Dutch North Sea goes from gas to green
The Netherlands plans to repurpose its declining North Sea and onshore assets to serve the energy transition
With Dutch gas production crumbling to its lowest level in nearly 50 years, the Netherlands’ North Sea infrastructure is ripe for decommissioning. But what if instead of pulling it apart, some of the platforms, pipelines and empty reservoirs found a new life in the country’s quest to clean up its energy system? From storing carbon in depleted offshore fields to producing green hydrogen powered by offshore wind, the Netherlands wants to repurpose the North Sea to serve its energy transition.
“The North Sea is going to be a pivotal area to reach the Paris climate goals,” says Ellen van der Veer, energy transition consultant at Dutch research organisation TNO. As a signatory of the 2015 Paris Agreement, the Netherlands has committed to reducing greenhouse gas emissions by 49pc below 1990 levels by the end of this decade. As a once-leading European gas producer, limiting the use of fossil fuels in its energy system is one of the ways in which the country aims to clean up.
Offshore wind boom
The Dutch government has placed huge bets on offshore wind as part of the country’s energy transition, with its most ambitious plan targeting 60GW of offshore wind capacity by 2050, 60 times what is in place in the Dutch part of the North Sea. Around 400 additional wind turbines will be installed offshore to bring total installed capacity to 4.5GW by 2023, highlighting the pace at which the Dutch North Sea is accommodating green energy projects.
“Part of the oil and gas infrastructure could be used to accelerate the energy transition” Vaessen, Nexstep
The Netherlands is ideally placed to deliver huge offshore infrastructure projects as it can rely on its mature oil and gas sector that has decades of experience building and working offshore. The IEA estimates that around 40pc of an offshore wind farm’s lifetime costs, including construction and maintenance, have significant synergies with the offshore oil and gas sector.
This provides a huge opportunity for a part of Dutch industry that has seen a drastic fall in activity in recent years. “Part of the oil and gas infrastructure could be used to accelerate the energy transition,” says Jacqueline Vaessen, general manager of Nexstep, the Netherlands’ public-private organisation for oil and gas decommissioning.
A number of pioneering projects are underway in the Dutch North Sea where existing oil and gas infrastructure is providing the foundation for realising green energy ideas. One example is the PosHYdon project, which is testing the production of hydrogen on an offshore oil platform by turning demineralised water into hydrogen using electrolysis that is powered by a nearby offshore wind farm.
The fully electrified Q13a oil platform run by Neptune Energy is providing a home for the project, around 13km off the Dutch coast. The Netherlands is also eyeing the production and transport of hydrogen as a way to repurpose some of its onshore gas pipelines that will soon become obsolete as the country’s huge Groningen gas field ceases production.
“With the knowledge that we have—and specifically with the infrastructure of pipelines, platforms, wells and reservoirs that we have—we can play a role in making projects faster and more efficient,” says Lex de Groot, managing director of Neptune Energy Netherlands. While the company, the largest offshore operator in the Netherlands, plans to remain an E&P business, de Groot says he sees alternative energy projects becoming “a central part of our business for a period of time”.
Carbon capture and storage
Neptune Energy Netherlands is also in discussions with several parties about involvement in subsea carbon capture and storage (CCS) projects, de Groot says, including the Athos, Porthos and Aramis projects in three different locations along the Dutch coast, studying the feasibility of burying carbon in depleted offshore fields.
The Porthos project, based on industry located in the Port of Rotterdam, is another example of the oil and gas industry providing essential support to an innovative clean energy project. Majors ExxonMobil and Shell are among the partners in the project, studying whether they can capture carbon from nearby refineries to send to depleted offshore fields for storage. Dutch gas network operator Gasunie, state energy company EBN and the Port of Rotterdam are the main leaders of the Porthos project. They say first subsea carbon storage is targeted by the end of 2023, provided the project receives government subsidies and that all partners agree to go ahead.
“These types of activities really need the experience of the current oil and gas industry,” says van der Veer. “This experience is vital if we look at opportunities for hydrogen and related energy carriers to add flexibility to the expected new, intermittent energy system that we are aiming for.”
Another Dutch company with a long history of working in the oil and gas sector that is making inroads into green energy is marine contractor Van Oord. Traditionally a supplier of dredging vessels, it has a growing business servicing the offshore wind sector. The company made €571mn in revenue from the offshore wind business unit in 2019, a nearly four-fold increase compared with ten years earlier.
"[Green energy] activities really need the experience of the current oil and gas industry" van der Veer, TNO
“Since 2010 our offshore work has almost completely shifted to realising offshore wind parks,” says Sven Kramer, director of sustainability at Van Oord. He says the company had recruited scores of technical experts to focus on its offshore wind business and it had retrained several staff who used to work on oil and gas projects. “Van Oord will continue to pursue a dominant role in the North Sea energy transition, not only through growing the installed capacity of offshore wind, but also by getting involved in the green hydrogen transition and offshore sequestration of CO2,” Kramer says.
But time is pressing to reutilise existing infrastructure as Dutch oil and gas decommissioning plans are well underway. Nexstep estimates that around half of all offshore pipelines, platforms and wells will be ripe for decommissioning or re-use by 2028. The recent sharp decline in oil and gas prices could even add to the momentum of decommissioning as operators shed uneconomic assets, the organisation says.
“The window of opportunity is relatively small. It is up to us, the full energy sector as well as the Dutch government, to address where we need to do what is necessary to grasp that window of opportunity when it is there,” van der Veer says.
Utilising synergies with the oil and gas sector and giving the industry room to develop at its own pace can also have huge cost benefits. Nexstep aims to reduce the Netherlands’ €7bn decommissioning bill by 30pc by encouraging, among other measures, the re-use of old infrastructure. It estimates that around 10pc of installations can find new applications. “Innovation can help to preserve crucial infrastructure to accelerate the energy transition,” says Nexstep’s Vaessen.
49pc – 2030 target for reduction in GHG emissions from 1990 levels
Not limiting the number of offshore wind and CCS projects could save the Netherlands billions of euros a year by 2050, concluded a recent preliminary report by North Sea Energy, an alliance of Dutch and other North Sea-focused companies and research organisations, including Shell, Total, Dana Petroleum and GasTerra. “Unlocking [the] low-carbon energy potential of the North Sea… requires integrated system thinking rather than merely sectoral optimisation,” the report found.
As is often the issue with pioneering technology, legislation and regulation lag behind. Current rules for connecting offshore wind farms stipulate that power may only be transported to the shore, complicating attempts to use offshore wind power for projects at sea. “In order to exploit the potential of system integration, legislative reforms are of importance,” says Miralda van Schot, energy analyst at New Energy Coalition, a Dutch network of researchers focused on the energy transition.
She adds that Dutch legislation is also unclear about how disused energy infrastructure may be repurposed. The Dutch energy ministry says the rules are being adjusted to allow re-use of offshore infrastructure but that it was not yet clear when the legislative changes would be implemented.