Big Oil Replacing Offshore Rigs with Wind Turbines
Big oil is starting to challenge the biggest utilities in the race to erect wind turbines at sea. Royal Dutch Shell Plc, Statoil ASA and Eni SpA are moving into multi-billion-dollar offshore wind farms in the North Sea and beyond. They’re starting to score victories against leading power suppliers including Dong Energy A/S and Vattenfall AB in competitive auctions for power purchase contracts, which have developed a specialty in anchoring massive turbines on the seabed.
The oil companies have many reasons to move into the industry. They’ve spent decades building oil projects offshore, and that business is winding down in some areas where older fields have drained. Returns from wind farms are predictable and underpinned by government-regulated electricity prices. And fossil fuel executives want to get a piece of the clean-energy business as forecasts emerge that renewables will eat into their market.
Even as oil production declined in the North Sea over the last 15 years, economic activity has been buoyed by offshore windmills. The notorious winds that menaced generations of roughnecks working on oil platforms have become a boon for a new era of workers asked to install and maintain turbines anchored deep into the seabed. About $99 billion will be invested in North Sea wind projects from 2000 to 2017, according to Bloomberg New Energy Finance. A decade ago, the industry had projects only a fraction of that size.
The entry of oil majors into renewables is part of “a longer term trend,” according to Nick Gardiner, head of offshore wind at U.K. Green Investment Bank, who notes that companies with the scale of Shell and Eni have the clout to finance projects more cheaply than many of their competitors.
Read the entire article at Bloomberg Markets.