As the green energy push gathers speed, propelling the shift to renewable energy sources forward, this raises concerns about oil and gas projects being in danger of turning into stranded assets while the world hurtles towards net-zero. However, the potential of converting the existing fossil fuels infrastructure for use in the offshore wind industry brings a plot twist that would give a new lease of life to oil and gas platforms while slashing offshore installation costs for renewable energy operators.
The fossil fuels industry, with oil and gas at the helm, has been ruling the global energy realm for decades, leading to the installation of offshore infrastructure, covering platforms, rigs, pipelines, subsea cables, and modules on the seabed to enable hydrocarbon extraction in shallow, deep, and ultra-deep waters. While decommissioning of these assets, once they reach the end-of-life phase, has already led to the plugging and abandonment of multiple wells and the removal of all pipes, subsea cables, and modules, the transition to green sources, which is sweeping across the energy sector, is expected to speed up the end of the operational life for some of these fossil fuels projects.
While the worldwide energy price shocks, galvanised into action by the Ukraine crisis, prompted global governments’ dash for more gas and oil last year, the energy transition to low-carbon and renewable sources did not stop, as the outcries to ban new oil and gas projects from being developed are gaining ground along with calls to phase out fossil fuels altogether. This is illustrated by Tuvalu becoming the second nation-state to call for the development of a Fossil Fuel Non-Proliferation Treaty in 2022, after it backed Vanuatu, which issued the same call a few months before.
According to the International Energy Agency (IEA) and multiple other sources, the energy coming from oil and gas is expected to decline globally by 2050 while renewable energy – wind, solar, hydrogen, nuclear, and marine energy – is set for further growth. The International Renewable Energy Agency (IRENA) underlines that renewable energy production will be dominated by solar and wind power, especially in the electricity generation sector.
This brings to the fore the potential for the existing oil and gas infrastructure to turn into stranded assets at a time when decommissioning such installations is said to have a high price tag while also raising certain technical and environmental factors. While the energy transition train cannot be stopped in its tracks, there are alternatives to removing the oil and gas infrastructure, as it can be converted for a new purpose to harvest offshore wind energy.
With many countries setting targets to reach net-zero emissions by 2050, Jime Braga, Thauan Santos, Milad Shadman, Corbiniano Silva, Luiz Filipe Assis Tavares, and Segen Estefen outline in ‘Converting Offshore Oil and Gas Infrastructures into Renewable Energy Generation Plants: An Economic and Technical Analysis of the Decommissioning Delay in the Brazilian Case’ that renewable energy sources are perceived to be one of the best options for the repurposing of oil and gas infrastructures, which would result in “a greener economy, with potential synergies with other ocean industries, among which offshore wind energy stands out.”
“It is estimated that approximately one-third of the total life costs (operation, maintenance, and service costs) of an offshore wind project can be favorably impacted upon by significant synergies with the O&G supply chain, by making it possible to electrify O&G offshore operations by installing wind farms nearby or by means of floating turbines, thus reducing the need to operate diesel or gas generators on the platform, reducing GHG emissions and air pollutants, and facilitating the energy transition, with platforms providing bases for wind farms,” elaborated Braga, Santos, Shadman, Silva, Tavares, and Estefen in their article.
Furthermore, they claim that the use of a wind source in terms of economic viability would involve a joint venture project to delay the decommissioning process of the existing infrastructure, as technically viable and environmentally acceptable option, “where the integration between wind energy and the oil industry represents the technological transition to a clean and sustainable blue energy economy.”
While decarbonisation efforts are on the rise, many agree that the benefit of employing alternatives to full offshore oil and gas installations’ decommissioning entails the ability to use such installations at the same location, with no need to move structures, thus, resulting in less disturbance to the subsea environment.
For Braga, Santos, Shadman, Silva, Tavares, and Estefen, the repurposing of oil and gas infrastructure works as “a temporal and financial barrier” to full removal and disposal, generating further revenue for the project, adding replacement energy gains, and shrinking offshore installation costs for operators of renewable energy source plants.
“Another important consideration in decommissioning-postponing campaigns regards overall emissions; if we consider that all current efforts towards industry decarbonisation will be successful, leading to a less carbon-intense industry, we can assume that future emissions generated due to the removal of the same facilities will be lower than the emissions that would be generated now, resulting in overall lower net GHG emissions to the atmosphere throughout the years, as well as the postponing of residual carbon release to the future,” added Braga, Santos, Shadman, Silva, Tavares, and Estefen.
Aside from offshore wind and other renewable sources of energy, hydrogen is seen as a fuel of the future that could be used to decarbonise the hard-to-abate sectors. Oil and gas infrastructure can also be repurposed to enable this, as shown by a converted jack-up rig from Borr Drilling, which was expected to be used for green hydrogen production in project Haldane – cooperation between Aquaterra Energy, Borr Drilling, and Lhyfe – aimed at developing an industrial-scale offshore green hydrogen production concept through the deployment of an electrolyser system on the converted jack-up rig.
This concept offers another alternative deployment option to existing assets, such as jack-up drilling rigs traditionally used for oil and gas exploration, as it provides a source of green hydrogen, and enhances the commercial feasibility of remote offshore wind projects. Braga, Santos, Shadman, Silva, Tavares, and Estefen propose offshore wind projects as an alternative to the removal and final disposal of oil and gas infrastructure.
This proposal is based on their research findings, which indicate that the CapEx discount rate of wind power projects offsetting decommissioning is “considerable, as are the benefits of delaying decommissioning in terms of reduced carbon emissions and the social effects of increased local employment rates, through the repurposing of offshore oil and gas infrastructures.”
With the low-carbon energy matrix being widely advocated, moving decommissioning emissions to the future by repurposing oil and gas infrastructure for offshore wind and hydrogen use seems to have benefits for the environment while supporting decarbonisation efforts along with local employment and social development.
On the other hand, Braga, Santos, Shadman, Silva, Tavares, and Estefen believe that benchmarking solar energy, as well as wind farms, as a potential solution for old offshore oil and gas fields and infrastructure, presents a potential new dialogue between the fossil fuel and renewable energy sectors, promoting “the advancement of offshore renewable energy in line with the ongoing energy transition aimed at mitigating greenhouse gas emissions in the energy sector.”
Repurposing offshore oil and gas infrastructure for offshore wind energy has also been recognised as a potential solution for offshore rigs. This is demonstrated by Transocean’s recent execution of a non-binding memorandum of understanding with Eneti, indicating the two players’ intention to form a joint venture company that would engage in offshore wind foundation installation activities.
The formation of this joint venture is subject to the negotiation and execution of definitive agreements, which would enable the conversion of at least two Transocean drilling vessels into floating offshore wind foundation installation platforms. The upgrades to the vessels would include a 5,200 t crane and provide them with the capability to carry up to six 3,500 t monopile foundations with 12 m diameter.