil production declined in the North Sea over the last 15 years, economic activity has been buoyed by offshore windmills. The notorious winds that menaced generations of roughnecks working on oil platforms have become a boon for a new era of workers asked to install and maintain turbines anchored deep into the seabed. About $99 billion will be invested in North Sea wind projects from 2000 to 2017, according to Bloomberg New Energy Finance. A decade ago, the industry had projects only a fraction of that size.

While crude still supplies almost a third of the world’s energy, oil executives are starting to adjust to demands for cleaner fuels. Even so, emerging fossil-fuel alternatives including wind and solar power are starting to limit growth in oil demand.

Those technologies and electric cars may displace as much as 13 million barrels of oil a day from global demand by 2040, more than is currently being produced by Saudi Arabia, according to Bloomberg New Energy Finance.

Shell’s Interest

Shell, whose CEO Ben van Beurden has said oil demand may peak in the second half of the next decade, has set up a business unit to identify the clean technologies where it could be most profitable. The company began more than 180 years ago importing shells from Asia and needs to adapt to ensure it’s still around in another century, according to Sinead Lynch, the company’s chair for U.K. businesses.

Wind farms are especially interesting to Shell because they can power electrolysis reactions that make hydrogen, which the company says may be a major fuel for cars in the coming decades, said Lynch in an interview.

It’s exploring new opportunities across Europe in offshore wind after winning contracts from the Dutch government to build the Borssele III and IV wind farms in December. Shell’s bid marked the second cheapest cost for the technology worldwide, according to Lynch, who said the oil major’s big advantage in renewables may be its expertise in marketing.

“It’s also about marketing energy,” Lynch said. “Once you produce your wind, you need to market the power and we have a phenomenally strong marketing and trading business.”

Statoil’s Costs

Oil majors are also changing the offshore wind industry by driving down costs, Statoil Senior Vice President Stephen Bull wrote in an email.

The Norwegian oil major’s Dudgeon wind farm off England’s east coast will be 40 percent cheaper than a neighboring plant built six years ago, Bull said. It’s also creating floating offshore wind foundations that eliminate the costly step of anchoring windmill masts into the seabed. In addition to the U.K., the company is developing projects in Germany and Norway and won a December auction to build an offshore wind farm in New York.

Cost cuts for offshore wind are helping the technology start to compete with traditional forms of energy, especially nuclear, according to Bloomberg New Energy Finance. Current projects entering operation are delivering power at about half the price of farms finished in 2012 thanks to larger turbines and more competition. Costs could fall another 26 percent by 2035, according to the London-based researcher.

The entry of oil majors into renewables is part of “a longer term trend,” according to Nick Gardiner, head of offshore wind at U.K. Green Investment Bank, who notes that companies with the scale of Shell and Eni have the clout to finance projects more cheaply than many of their competitors.

“I don’t think they are doing this just for investor-relation purposes,” said Gunnar Groebler, head of wind at Sweden’s Vattenfall AB, one of the top five offshore wind developers who welcomed the added competition. “Given that these projects are billion-euro investments, I just assume that they will have done their assessments very thoroughly.”

bloomberg



14 Comments on "Big Oil Replaces Rigs With Wind Turbines"

  1. Cloggie on Fri, 24th Mar 2017 2:31 am 

    Radically new design of wind turbine enables 80% weight reduction with same yield. Secret: replace rotating axis and single generator with a ring containing many smaller generators that can be switched on one after the other as wind speed incrases:

    https://deepresource.wordpress.com/2017/03/24/megawindforce-turbine/

    An offshore turbine with tip height of 135 yields the same energy as a conventional design of 200 m. Rotational speeds are much lower because of many-generators-principle, which leads to lower stress and subsequent lower turbine weight.

    Cost: 3 cent per kWh.

  2. Cloggie on Fri, 24th Mar 2017 2:48 am 

    After last week’s election, any new Dutch government will likely heavily increase the speed of the energy transition, far before the EU 2050 time frame. Even the “right-wing” business party VVD (Volkspartij voor Vrijheid en Democratie), the largest party in parliament and member in any government coalition, has voiced concern with the latest data regarding climate change. Helpful is that for the first time since the Lehman 2008 financial crises the Dutch government is running surpluses again, enabling ambitious investment programs.

    The possibility of adding new offshore skills to the traditional already strong offshore industry also plays an important role for the VVD.

  3. Simon on Fri, 24th Mar 2017 4:22 am 

    Hi Cloggie

    have you recovered from the election fever.

    You should have seen the british coverage of your election, hinting that Kurt Wilders was gonna win and join the glorious march to Brexit, but…. when it started to not look that way, the message was that the election was too complicated and the Dutch people were being hoodwinked, when he didn’t win, the message was, not having him in a coalition is undemocratic, then finally they stopped coverage.
    So no revolution in Austria or Holland, France and Germany next.
    Interesting times

    Simon

  4. Boat on Fri, 24th Mar 2017 4:49 am 

    clog,

    Have you been able to find any stats on the megawindforce turbine. Like how many have been installed, where, cost per MW, pay back time etc.

  5. Cloggie on Fri, 24th Mar 2017 5:12 am 

    Have you been able to find any stats on the megawindforce turbine. Like how many have been installed, where, cost per MW, pay back time etc.

    It is a design only. A first prototype is being build as we speak, supported by the province of Groningen to the tune of 125,000 euro.

    Onshore maintenance:

    https://www.youtube.com/watch?v=8ry8NaF9d_Y

    Interview (in Dutch) with inventor/director Ton Bos:
    https://www.youtube.com/watch?v=BPbERUg1niM

    The real innovation
    1) is distribution of wind forces over a ring rather than a single axis
    2) large number of generators without gears enabling to reduce rotor speed by gradually switching in generators depending on wind speed between wind force 2-11. The guaranteed low rotor speed enables a lighter construction and hence lighter weight and lower cost.
    3) Low noise due to lower rotor speed

  6. Cloggie on Fri, 24th Mar 2017 5:26 am 

    have you recovered from the election fever.
    You should have seen the british coverage of your election, hinting that Kurt Wilders was gonna win and join the glorious march to Brexit, but…. when it started to not look that way, the message was that the election was too complicated and the Dutch people were being hoodwinked, when he didn’t win, the message was, not having him in a coalition is undemocratic, then finally they stopped coverage.
    So no revolution in Austria or Holland, France and Germany next.
    Interesting times

    A Nexit is not going to happen. I’m not even sure if Brexit will happen, once the consequences for Britain will sink in: losing Scotland as well as the City to continental Europe. Britain will become totally isolated and parked outside of the common market. Michael Heseltine: Brexit = unmitigated disaster for Britain. And that’s what it is.

    But it is fine with me. Continental Europe has began building an army of its own Euro-Pentagon designated for Brussels.

    http://www.dailymail.co.uk/news/article-3964910/German-MEP-says-European-Army-happen-thanks-Brexit-Britain-thing-stopping-Germany-France-s-plans.html

    Perhaps if the US withdraws from NATO we can use the brand new NATO headquarters in Brussels:

    http://www.som.com/FILE/20256/nato_construction_1575x900_som_03jpg.jpg?h=800&s=17

    And now that Turkey is looking for trouble with Europe, expect them to leave the West and Europe will automatically turn to Russia. Voila, the new super power Paris-Berlin-Moscow. What’s not to like.

    Geert Wilders did increase seats with 33% but did not become the largest. But far more interesting is the demise of multicult central Labor (PvdA) from 38 to 9 seats. Holland is a different country now, far more right-wing. Besides all the Balkan countries are building fences now, so the apocalyptic events of 2015-2016 will not repeat themselves (poor Greece).

    The multicult problem can’t be solved via the voting booth but will be solved via civil war, both in America and Europe.

  7. Cloggie on Sat, 25th Mar 2017 7:57 am 

    Energy Island as a wind energy hub in the North Sea one important step closer yesterday:

    https://deepresource.wordpress.com/2017/03/25/important-step-taken-towards-energy-hub-north-sea/

    If the Chinese can build an artificial island in the deep South China Sea on top of a coral reef, the Dutch and others can be expected to build an airstrip-maintenance island at the Dutch part of Doggersbank:

    http://www.anemoon.org/Portals/0/Gebieden/Doggersbank/dogger_map.gif

    Depth 22 meter:

    http://www.pterodroma.com/?page_id=8

  8. Davy on Sat, 25th Mar 2017 8:19 am 

    I can’t see how an energy island would have much of a positive EROI but it is still better than a zero EROI of a new airport

  9. Cloggie on Sat, 25th Mar 2017 8:32 am 

    The purpose of the island(s) is to bring maintenance crew close to the turbine parks. On top of that excess electricity needs to be converted into fuel and shipped to the surrounding countries.

    http://www.europeanpowertogas.com/about/power-to-gas

    And finally, onshore wind and solar needs to be distributed over Europe as well and excess electricity send to Norway for pumped hydro storage.

  10. Davy on Sat, 25th Mar 2017 8:44 am 

    Sounds great Clog and like I always say “its better than most other status quo progress”. Yet, it somehow reminds me of the building of a great pyramids and how they eventually become little more than a curiosity. If the system can’t handle or support them they will be of little use. That danger is real and growing. Less grandiose and more practical solution in the embrace of decline are better bang for the buck. The problem is green capitalism is a product of global capitalism and modern finance. These projects can get financing from the markets and government support. That does not mean they are valid efforts for long term sustainability in a different economic and social reality. It means currently in the status quo they have capex from a many times irrational market.

  11. Cloggie on Sat, 25th Mar 2017 9:07 am 

    Yet, it somehow reminds me of the building of a great pyramids and how they eventually become little more than a curiosity.

    That’s not an argument against the energy island. In the long run everything decays. For thousands of years though the pyramids looked like this:

    http://tinyurl.com/k7mhl3l

    Less grandiose and more practical solution in the embrace of decline are better bang for the buck.

    We have the means to build this infrastructure, so let’s do it. No need to “embrace decline” more than necessary.

  12. Cloggie on Sat, 25th Mar 2017 9:28 am 

    On March 22 in all large Dutch newspapers a full page add was placed, with a call to the future Dutch government (the formation of which is now underway) to aim for “rapid transition to clean energy”:

    http://www.fluxenergie.nl/oproep-aan-nieuwe-kabinet-nu-deltaplan-100-schone-energie/

    One of these newspaper report that Dutch corporations are ready for a “green energy” plan and that a “green-right coalition” is worth trying and should aim for 100% clean energy by 2030:

    https://www.trouw.nl/groen/bedrijven-voelen-groene-energie~a1bd43e2/

    (Chrome browser, right click, translate)

    Motto: “climate is neither left or right”.

  13. GregT on Sat, 25th Mar 2017 11:02 am 

    The only green energy available to us is from the Sun, in the form of photosynthesis. There is nothing ‘green’ about human industrial processes.

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