Viewpoint: Offshore Electrification Money Better Spent Closer to Home
The North Sea Transition Authority supports electrifying UK oil and gas sites to cut greenhouse gas emissions, but Tom Baxter argues the funds could achieve greater impact if used elsewhere
Quick read
- Offshore electrification offers limited climate benefit at high cost: Despite being central to the UK’s North Sea Transition Deal, electrifying offshore oil and gas platforms could deliver only a peak 0.5% reduction in national emissions — at an estimated cost of £5.62bn
- Alternative investments may yield far greater carbon savings: Redirecting that same £5.62bn to loft insulation in homes could cut over 5m t of CO2 annually — nearly triple the peak benefit of offshore electrification
- A system-wide, value-for-money approach is essential: Rather than mandating expensive and complex upgrades to ageing oil and gas infrastructure, regulators and industry could achieve greater climate impact by funding more efficient, scalable carbon reduction strategies
THE UK’s oil and gas regulator has been handed a clear climate mission: slash emissions from offshore operations or risk falling behind on national net zero goals. Under the North Sea Transition Deal (NTSD) – signed with industry in 2021 – the North Sea Transition Authority (NSTA) must drive upstream emissions down by 10% by 2025, 25% by 2027, and 50% by 2030, all against a 2018 baseline.
The 2022 NSTA’s Emissions Monitoring Report1 states that “electrification is essential to meeting the NSTD target”. In essence, the production sites convert from locally produced electricity using greenhouse gas-emitting gas turbines to importing electricity from renewable generation that has minimal greenhouse gas footprint.
It is worth noting, however, that around 90–95% of greenhouse gas emissions result from the scope 3 use of the produced fossil fuels – which are not included in the NSTA’s remit – and only 5–10% from the production side.
Energy needed for oil and gas production
Producing oil and gas needs energy for the pumps, compressors, heaters and drilling units used in the process of treating and moving oil and gas from many kilometres underground to refineries and gas facilities.
The energy is generally supplied by gas turbines. Natural gas is burned with air; the product is an increased volume of high temperature gas, mainly nitrogen, CO2 and water, that is expanded through a turbine. The turbine is coupled to an alternator to produce electricity for the pumps, compressors and other equipment.Burning hydrocarbon gas for energy at production sites results in localised greenhouse gas emissions from the CO2 expelled from the gas turbine. There are other associated harmful emissions too: methane from incomplete combustion, CO, NOx, SOx and particulates.
Sources of offshore greenhouse gas emissions are shown in Figure 1 – the outer ring are the contributors to emissions and the inner is the equipment that is the cause of the emissions. As can be seen, gas turbines contribute 65% of the overall CO2e emissions.
Open-heart surgery
I worked in oil and gas for over 40 years and have seen very large cost and schedule overruns for brownfield modification projects. From experience, I know that converting an existing installation from gas turbines to electrification is a highly risky undertaking, particularly due to the challenges of working in congested areas with limited access, space and weight capacity – common issues on many ageing platforms. Productivity is often lower than planned leading to extended schedules. Indeed, Shell described it as being as complicated as open-heart surgery,2 with other producers warning electrification is a “huge concern”.3
The NSTA estimates (see Figure 2) that low, medium and high electrification cases have respective peak year greenhouse gas reductions of 0.6, 1.2 and 1.8m t. That might sound like a big number. However, the UK currently emits around 371m t CO2e per year. Offshore electrification’s peak benefit is only 0.5% of UK emissions and that is only for a couple of years.4
My experience indicates that electrification costs are likely to run to many billions.
In their annex5 to the final report of the UK Continental Shelf Energy Integration Project, the NSTA provides capex estimates for offshore electrification hubs (see Figure 3).
Let’s assume three hubs with six connected platforms. Using the capex estimates, the total cost for offshore electrification can be estimated as shown in Table 1.
Let’s take a systems approach – viewing the UK as a whole, with the aim of achieving the best value for money in reducing greenhouse gas emissions. For example, if that £5.62bn (US$7.63bn) were instead invested in household loft insulation, what level of carbon savings could be achieved?
According to the Energy Saving Trust,6 the costs and associated carbon savings are shown in Table 2.
So, if the £5.62bn earmarked for offshore electrification was instead reassigned to the lofts of detached houses, 5.1m homes could be insulated with an associated carbon saving of 5.1m t – a significantly larger saving than the 1.8m t peak for the NSTA’s high case. Furthermore, unlike the NSTA case where the savings tail off, the insulation investment would result in consistent savings year on year.
A better use of taxpayers’ and industry money
Clearly, it makes sense to transfer the money the oil and gas companies would need to spend on electrification to more cost-effective greenhouse gas reduction measures.
This would allow the NSTA to let oil and gas companies operate without electrification on the proviso they demonstrate best practice greenhouse gas management.
Government could then agree with the operators what percentage of the estimated cost of electrification they provide to the public as a fossil fuel reduction purse.
The upshot is UK plc achieves a much greater reduction in greenhouse gas emissions than offshore electrification alone can deliver. Householders’ fuel bills drop, the UK avoids the need to build additional wind and solar farms, energy consumption falls and oil and gas companies are spared from undertaking open-heart surgery on ageing assets.
It’s not about doing less but doing smarter.
References
1. NSTA Emissions Monitoring Report 2022: https://bit.ly/emissions-report
2. Electrification of older platforms as complicated as ‘open heart surgery’, Shell chief says: energyvoice.com: bit.ly/3SApiWm
3. New NSTA electrification plans pose ‘huge concern’ for operators: https://bit.ly/energyvoice-com
4. 2024 Provisional greenhouse gas emissions statistics: https://bit.ly/statistical-summary
5. UK Continental Shelf Energy Integration Final report Annex 1. Offshore electrification: https://bit.ly/offshore-electrification
6. Energy Saving Trust: https://energysavingtrust.org.uk/advice/roof-and-loft-insulation/
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