Thursday, May 25, 2023

LNG Carrier Shipbuilding Risks Stranded Assets Due to Climate Policies

Risk for stranded assets is high due to the rate of LNG carrier construction and climate change policies (file photo)

The rapid growth in LNG shipbuilding responding to the demand for gas transport is raising the likelihood of creating stranded assets writes Climate Analytics, a climate science and policy institute, in a newly released report entitled “High and Dry: The global energy transition's looming impact on the LNG and oil shipbuilding industry.” Partnering with South Korean climate and energy advocacy group Solutions for Our Climate, the report highlights the risk of overshooting LNG shipping capacity which is increased by future energy scenarios that call for the rapid elimination of fossil fuels.

“This report finds that the uptake in shipping capacity far exceeds global forecasts for the LNG trade as the world transitions away from fossil fuels,” writes Victor Maxwell and Nandini Das as co-authors of the report. The report calls for Korea and other shipbuilding countries to redirect public finance currently subsidizing fossil fuels, including shipbuilding activities, toward clean energy. Doing so they write would avoid stranded asset risk and delivery a transition for the shipbuilding industry away from its focus on gas carriers and crude oil tankers.

The orderbook for LNG carriers grew to record levels in 2022, with the authors citing the oil and gas industry’s “dash for LNG following Russia’s invasion of Ukraine.” While the war and the embargoes on Russian energy shifted demand to make up for the lost supplies, producing nations have also been rushing to increase capacity and LNG exports. Producers are expanding their facilities in the United States as nations such as China rapidly increase imports while Qatar is in the final phase of a long-term expansion project to open its new North Field which is expected to double the country’s exports.

The report analyzes the outlook for LNG carrier and oil tanker shipbuilding using a variety of scenarios in the efforts to slow global warming. They point out that these ship types in the five years between 2016 and 2020 accounted for 27 percent and 10 percent of shipbuilding globally.

They calculate that at the end of 2021, there were around 700 LNG ships. However, they highlight the rapid growth in 2022 saying that 34 LNG carriers were added last year and a further 335 LNG carriers are expected to deliver between 2023 and 2028, according to data from Clarkson Research.

They further highlight that the South Korean shipbuilding industry is heavily dependent on LNG carriers. Along with tankers they said these ships rank among South Korea’s top ten exports in terms of value. In 2022, Korean shipbuilders won over 70 percent of the orders for LNG carriers, representing 65 percent of the tonnage order from the country’s shipbuilders. The market for VLCCs has been slower based on the downturn in the oil markets but rebounded since mid-2022 as analysts predicted the beginning of a prolonged upcycle in the oil market.

The report highlights that shipowners are also continuing to explore further LNG carrier orders. They cite reports that QatarEnergy is in discussions with the South Korean shipbuilders for a further order of up to 40 LNG carriers for delivery by 2027. TotalEnergies is also reported in discussion for an order of 17 LNG carriers to support its resumption of the Mozambique LNG project.

“If built, the global LNG shipping capacity will further exceed IEA’s forecast of LNG trade,” the report warns. “This poses a particular risk for financial institutions that provide loans and underwriting to the capital-intensive shipbuilding industry.”

They conclude that any decline in the market for these ships will have a significant impact on the sector and broader implications for shipbuilding nations. Given the traditional economic lifespan for ships versus the timelines for cutting and eliminating fossil fuel use, the report highlights the potential for creating stranded assets among the current class of newbuilds. They call for shipbuilders and their nations to prepare for these changes highlighting the heavy dependence on oil tanker and gas carrier construction creates a likelihood for a fundamental crisis.

Trafigura: Global South Could Power Shipping With Green Fuels

But without a global carbon levy on bunker fuel, "it doesn't happen"

iStock image of hydrogen pipeline concept — iStock

In a new white paper released Tuesday, shipping executives at commodities trading house Trafigura argued that incentivizing a transition to zero-carbon marine fuels would not only help meet emissions targets - it would also create new economic opportunities in the Global South, where abundant renewable potential could be tapped to make e-fuels like green methanol and green ammonia.

Trafigura's analysis determined that Asia, South America and Africa have potential to produce abundant quantities of electrofuels. Argentina, Brazil, Chile, Colombia, Egypt, India and Morocco are particularly well-positioned for manufacturing green hydrogen, the building block of the electrofuel economy.

However, shipping as a whole is far from on track for creating a market for that fuel. Based on a business-as-usual trajectory, total emissions should roughly triple by 2050. If energy efficiency measures are implemented, emissions would still double by midcentury.

To get to a point where green bunker fuel is made and used at scale, Trafigura argues, the IMO will need to enact substantial carbon policy measures. While peripheral adjustments in the rules will help, the main tool would have to be the most controversial option available - a global carbon levy. Even the cheapest electrofuels from the most cost-efficient markets (in the Global South) will be twice as expensive as VLSFO, Trafigura predicts. At that price, they would have a hard time competing with fuel oil unless IMO taxes bunker fuel and uses the proceeds to subsidize green fuel.

Green corridors, regional (EU) regulation and voluntary uptake will all help, but "only IMO regulation can ensure global participation in shipping decarbonization," the authors argued - and only global uptake would be enough to spin up a green-hydrogen industry across the developing world.

“Delaying action will only add to the eventual cost of decarbonisation. The IMO needs to decisively move forward to tackle the shipping industry’s emissions and start the journey to a sustainable and resilient future,” said Rasmus Bach Nielsen, Global Head of Fuel Decarbonization at Trafigura and co-author of the whitepaper.

Trafigura first called for a levy in 2020, when it suggested a carbon price in the range of $250-300 per tonne CO2 (about $750-900 per tonne bunker fuel). This is among the highest proposed taxes yet published, and it would more than double the current price of conventional bunkers - closing the gap with green-fuel pricing.

The cheapest production potential for green fuels is in locations with the best renewable-power resources, and many of those sites exist in developing nations. In select sites in the Global South, high-wattage wind and solar could produce electrofuels at a cost in the range of $750 per tonne, Trafigura estimates. This is much less expensive than the expected production cost in Europe, where it would be about $1,200-1,500 per tonne.

Sub-Saharan Africa could be the biggest winner in an energy shakeup. Its maximum green-fuel production potential is equal to that of Australia, the Middle East and South America combined. Between all of these four regions, there is enough renewable-power potential available to fuel shipping 100 times over, Trafigura concluded - if the right carbon policies are enacted at IMO. And if the industry is to spool up to meet a five percent green-fuel target by 2030 - a realistic goal, according to Nielsen - that carbon policy would have to be enacted by 2025, putting pressure on IMO MEPC 80 this summer.

"If you can summarize it, it's not a technology problem; the potential [fuel] supply is there; we believe that the demand is there in order to meet Paris [Agreement]; the financing is there; so what's missing is the consensus on carbon pricing," said Margaux Moore, head of energy transition research at Trafigura. "We do need a price on carbon in order to support the adoption of these low-carbon fuels. Without it, it doesn't happen."

Chinese Bulker Goes Aground in Suez Canal

Xin Hai Tong 23's trackline and the location of the grounding (Pole Star)

On Thursday, a Chinese bulker went aground in the Suez Canal, prompting an effort to carry out a refloat.

The Xin Hai Tong 23 entered the canal from the south and ran aground in the narrow lower stretch at about 0100 hours GMT on Thursday, according to AIS data provided by Pole Star. A small number of other ships were delayed just behind it in the queue.

According to agent Leth Agencies, the Suez Canal Authority provided assistance by dispatching two tugs, and the vessel was successfully refloated at about 0740, freeing up space for the northbound convoy to transit. The Xin Hai Tong 23 was turned around and brought out the southern entrance.

Groundings occur periodically on the narrow waterway, and the soft sand of the banks is usually forgiving. In January, a bulker carrying 65,000 tonnes of Ukrainian grain went aground in the canal near Qantara due to a technical issue. In August, a tanker briefly grounded in the lower canal, stopping traffic for several hours.

Xin Hai Tong 23 is a Hong Kong-flagged bulker built in 2010. She has a mixed port state control history; during her last inspection in Tianjin, officials found issues with fire prevention measures and with her watertight hatches.

By far the most prominent grounding casualty on the canal in recent memory was the double-ended grounding of the ultra-large boxship Ever Given in 2021. When the pilots on board lost heading control in a windstorm, the Ever Given straddled the full width of the lower canal and dug both bow and stern into the sand. It took five days to free her, delaying dozens of ships and tens of billions of dollars worth of cargo.

Video: Drone Boats Attack Russian Surveillance Ship in the Black Sea

On Wednesday morning, the Russian Ministry of Defense claimed that a Russian surveillance ship had been attacked by Ukrainian drone boats in international waters in the southwestern Black Sea.

At 0530 hours, the ministry reported, the Ukrainian armed forces attempted to attack the surveillance ship Ivan Khurs using three unmanned speedboats - a tactic which Ukraine has used before. The strike was not successful, Russia claimed, and all three boats were destroyed by the Khurs' defensive weaponry.

The ministry released a video appearing to show a black drone boat approaching the camera at speed and attempting to evade a stream of machine gun fire. The small craft exploded before reaching target.

At the time of the strike, the Khurs was tasked with patrolling the route of the TurkStream and Blue Stream pipelines under the Black Sea, about 75 nm to the northeast of the Bosporus entrance, according to the ministry. This location is within the Turkish EEZ but outside of Turkish territorial seas.

Ukraine's government rarely claims official responsibility for strikes outside of its own territory, and it has not responded to the Russian report.

It would not be the first Ukrainian strike. In October 2022, a large-scale drone boat attack hit the Russian-occupied port of Sevastopol, the home port of the Black Sea Fleet. Russia claimed that seven drone boats and eight UAVs were involved, and analysts believe that at least one Russian frigate may have been damaged in the attack. Ukraine did not claim responsibility, but after the fact, Ukrainian President Volodymyr Zelensky announced the start of a crowdfunding campaign for the construction of "marine drones." In an appeal, he suggested that "absolutely everyone understands" why Ukraine might want to invest in this class of weaponry.

After the Ukrainian attack, Russia withdrew the majority of its vessel assets to Novorossyisk, further away from Ukrainian shores. It also emplaced multiple floating barriers between its warship berths and the harbor entrance in order to thwart small-craft attacks, and these augmented barriers (below) appear to have had success in fending off subsequent Ukrainian operations. Wednesday's strike on the Khurs suggests that Ukraine may be looking for opportunities to attack Russian warships at sea, where they do not have protection from strengthened port defenses.

Russia has also used drone-boat technology to support its ongoing invasion, albeit on a smaller scale. In February, video imagery circulating on Russian social media appeared to show a drone boat strike on a strategic bridge between Odesa and Moldova; the bridge is the only road and rail link between the two nations. The extent of any damage from this attack was not immediately clear.

Putin Pledges More Backing for Arctic Shipping Route

LNG carrier with icebreaker — File image courtesy Sovcomflot

In a meeting with senior government officials last week, Russian President Vladimir Putin pledged further support for shipping along Russia's Arctic coastline, which has historically ranked high on his list of priorities.

During the meeting, Minister for Development of the Russian Far East and Arctic Alexei Chekunkov said the Northern Sea Route (NSR) is gaining traction with the export of oil, LNG and metals to world markets.

Freight traffic along the NSR has increased from four million tons in 2014 to 34 million tons in 2022, surpassing the Soviet record five-fold. To ensure the NSR will handle growing freight volumes in coming years, Chekunkov said his ministry has already approved a uniform plan for the development of the route until 2035.

The first step of the plan is to have binding agreements with Russian companies operating in the Arctic to achieve government-mandated tonnage targets. These include LNG producer NOVATEK, Vostok Oil and Gazprom Neft, among others. Under the agreements, these companies alone must ship through the NSR at least 30 million tons of cargo this year, no less than 71 million tons in 2024 and over 190 million tons by 2030.

“In order to promote transport along the NSR within Russia, we have launched, in conjunction with Rosatomflot, regular coastal service between Murmansk and Kamchatka in 2022 with subsidized rates. In this year, there will be three passages, and the number of ports of call have gone up from four to 11, with the route extending to Vladivostok,” elaborated Chekunkov.

However, expansion of the NSR means extra investment in transport infrastructure. The Kremlin has stated it will invest over $22 billion until 2035. The funds will go into creating and upgrading fourteen ports and terminals from Murmansk to Vladivostok. Some of these include LNG transshipment terminals in Murmansk and Kamchatka, the Lavna coal terminal and the Port of Tuloma for the transshipment of fertilizers.

In addition, the Kremlin revealed it has approved an order for 153 new icebreaking and ice-class transport vessels for use in the NSR.

Royal Navy Divers Pull WWII-Era Mines Out of the Baltic

Dive teams with the Royal Navy are working with their NATO counterparts to remove WWII-era ordnance from the bottom of the Baltic, which is littered with mines, bombs and other dangerous debris from both World Wars and the Cold War.

The aim of the annual operation – dubbed Open Spirit – is to clear the Baltic's lanes from mines, torpedoes, and other explosive leftovers. During both the World Wars, the Baltic was heavily mined, and bombing raids, naval battles and submarine warfare contributed additional detritus. Some of the world's most dramatic underwater UXO removal operations occur in the region, like the detonation of a 12,000-pound "Tallboy" bomb in Poland's Piastowski Canal (Piast Canal) in 2020.

Abandoned projectiles found on the bottom (Royal Navy)

Exposed blocks of explosive in a damaged torpedo warhead (Royal Navy)

During this year's Open Spirit, the Royal Navy's Diving & Threat Exploitation Group has already recovered two ground mines and one aging torpedo in two days of work. It's not just about safety, according to the service: taking inventory and clearing the bottom of old ordnance makes it easier to tell if an adversary emplaces something new and dangerous, like a more modern sea mine.

“It’s fantastic to be working with our friends in the Baltic again, this constant drumbeat of exercise allows real relationships to grow, bound by our shared values, stronger together and ready to defeat aggression," said Chief Petty Officer James Roberts.

BALLAST WATER IS TOXIC

BIO-SEA Ballast Water Treatment System Developed for U.S. Navy

[By: BIO-UV Group]

BIO-UV Group is delighted to announce that a BIO-SEA Ballast Water Treatment System (BWTS) designed for the Unites States Navy (USN) completed Factory Acceptance Tests (FAT) at the production facility in France. BIO-UV Group now has approval to ship the system to a USN facility for operational testing.

BIO-UV Group is working with The Columbia Group, Inc. (TCG), a U.S.-based engineering partner, and prime contractor in the development project. Teaming up with BIO-UV Group design engineers, TCG was awarded a contract in 2021 to develop a military version of BIO-SEA’s United States Coast Guard (USCG)-approved ultraviolet light (UV) ballast water disinfection system to equip future USN ships. Contract awards were open to international vendors based on a competitive proposal process.

Completion of FAT is a critical step in the multi-year design and development project. The overall program has been developed to meet the U.S. Government objective to provide Naval vessels with a treatment option to manage ballast water, pending successful completion of the contract in 2026. BIO-UV Group works as part of a team with USN scientists and engineers, and TCG engineers in support of this objective.

“We thank the TCG team and USN representatives for visiting our production plant and overseeing the successful completion of FATs of the first BIO-SEA unit under the initial development contract” said Laurent-Emmanuel Migeon, CEO of BIO-UV Group.

“This is a major milestone and not only represents the quality and efficiency of BIO-SEA engineering and technology, but it is also indicative of the success of the partnership we have with the USN and TCG in designing a custom-made BWTS capable of meeting the most stringent requirements of the U.S. military” he added.

The tailor-made system developed for the USN is a robust, filtration and UV-based BWTS capable of dealing with flow rates up to 300m3/h and plans include the manufacture of a system capable of up to 1,000m3/h.

https://en.bio-uv.com/
www.ballast-water-treatment.com

The products and services herein described in this press release are not endorsed by The Maritime Executive.

Bumi Armada Turns to Drone Tech to Reduce Methane Leaks Offshore

FPSO operator Bumi Armada is working to reduce the greenhouse gas emissions intensity of its oil and gas operations in the UK North Sea, and it is turning to a novel solution: drone technology.

Methane leaks are a major source of emissions from upstream production, and are particularly pernicious because methane is about 25-80 times more potent than CO2 as a greenhouse gas (depending on the method of calculation and timescale). Methane can come from natural gas flaring and from tiny leaks in pipe joints, valves and processing equipment; the effect is cumulative, and worldwide, the IEA estimates that the energy industry emits about 135 million tonnes per year (3.4 to 10.8 billion tonnes CO2 equivalent).

To detect and control methane emissions, Bumi Armada has hired drone surveillance company IKM Testing to scan the Kraken FPSO for the location and size of any "hot spots." By returning and performing multiple surveys, IKM also profiled the efficiency of the FPSO's flare, determining how much unburned methane escapes the flame. The results will inform an overall emissions reduction plan for the installation.

Controlling methane leaks has a twofold benefit for the operator: it improves the platform's emissions intensity profile for compliance and ESG purposes; and it keeps valuable and hard-earned natural gas inside the piping, conserving product available for sale to customers.

"The energy industry, as one of the largest emitters of methane gas, has made concerted efforts to monitor and reduce its output in line with net zero targets," said IKM methane technical director Sam Rowley. "

The upstream sector isn't the only segment of the economy targeting fugitive natural gas emissions. While natural gas is an essential energy source for the global economy, a small number of municipalities and state governments have begun to ban its use in new structures because of the potential for leaks in production, transport and utilization. Utility gas piping, meters and gas-powered home appliances all emit small quantities of methane, and eliminating natural gas hookups in new construction is a rapid - if politically controversial - new control measure.

Substations for First US Offshore Wind Farms Ready for Installation

US offshore wind substations — Substation for South Fork Wind became the first to be built in the U.S. and has now departed Texas (Orsted)

The first substations of the U.S.’s commercial offshore wind farms have been completed and are being moved from Texas and Denmark to the locations for their installations. These projects signal several key milestones in the U.S. offshore wind sector including the completion of the first American-built substation. They are also a significant step for the offshore projects in New York and Massachusetts both of which are scheduled to be the first to be completed in the United States and generate power this year.

The first American-built offshore wind substation departed a Texas fabrication facility on May 24. The substation is transiting across the Gulf of Mexico and then up the East Coast for installation at the South Fork Wind project site off New York in a few weeks. Designed and built by Kiewit Offshore Services, the 1,500-ton, 60-foot-tall substation left Kiewit’s Ingleside facility near Corpus Christi, Texas.

“The completion of South Fork Wind’s offshore wind substation is yet another first for this groundbreaking project and moves us one step closer to the project’s first ‘steel in the water’,” said David Hardy, Group EVP and CEO Americas at Ørsted.

South Fork Wind, which is a project from joint development partners Ørsted and Eversource, is now in its offshore construction phase, first with work to install the project’s 68-nautical mile submarine cable from its landfall below Wainscott Beach, in East Hampton, New York to the wind farm site roughly 35 miles east of Montauk. Cable laying is underway and installation of monopile foundations will begin in the coming weeks. Vessels from several Gulf ports are supporting the construction of South Fork Wind.

According to the companies, South Fork Wind is on track to be the first completed utility-scale offshore wind farm in federal waters, with the project expected to be operational by the end of 2023. The project consists of 12 turbines to provide 132 MW.

Substation for Vineyard 1 departed from Denmark today (Semco Maritime)

Today, May 25, in Denmark, they also marked the departure of the substation for the Vineyard Wind 1 project to be located approximately 35 miles offshore in Massachusetts. Sail-away for the 3,200-ton substation is reported to be on time according to the original schedule and is a major milestone for the project team from Bladt Industries, Semco Maritime, and ISC Consulting Engineers. The project is being developed in a 50-50 partnership between Copenhagen Infrastructure Partners and Avangrid Renewables.

Vineyard Wind 1 is carried out as an EPC contract, with ISC as a subcontractor, covering the design, procurement, and construction of the 3,200 tons offshore substation and a 2,000 tons jacket foundation with four piles, which form the permanent anchorage to the seabed. Bladt handled the steel manufacturing of the substation. Design and engineering were carried out by Semco Maritime and ISC, and installation of the electrical system was also carried out by Semco Maritime.

After arrival at the installation site, Vineyard Wind will install the substation. Semco Maritime and Bladt Industries will oversee the offshore commissioning during the summer.

Vineyard Wind 1 will consist of an array of 62 wind turbines, which will generate 800 MW of electricity annually. It is also scheduled to deliver the first power to the grid in 2023.

BOEM Completes Environmental Review for New Jersey Offshore Wind Farm

environmental review NJ offshore wind farm — Ocean Wind 1 will be located off the Southern New Jersey coast near Ocean City and Atlantic City (Orsted)

The Bureau of Ocean Energy Management (BOEM) reported that it has completed its environmental analysis of the proposed Ocean Wind 1 wind project offshore New Jersey. The bureau plans to issue its decision this summer to approve the project, which would be New Jersey’s first commercial-scale offshore wind farm.

Eleven months ago, BOEM published its draft of the Environmental Impact Statement for the project. It was followed by a public comment period as well as three virtual meetings to solicit additional feedback on the draft. BOEM reports it received a total of 1,389 comment submissions from government agencies, non-governmental organizations, and the public during the comment period and considered these comments and stakeholders’ feedback when developing the final EIS.

The final EIS is available on BOEM’s website and as required by law a notice will be published on May 26. The report analyzes the potential environmental impacts of the activities laid out in Ocean Wind’s Construction and Operations Plan.

“BOEM continues to make progress towards a once-in-a-generation opportunity to build a new clean energy industry in the United States,” said BOEM Director Elizabeth Klein.

Ocean Wind proposes to construct up to 98 wind turbines and up to three offshore substations within its lease area with an estimated capacity range will be from 1,215 to 1,440 megawatts, capable of powering up to 504,000 homes per year. At its closest point, the Ocean Wind 1 project will be at least 13 nautical miles southeast of Atlantic City, New Jersey. Export cables are anticipated to make landfall in Ocean County and Cape May County, New Jersey.

The project was proposed as a partnership between Ørsted and New Jersey power utility Public Service Enterprise Group (PSEG). However, in January 2023, they said that based on changes in the government financial support programs for offshore wind, they had determined that it would be best if Ørsted acquired PSEG’s 25 percent interest in Ocean Wind. PSEG said it had decided to step aside and allow for a better positioned tax investor to join the project so that it can proceed with an optimized tax structure.

Plans call for the installation of GE Haliade X 12 MW turbines. Ørsted had previously estimated that construction would take approximately two years with first operations beginning before the end of 2024 and full operations in 2025. At the end of April, the project cleared another key step with decisions from the New Jersey Department of Environmental Protection and the issuance of the first construction permits. Ørsted noted that additional federal, state, and local approvals, in addition to approval from the Bureau of Ocean Energy Management, were required before construction on Ocean Wind 1 can begin.

Ocean Wind 2 has also been proposed which would be located 15 miles off the coast of southern New Jersey, adjacent to Ocean Wind 1. The second phase project would generate an additional 1,148 megawatts of offshore wind energy, which would be enough to power more than 500,000 homes.

UK and Japan Unveil Massive Offshore Wind Trade Deals

Scottish Enterprise photo of Aberdeen Bay wind farm — File image courtesy Scottish Enterprise

The UK’s renewable energy sector has received a major boost after leading Japanese corporations committed to multi-billion investment deals in Britain’s offshore wind industry. The announcement came as the UK Prime Minister hosted a business reception event in Tokyo last week, geared towards expanding the UK-Japan trade relationship.

The new investments include funding for offshore wind, low carbon hydrogen and other clean energy projects from Marubeni. The leading Japanese trading house said it would sign an MoU with UK government laying out about $12 billion in investment over the next 10 years, including in offshore wind in Scotland and green hydrogen projects in Wales and Scotland.

Sumitomo Corporation, one of the largest general trading companies in Japan, also committed to expand its UK offshore wind projects. This will involve a total investment of $4.9 billion in projects off the coasts of Suffolk and Norfolk, alongside its partners. Sumitomo will also build a high voltage cable manufacturing plant in the Scottish Highlands, bringing more than $250 million in investment and creating 150 skilled green jobs.

Japanese companies are major investors in UK offshore wind and other clean energy technologies. At the same time, UK companies have developed considerable experience on development and deployment of offshore wind and other renewables, and are now bringing that expertise to the Japanese market. In fact, at the same reception last week, several of the UK’s renewable energy companies signed multi-million dollar projects in Japanese and Asian markets.

UK company Octopus Energy committed to invest $1.8 billion in the Asia-Pacific energy market by 2027, helping speed up the region’s transition to a cleaner and smarter energy system. Additionally, leveraging on its existing Asian headquarters, Octopus will channel $373 million to expand its tech innovation and energy retail hub in Tokyo.

UK consultancy Mott MacDonald also secured a major contract to help develop a state-of-the-art offshore wind farm in western Japan, which could power more than 175,000 homes with clean energy.

“These new investments are a massive vote of confidence in the UK’s dynamic economy, from some of Japan’s top firms. It is also great to see leading UK businesses seizing the huge opportunities for growth and collaboration in Japan. As we grow our trade ties further and join the huge regional Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade bloc, the sky is the limit for British and Japanese businesses and entrepreneurs,” said UK Prime Minister Rishi Sunak.

Rising Costs Prompt Equinor to Pull Plug on Floating Wind Project

Norwegian state oil company Equinor has pulled the plug on a floating wind-to-platform power project on the Norwegian continental shelf, citing rising costs.

In June 2022, Equinor joined with Petoro, TotalEnergies, Shell and ConocoPhillips to pursue the design of a floating wind farm in the area around the Troll oil field, about 30 nm off the coast of Bergen. The development concept called for a 1 GW floating wind farm linked to a shoreside substation. The power would help feed the nearby Troll and Oseberg offshore oil platforms, which are already linked to the grid near the same location Using that connection, the platform operators would buy as much of Trollvind's power as possible, giving it a built-in "market" for its power at a commercially viable price point.

At the time, Equinor CEO Anders Opedal said that Trollvind would help cut emissions through electrification, deliver more green power to a region that was experiencing shortages, and help Norway cement its leadership in floating offshore wind. However, even the best of plans can be put on hold by inflation and supply chain challenges. According to Equinor, rising costs in the offshore wind industry have undercut the goal to complete Trollvind without support, and "it is no longer a commercially sustainable project." Additionally, the project team had to make technical changes because of the preferred technology for the wind farm "not being available."

"Trollvind was a bold industrial plan to solve pressing issues concerning electrification of oil and gas installations, bringing much needed power to the Bergen-area, while accelerating floating offshore wind power in Norway. Unfortunately, we no longer see a way forward to deliver on our original concept of having an operational wind farm well before 2030,” says Siri Espedal Kindem, vice president of renewables Norway.

As Kindem suggested, the project's challenges were also stacked up against a tight deadline. In 2020, Norway set an emissions-intensity reduction target for its oil and gas operators, asking for a 40-50 percent cut by 2030. Achieving that cut will require platform electrification and new sources of green power. While Trollvind was designed to help meet this requirement, it has not achieved enough maturity as a project to reach implementation by the deadline, further reducing its attractiveness.

Equinor said that it would continue to look for future opportunities in the floating wind sector, which it pioneered through the development of the Hywind Scotland and Hywind Tampen projects.

The cancellation marks a new setback for Equinor's floating-wind ambitions. The firm lost out of the bidding in the massive ScotWind lease round in November 2021; it proposed a large-scale, one-gigawatt floating development, similar in size to Trollvind, but the offer was not accepted. "We are going to compete fiercely going forward," EVP for renewables Pal Eitrheim told Energy Voice after the auction.

LA REVUE GAUCHE - Left Comment