Kent is collaborating with the UK’s Energy Institute to create guidelines for decarbonisation economics in Greenhouse Gas (GHG) emission reduction projects in the upstream oil and gas industries.
This report will provide clear, actionable guidance to help the sector achieve its environmental goals, demystifying the economics of decarbonisation, including the societal cost of carbon. While it will focus on the UK North Sea upstream sector, it will take a global view so that it can serve as a basis for future research across the world. It will involve the collaboration of Kent’s Environmental team, Asset Decarbonisation team, and Energy Environment Economic (E3) Modelling and Communications team.
"We have seen the challenges of presenting decarbonisation projects against standard project economics with the only justification being the reduced OPEX related to Emission Trading Scheme credits and potential increased revenue from an increase in sales gas quantities from reducing fuel and flare gas," said Graham Filsell, Kent’s Decarbonisation lead. "There is a strong case for the societal cost of carbon and potentially an individual asset marginal abatement cost to form part of the project economics for decarbonisation projects."
James Lawson, chair of USEG (Upstream Environmental Group) added, "Decarbonisation and GHG reduction projects are inherently holistic, involving a wide spectrum of energy professionals, many of whom have not previously engaged in economic assessments and project prioritisation. Furthermore, these projects compete for capital and resources with other industry sectors. Therefore, a clear, concise, and targeted document that all energy professionals can refer to will be invaluable for ensuring that capital and resources are allocated appropriately and in line with net zero commitments."
• Demystifying Decarbonisation Economics: Provide clarity for energy professionals with limited exposure to project economics, such as environmental or sustainability managers.
• Understanding Carbon Costs: Offer insights into how carbon costs are calculated and influenced by market forces, including societal costs.
• Alternative Metrics: Recommend non-standard metrics beyond NPV to ensure that decarbonisation goals are met, delivered as a technical note to the industry.
• Justification of Metrics: Articulate and justify the choice of both standard and non-standard metrics used in the guidance.
• Upstream O&G Value Chain: Focus on the upstream sector of the O&G value chain affected by decarbonisation and assess the potential to broaden the scope to the full value chain.
Petrofac will be supporting the Netherlands’ ambitions for CO2 capture and storage as TotalEnergies EP Nederland BV has chosen its services for a multi-million-dollar front-end-engineering design (FEED) for a CO2 injection platform.
The project involves the decommissioning of topsides and installation of a new repurposed platform connecting to the Aramis CO2 distribution network.
Petrofac is already working on a FEED project covering the design of the 32” CO2 trunkline, including onshore, landfall and offshore sections, together with the offshore CO distribution hub platform for the Aramis system, that it took up earlier this year. This additional scope will enhance the company's carbon transport and storage (CCS) sector internationally, influencing its reputation in managing the challenges and opportunities in delivering CO2 capture, transport, and storage at scale.
John Pearson, Chief Operating Officer, Energy Transition Projects, Petrofac, said, “This award demonstrates confidence in our abilities to provide vital engineering and project delivery expertise to projects that span the CCS value chain. This project, associated with the overall Aramis development, is another key component to the Netherlands’ ambitions to capture millions of tonnes of CO2 from industrial emitters in the region. We are immensely proud to be making an important contribution to these ambitions.”
Allseas has reported that Brent Charlie topsides have been successfully delivered to Able UK’s Seaton Port in Hartlepool, UK.
Weighing more than 31,000 t, Brent Charlie is the largest single offshore topsides to be lifted, transported and delivered to shore, according to Allseas. It was initially removed in a single lift by the Pioneering Spirit, Allseas’ heavy lift vessel that is capable of lifting entire topsides of up to 48,000 t and 20,000 t jackets.
After being carried on the vessel to near-location, the topsides was transferred to the custom barge, Iron Lady, for the short tow to the Tees Estuary and onwards to the Seaton Port disposal facility.
Barge and topsides were grounded onto the grounding bed in the wet dock for the load-in. All safety checks complete, the former production platform was skidded onto Quay 6, designed specifically to distribute the weight of the heaviest topsides facilities.
Now delivered, the massive topsides will be decommissioned with as much recycled or re-used as possible. Able UK has achieved over 97% recycling/re-use rates on previously decommissioned Brent topsides Delta (24,000 tonnes), Bravo (25,000 tonnes), and Alpha (17,000 tonnes), and aims to match or exceed this figure for Charlie using its well-established supply chain.
Geothermal services provider DMT GmbH & Co. KG will be exploring geothermal potential in Münster for Stadtwerke Münster GmbH who commissioned the project as part of the 2030 decarbonisation strategy
The project will involve a large-scale 3D seismic measurement campaign before winter 2024/25, surveying the deep underground between 1,400 and 7,000 meters, covering the entire city.
"25% of the heat demand in Germany could already be covered in the long term, sustainably and CO2-neutrally using deep geothermal energy. The first steps to accelerate the heat transition with the help of deep geothermal energy have been taken. Now it is important to consistently use and roll out instruments such as exploration loans or insurance, national and international funding and accelerated approval procedures. This means that projects like the one in Münster can soon be implemented throughout Germany," said Maik Tiedemann, Chairman of the Management Board / CEO of DMT, and CEO of the TÜV NORD GROUP Business Unit Energy & Resources.
The campaign will see five vibrator fleets working in parallel, consisting of up to 18 vibro trucks and a measuring crew of around 80. Data collected from the campaign will influence further planning and implementation of the heat transition using deep geothermal energy in Münster and the associated decarbonisation.
"The upcoming measurements in the deep underground around Münster will provide valuable information to specify the agenda for the use of deep geothermal energy in the Münsterland and to define a roadmap for this project. With our recent acquisition of high-quality and state-of-the-art measuring instruments, we are also well prepared for the expected increase in orders," said Thorsten Müller, Head of Business Entity Exploration Seismic at DMT, who leads operational teams.
Electrocentrale București (ELCEN), one of Romania’s leading producers of thermal and electric energy, has signed a MoU with Sage Geosystems for the carrying out of a feasibility study for the implementation of geothermal technologies in the Bucharest district heating system.
The benefits of this collaboration are aimed at ensuring sustainability, innovation and efficient economic solutions for the future of centralised heating in Bucharest in an approach that is consistent with the national and European energy transition objectives.
Through the MoU, ELCEN will facilitate access to the relevant data and necessary infrastructure in order to carry out the study, and will contribute its technical expertise and specific operational knowledge to the centralised heating system within Bucharest. Sage Geosystems will perform the technical and geological analysis and feasibility study on the geothermal utilisation solution.
The aim of the partnership is to explore how geothermal energy can be implemented within the city the replace a fossil fuel-based thermal plant with a clean alternative. The first project is expected to generate up to 70MW of thermal power for a district in Bucharest, and upon its a success, will be expanded to other Romanian projects and cities.
General Director of ELCEN, Claudiu Crețu, stated, “We signed this Memorandum of Understanding to see how we can use the geothermal potential in the coming years for the heating of Bucharest as efficiently and sustainably as possible in a hybrid approach."
Cindy Taff, CEO and Co-Founder of Sage Geosystems, commented, “Sage is thrilled to be supporting Romania’s transition to clean energy and to introduce geothermal energy applications to its capital city.”
Perenco UK has completed a campaign of velocity string installations on five wells at the West Sole Charlie platform in the Southern North Sea (SNS), situated 70 km east of Perenco’s Dimlington terminal on the Yorkshire Coast.
The campaign was conducted by the Petrodec HAEVA rig and has delivered sustained production gains of around +5 MMscf/d, in line with expectations.
In a technical and commercial feat, the company completed ahead of schedule. Each of the wells are seeing improved production rates, running with 100% uptime, withouth the need for cycling. Two of these wells were brought online from scratch as they remained shut-in and were not producing.
The net effect is a new production rate for the West Sole field sustained above the 30 MMscf/d level. Recompletion using velocity strings is a proven technology in fields that are no longer producing at their original high gas rates.
In the case of West Sole, the original completion with 5½” tubings were no longer optimal, given the now partially depleted reservoir. Inserting velocity strings of narrower diameter helps to increase the fluid velocities, thereby sustaining production at lower pressures and allowing extension of field life. Perenco had previously deployed this technique to good effect in 2020 at the Hyde field and decided to continue with similar deployment at West Sole Charlie. Other SNS fields, such as Apollo, are also being evaluated for the same.
Perenco UK SNS Managing Director, Jo White, said, “Demand for gas in the UK is set to remain high, so enhancing recovery from domestic gas fields is vital for both energy security and for improving overall emissions intensity. Local natural gas resources have a significantly lower carbon footprint than imported liquified natural gas (LNG), which today accounts for a high proportion of the balance of supply. West Sole was the first offshore natural gas field to be developed in the UK. Since 1967, it has delivered cumulative production of more than 2.2 trillion cubic feet of gas. It remains a significant production hub in the SNS offshore gas network, with potential for future development and tie-in of nearby gas discoveries. Through renewal and application of new technology a sustainable and productive future remains possible for decades to come for the West Sole field.”
The North Sea Transition Authority (NSTA) has warned North Sea operators that they must act now on well decommissioning or risk losing the support of the associated supply chain which will begin to look elsewhere in search of work.
Repeated delays to well plugging and abandonment work, competition for rigs from overseas and cost pressures are pushing up the estimated bill for decommissioning on the UK Continental Shelf – information made clear in the latest Decommissioning Cost and Performance Update from the organisation. According to this report, operators expect to spend about UK£24bn on decommissioning between 2023 and 2032, up UK£3bn on the forecast for the same period in last year’s report.
The NSTA has drawn attention to the importance of sharing knowledge, learning lessons and producing robust plans which helped lower the cost of decommissioning by an estimated UK£15bn between 2017 and 2022. However, it stated that further improvements have been difficult to achieve as much of the low-hanging fruit has been picked.
More than half of the overall estimate of UK£40bn (in constant 2021 prices) is to be spent during this 10-year period, which shows near-term actions will set the direction for the sector. Embedding good practice now and striking a balance between supply chain capacity and demand for its services is crucial, the NSTA reports.
Pockets of operators continue to collaborate, perform admirably and deliver savings, but the majority need to improve by doubling down on their planning. Operators spent around UK£2bn on decommissioning last year, which was in line with forecasts, but they completed much less work than originally planned. In regard to P&A, the NSTA stated that operators can keep their costs under control and meet their regulatory obligations by engaging early with the UK’s world-leading supply chain, providing details of their inactive wells and, most importantly, placing contracts to get the work done.
Hundreds of wells will need to be decommissioned every year as more oil and gas fields shut down, the NSTA explained. However, operators only achieved 70% of planned well decommissioning activities last year. Some operators, it continued, are deferring in hope that prices will go down in the coming years. However, failing to award contracts reduces the supply chain’s revenues and ability to invest in capacity and resources. Rig contractors are actively seeking opportunities in other regions where operators offer longer, more secure contracts. If this trend continues, prices will increase, as reflected in market forecasts.
In addition to exploring the use of sanctions, the NSTA is spearheading a project to identify which UKCS wells will be ready for decommissioning between 2026 to 2030 and assess the supply chain capacity required to undertake the work in a timely and cost-effective manner.
“With spending forecast to peak at UK£2.5bn per year in the current decade, decommissioning can ensure that the UK’s world-leading supply chain is equipped to help operators clean up their oil and gas infrastructure over the next 50 years and support the carbon storage sector, which will rely on many of the same resources,” said Pauline Innes, the NSTA’s Supply Chain and Decommissioning Director.
“I am concerned that this huge opportunity to safeguard highly-skilled jobs and support the transition will be wasted if operators fail to tackle their well decommissioning backlogs. The supply chain wants to do this work, but it is not physically tied to the UK. Its skills and resources are in demand in other regions, and we are starting to see companies marketing their rigs elsewhere. Operators need to use the supply chain, now, or risk losing it.”
In its latest operations update, British independent upstream oil and gas company, Serica Energy, announced that its investment plans for the Bruce and Keith Light Well Intervention Vessel (LWIV) campaign is on track to take place between March and May 2024.
This follows previous campaigns in 2022 and 2023, which have delivered low-cost incremental production. The intervention is expected to restart production from the Keith field this year following successful preparation work on the Keith subsea facilities carried out in 2023. Additional well interventions from the Bruce platform are scheduled for the second half of 2024.
Besides well work on the Bruce and Keith fields, investments in 2024 include four wells in the Triton area (Bittern B1z sidetrack, Gannet E GE-05, Guillemot North West EC1 and Evelyn EV-02). The start date of the B1z sidetrack is set in March 2024. This well and the subsequent three wells are scheduled to take about three months each, meaning that drilling will continue into 2025. Serica has also exercised an option to keep the rig for a further well following completion of the fourth well in the programme (EV-02).
Serica is maturing plans for two infill wells on the Bruce field too with the aim of drilling in 2026.
Abandonment costs in 2024 are forecast to be about £14 million (pre-tax) net to Serica. These will be incurred mainly on the final decommissioning of the Arthur field, situated in the UK Southern North Sea, which was held by Tailwind Energy.
Reflecting on Serica's investment focus on enabling maximum production like from the Bruce and Triton assets, Mitch Flegg, Chief Executive of the company, said, "Production in 2024 is expected to be higher than in 2023 with guidance between 41,000 boe/d and 48,000 boe/d for the year. This reflects a range of outcomes in a year of significant activity including the speed with which the scheduled drilling and well work deliver incremental production.
"Serica's strategy of investing in its assets continues to be central to our record of consistently achieving high levels of reserves replacement, combined with increased levels of production. We are looking forward, therefore, to the start of the four well Triton area drilling programme in March, with the benefits of added production expected to start coming through in the second half of the year. During 2024 there is also an extensive programme of interventions in both platform and subsea wells on the Bruce and Keith fields. The objectives include re-establishing consistent production from the Keith field.
"In addition, Serica has a healthy portfolio of potential new projects. This includes the possible developments of the Buchan and Belinda fields, which offer the prospect of further replacement of produced reserves and incremental production from 2026 onwards. Our plans for drilling two Bruce infill wells, the first new wells on the field since 2012, are progressing and, during the next eighteen months, we will be participating in the Parkmead operated Skerryvore exploration well situated in the UK Central North Sea. As a UK taxpayer, Serica will benefit from tax relief for its share of the associated development and exploration costs.
"Serica is extremely well placed, therefore, to continue its track record of replacing reserves and increasing production. This platform has been achieved while maintaining a very strong balance sheet, which is both the result and enabler of our strategy to invest and grow organically and through disciplined M&A."
Irish company TerraThermo Ltd and alfa8 Colab Ltd (alfa8) have announced the signing of an Investment Agreement to financially support the development of Projekt Thermo, a 12MW deep geothermal power plant project in Germany.
The investment made by alfa8 covers the provision of up to EUR€1mn in working capital to advance Projekt Thermo to a financial close, and up to EUR€32.5mn in future financings for the project.
TerraThermo will use the working capital to undertake technical and financial due diligence on the project, with the intention of reaching financial close in Q4 2024/Q1 2025. The company is also in discussions with the European Investment Bank EIB for a potential parallel investment to fund up to EUR€32.5mn for the project, in addition to the investment already provided by alfa8.
The first stage of Projekt Thermo is to develop a 12MW ‘Hot Dry Rock’ geothermal power plant in Lower Saxony, Germany, marking the first of many deep geothermal generation and energy storage projects to be developed by TerraThermal in Europe.
John Ashbridge, CEO of TerraThermo, is “extremely pleased” to welcome alfa8 as an investor in the project, given the company’s “focus on first-of-a-kind technology and our matching visions and expectations of what can be achieved in the geothermal energy industry in the coming years.”
Erin Glen, COO of alfa8, commented, “TerraThermo is focused on delivering a first-of-a-kind, deep hot dry rock geothermal project in Europe. We are excited to team up with them to accelerate the development of geothermal technology in Europe. At alfa8, we are on a mission to deploy catalytic capital into the energy transition and promising first-of-its-kind technologies that can accelerate the path to net-zero.”
Wells and subsurface specialist, Elemental Energies, has announced the acquisition of Norway-based well management and consultancy company, Well Expertise AS.
Expected to generate revenues surpassing £50mn in 2024, the acquisition also adds significant growth to Elemental's North Sea expansion ambitions in Norway.
The Well Expertise acquisiton is the latest in a series of strategic acquisitions by Elemental Energies, including Vysus Senergy Wells in December 2022, Norwell Engineering in May 2023 and Sentinel Group in February 2024.
The acquisition established the companies' shared growth ambitions in well management services across oil and gas, decommissioning, geothermal, and carbon capture and storage projects.
Mike Adams, CEO of ElementalEnergies, said, “Norway is a pivotal region for us through its stable energy policy that prioritises both security and transition, aligning with our core ambitions as a business. As a mature market, Norway faces the challenge of managing new production with decommissioning and energy transition which present significant opportunity. This deal marks the start of the next chapter for both companies, as we build a strategic global wells and subsurface partner that will allow operators to outsource larger and more diverse projects with confidence.”
Sigve K. Næsheim, who will continue as CEO of Well Expertise and head up Norway operations, said, “This acquisition marks a significant milestone, underscoring our commitment to providing best-in-class well engineering and project management services. From the outset, our strategic alignment with Elemental Energies has fostered a shared vision to become the go-to global well management partner for projects spanning exploration,production, decommissioning, CCS, and geothermal. As part of Elemental Energies, we are able to expand the development opportunities for our team, bring new perspectives to our projects,and deliver expanded capabilities to our clients.”
Stig Seland, Commercial Manager of Well Expertise and one of its founders, said, "At Well Expertise, we have built long-term relationships with our customers through our collaborative and customer-first approach, which has been the cornerstone of our success. I am very pleased to announce that we can now offer an even broader range of services to our clients. Rest assured, our commitment to putting customers first will remain our primary focus as we continue to support the future of Norwegian energy."
Backed by the Ministry of Economic Affairs and Employment and Salon Kaukolämpö Oy, Lounavoima is developing a geothermal heat well storage at its waste-to-energy (WtE) plant at the Lounapuisto circular economy park in Salo.
Following good test run from the first well, three additional wells are now being constructed. The final heat well is expected to be completed by the summer of 2025.
Upon completion, the WtE plant will have six geothermal heat wells with a combined output of 6MW.
Waste heat produced by the WtE plant is stored at a depth of more than 2 kms in the geothermal heat wells to cover the district Salo's heating requirements during the winter.
The first well which was tested last winter runs 1,600-metre-deep, producing 450 MWh of energy from January to March.
A second heat well, which is undergoing tests, was drilled in the autumn of 2023 and a third was drilled in the winter of 2024. Its pipework will be completed in the late summer.
Finnish company Geomachine Oy deployed new drilling equipment which were specially designed for the exploration of the heat wells, achieving a target depth of 2,000 metres. The heat pump process was delivered by Calefa Oy.
Once all the heatwells are brought onstream, the six new geothermal heat wells will have a combined output of as much as 14 GWh a year, which is equivalent to the annual heating need of approximately 700 single-family homes.
“The heat well production will always be used first if the district heat output of the WtE plant isn’t enough. This allows us to primarily replace the need for starting oil heating plants and, in many cases, we can also avoid the need to start a backup power plant,” said Lounavoima and district heating company Salon Kaukolämpö's Managing Director Petri Onikki.
“We have such top expertise here in Finland. Even though the new technology development project has not always gone smoothly, the results have exceeded our expectations. The geothermal heat wells have a multiplying effect on heat production in Salo,” said Onikki. “The project is a successful example of concrete circular economy work at Lounapuisto,” he added.
Shell UK Ltd has signed a contract with Mermaid Subsea Services Ltd to utilise the offshore company's services for a multi-year engineering, preparation, removal and disposal (EPRD) well head severance (WHS) project in the North Sea.
Planned in three annual batches, the first phase of the decommissioning project is scheduled to begin later this year. The WHS solution will be delivered by a bespoke vessel for which Mermaid will be accumulating key stakeholders accross the supply chain.
The initial campaign will involve the removal of well head protection covers from the sea floor, before lifting them to the surface for transportation onshore.
The well head flow base structures will then be retrieved using specialist tooling.
The final activity will cover well head severance and recovery operations, for which bespoke underwater cutting tooling and techniques will be deployed by Mermaid.
Each stage of the project will be followed by clearance of debris, as well as seabed and over trawl surveys where necessary. All the recovered materials from the project will be put to reuse and recycling.
Scott Cormack, Regional Director for Mermaid Subsea Services (UK), said, “This a milestone contract for Mermaid and we are very grateful to Shell for putting their faith in our team. We look forward to kicking off work this year.
“The North Sea is on the cusp of a multi-decade decommissioning boom and Mermaid plans to be front and centre of that with our bespoke solutions and leading expertise.”
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