With the existing economic models and today’s technical capabilities, many European oil and gas fields will reach the end of their economic lifespan in the coming decade. As a consequence, for a significant part of the historical oil and gas infrastructure, there needs to be a re-evaluation of its use. This inconvenient truth is well known in the oil and gas industry where ‘decommissioning’ is the trending topic.
Decommissioning or reconversion? It may be time for a new trend.
Although the principle is not new, the idea of reconversion is finally taking off. Rather than terminating economic activities on aging onshore and offshore constructions or removing them altogether, the reconversion approach tries to look at options to bring new economic purpose to these sites.
A new report by the Dutch organization Nexstep even suggests that reconversion of historical oil and gas fields could actually help the Netherlands achieve its target of reducing carbon emissions.
Today we finally find ourselves at an exciting crossroads. In the past, extending the economic life span of wells and platforms mainly meant looking at a vital reinjection of capital into these structures. This was in order to elongate the life of profitable carbon-based energy sources like crude oil and hydrocarbon gas. But nowadays, the industry is also thinking about how it can repurpose the old carbon mining infrastructure to alternative energy source infrastructures like wind power plants. The industry is even considering reinjecting carbon back into the original wells.
In this blog we list 3 innovative (and realistic) processes that are currently being developed by the industry to convert oil and gas platforms into storage facilities and production sites for alternative energy.
[Source: Nexstep Re-use & decommissioning report 2018 – case study of the Netherlands]
1. Carbon capture and storage
Carbon capture is a cost-effective and large-scale measure that would enable the Netherlands – and probably many other countries – to meet their Paris Climate Agreement targets. It requires trapping carbon dioxide at its emission source and separating it from other gases like oxygen and nitrogen. The gas is then transported to its storage location, usually via pipelines.
Depleted offshore gas field infrastructure holds great potential for the storage of CO2. Did you know the offshore gas fields in the Netherlands have the capacity to store 1,600 million tons of CO2?
This alternative approach could mean a big step forward in the reduction of greenhouse gas emissions.
2. Production and storage of hydrogen
The conversion from electricity to hydrogen gas offers many advantages. First of all, it is an attractive option for storing electricity from wind farms, which is prone to periods of overcapacity. In addition, it could also offer a cheap and efficient way to transport electricity to shore via existing pipelines.
But the conversion from electricity to hydrogen is still in its infancy. The first couple of pilot projects are now being set up.
3. Geothermal energy
A considerable number of onshore oil and gas wells are suitable for the production of geothermal energy. Just look at the Netherlands: 120 of the 500 identified locations have the potential to tap into geothermal energy.
Those wells that no longer hold economically viable carbon reserves could be used to pump up hot water located in deep underground layers. The hot water could then serve as a heating solution for homes or industry.
But there are bumps in the road…
Before the oil and gas sector can seize these opportunities and is able to contribute to a stable and sustainable energy ecosystem, the industry faces a number of challenges:
At the moment there is no legislative foundation or ‘hard political commitment’ to realize system integration options like carbon capture. This translates into insecurities and a certain reluctance to invest. The International Energy Agency already pointed out that investments in renewable energy were dropping in 2017 for the first time in years.
Of course, any endeavors to reduce carbon emissions depend largely on long-term commitment from policy makers to favor renewables over carbon-based energy sources. This in turn influences oil prices and the economic viability of future energy projects.
2. Offshore electrification
In order to enable new economic activities on offshore platforms, a certain amount of electricity is required, preferably generated by wind farms. That’s why it will be essential to construct an offshore electricity network to connect different platforms, but that is more difficult than it sounds.
There are high costs associated with connecting platforms to an offshore electricity network. To earn back this investment, businesses will have to ensure the current production equipment has an adequate lifespan.
3. Availability of competence and knowhow
The time to start reconversion projects is now.
Europe is investing less and less in the exploration of new gas fields. There is therefore a substantial risk that the required knowhow, experience and competence about how to drill deep underground will disappear in Europe. However, the ambitious plans for carbon storage will require precisely those specific skills and experience. It is time to secure this knowledge before it shifts to other parts of the world.
Our goal? Sustainable productivity
The industry is making a mindset shift from decommissioning to reconversion and has started preparing for this brand new adventure. At Atlas Copco Rental, we have been providing temporary solutions to the oil and gas industry for many years in support of their activities ranging from commissioning to decommissioning.
We understand the challenges the industry is facing and we are eager to support innovative projects from pilot phase to project realization by offering temporary solutions in compressed air, nitrogen, steam or power.
Some interesting links for further reading:
- Press release ref. Rental Europe offshore fleet
- Offshore Industry page & Oil and Gas Industry page on Rental website
- Nexstep rapport
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