In the battle for energy production, there’s often the clashing of two familiar heads. The sustainable power, and the oil and gas industry. It has always been the case that renewables are at polar opposite ends to O&G, with no signs of budging either way. Well, major companies such as Shell and Equinor are beginning to turn their attention to investing in renewable. This isn’t as strange as it might initially seem, with the net carbon emission goals of zero moving closer and closer each year. Notably, offshore wind has made headlines as the entrance into the global energy transition.
Why offshore wind?
When there are so many choices for sustainable energy investment, why wind? There are other areas of sustainable energy that oil and gas companies are beginning to target such as solar, green hydrogen and more. But in recent news, offshorewind is the poster child. There are a few main reasons for this.
One, in terms of proximity, a fair few offshore rigs are in prime position for wind farms. It seems a natural progression that there are rigs that are set up near or even powered solely by large offshore wind farms. This is attractive to investors, and the public. Investors, because they have peace of mind for the longevity of a project, and the public because it gives a sense of corporate social responsibility. It’s long been the case that they believe we don’t have any at all. By making steps in the right direction, we have a chance of challenging their perceptions of us, the oil and gas industry as a whole. Two, wind is a sector that is likely to experience huge growth in the next decade. Despite high governmental targets, research has suggested that offshore wind is going to grow almost sixfold in the coming years.
What are the Majors doing?
It is thought that the acquisition of new land, albeit offshore, is to provide a competitive advantage. By increasing their portfolios of investment to wider spheres, they’re given the edge in partnerships, technology, operational functions and geographical spread. This gives them an ‘in’ into new areas, markets and services. According to energy research company Wood Mackenzie, annual spending on offshore wind will hit $8 billion per year. Companies are now starting to branch out into their own in-house operations and research and development, and this will only grow.
Manufacture and Installation
There are many overlapping manufacture or infrastructure elements that work in the oil and gas industry and in offshore wind. For example, there are multiple synergies for lower-cable connections and overlaps between O&G and other industries. The industry itself has a good track record of cable installation, and although wind may require different cables, this gives the industry a head start when it comes to branching out. Of all the areas to have an advantage, having the infrastructure in place to manufacture to a high enough standard to bring the oil and gas industry and offshore wind industries together.
Whilst there may not be direct creation of roles in the oil and gas industry, the investment in offshore wind will create jobs elsewhere. For example, there are indeed synergies between manufacturing for offshore wind and offshore rigs, such as pipelines. But smaller components may need to be bespoke made for individual projects. Therefore, by increasing investment in this area, you’re not only creating jobs, but you’re also helping with corporate social responsibility in a different way.
All companies are working towards their own particular niches, it would seem, Equinor is growing quickly, BP and Total are moving towards new technology, and Shell is working to integrate it with its customer supply chain, in a bid to provide carbon-neutral energy to its customers. Overall, there is an appetite for offshore wind investment. Especially with a stable manufacturing process and sufficient infrastructure to support long-term investment. Offshore Wind Scotland for example, predicts only complete openness and opportunity for this kind of investment in the U.K.
Major publications predict that this will only continue to growth and expand. Some are pegging floating wind solutions as the next big commercial investment, as we see all of the big Euro Majors working towards positioning it as a staple of company offerings. In general, we can expect the renewable areas to become a huge growth factor for oil companies in the future, and wind will certainly be a big part of that. As an oil investment company, we’re always looking for new opportunities and news that will help inform our decisions. Whether that be a prospect acquisition or new oil and gas technology trends.
If you’re interested in finding out what we’re doing in the world of offshore wind or other new technologies, contact TriStone Holdings today on 0800 055 7079 or by emailing us at [email protected]