Governments are being urged to fast-track a new £10 billion green infrastructure plan, which aims to accelerate the decarbonisation of oil and gas assets in the North Sea.
The ambitious new plan has been unveiled by green infrastructure developer Cerulean Winds, and would have the capacity to abate 20 million tonnes of CO2 through an integrated 200-turbine floating wind and hydrogen development situated close to current North Sea projects to the West of Shetland and in the Central North Sea.
The venture is now calling on the UK and Scottish governments to make an “exceptional” case to deliver a positive outcome for the economy and the environment. A formal request for seabed leases has been submitted to Marine Scotland.
Cerulean Winds is led by Dan Jackson and Mark Dixon, who have more than 25 years of experience working together on large-scale offshore infrastructure developments in the oil and gas industry. They believe the risk of not moving quickly on basin-wide decarbonisation would wholly undermine the objectives set out in the recent North Sea Transition Deal.
Jackson, founding director of Cerulean Winds, said: “The UK is progressing the energy transition, but a sense of urgency and joined0up approach is required to enable rapid decarbonisation of oil and gas assets, or there is a risk of earlier decommissioning and significant job losses.
“Emissions are quite rightly no longer acceptable, but with emissions penalties and taxes coming, the UK oil and gas industry’s role in homegrown energy security during the transition could be threatened unless current decarbonisation efforts can be greatly speeded up.
“The consequences of not moving quickly enough will be catastrophic for the economy and environment.”
To that end, the Cerulean leadership has begun to put together a team of tier one contractors to deliver the UKCS backbone development, and has engaged with the financial markets for a fully funded infrastructure construct.
The proposed development incorporates over 200 of the largest floating turbines situated on-site, with a capacity of three gigawatts (GW) per hour. This power would be fed to the offshore facilities, while an excess 1.5GW per hour of power is transferred to onshore green hydrogen plants.
This means that the project will be able to deliver the ability to electrify the majority of current UKCS assets, as well as future production potential from 2024 to reduce emissions well ahead of abatement targets. This is achieved with the 100 per cent availability of green power to offshore platforms, at a price below current gas turbine generation, through a self-sustained scheme with no upfront cost to operators.
Additionally, the development of green hydrogen at scale has the potential to lead to a £1 billion export business, and will generate millions of pounds of government revenue via leases and taxation through to 2030.
The necessary infrastructure planning has already been undertaken for the scheme to ensure the required level of project readiness, targeting financial close in Q1, 2022. Construction would start soon after, with energisation commencing in 2024. An Infrastructure Project Finance model commonly used for major capital projects is being adopted.
Société Générale, one of the leading European financial services groups, is advising Cerulean Winds.
Allan Baker, global head of power advisory and project finance, commented: “The Cerulean UKCS decarbonisation project has the potential to meet all of the basin’s transition needs by reducing oil and gas emissions as quickly as possible, whilst also introducing large scale green energy. We are pleased the be supporting the leadership on what is a transformational proposition for the UK.”
Corporate finance advisors to the energy industry, Piper Sandler, are also advising.
Tim Hoover, managing director of project finance investment banking at Piper Sandler added: “The Piper Sandler investment bankers in the UK and in the US have partnered with Cerulean’s leadership over the last year to develop the UKCS decarbonisation model, and we are pleased that it is now at the regulatory approval stage; it is a scheme that understands the needs and requirements of the financial markets to make it bankable.”
Cerulean estimates that the current 160,000 oil and gas jobs can be safeguarded and 200,000 new roles within the floating wind and hydrogen sectors will be created within the next five years.
Jackson added: “We have a transformative development that will give the UK the opportunity to rapidly decarbonise oil and gas assets, safeguard many thousands of jobs, and support a new green hydrogen supply chain.
“The decision to proceed with the scheme will ultimately rest with the Scottish Government and Marine Scotland, and their enthusiasm for a streamlined regulatory approach. The ask is simply that an exceptional decision is made for an extraordinary outcome.
“We are ready to deliver a self-sustained development that will decarbonise the UKCS, and be the single biggest emissions abatement project to-date.”
