Thursday, 17 April 2014

Scots' go-it-alone vote hitting North Sea investment



THE looming Scottish independence ballot has been affecting investment in the oil and gas industry for over a year, says one of the industry’s leading lights.

Dennis Clark, OBE, chairman of Newcastle fabricators the OGN Group said: “The oil company chief executives don’t like risk and that’s what they see in the North Sea now.

“Will the assets be nationalised? Will the tax situation change? Will management and resources move away from Scotland? These are any one of a million things that could happen.

“Regional managers in the oil companies just can’t answer these questions so oil chiefs would rather spend their money elsewhere, Angola or Brazil, or shale.

“This is already happening; capital is migrating out of the North Sea and into shale. This uncertainty is damaging the industry.”

Cark the former chief executive of Amec Energy is honorary president and founder of NOF Energy.

Clark soundings follow similar comments from many in the industry including BP chief executive Bob Dudley

For more on Dennis Clark, and the energy industry see: http://www.thejournal.co.uk/authors/Peter_McCusker

Wednesday, 16 April 2014

15-year contract demands damaging offshore wind industry


SIEMENS became the first offshore wind turbine manufacturer to confirm it plans to set up a base in the UK when it announced it was establishing a blade manufacturing base in Hull, creating 1,000 jobs.

In recent years four of the world’s other main turbine players have signalled their intent to establish factories at UK ports, however none have yet committed, with the length of leases required said to be a major drawback.

Industry insiders say that many of the turbine companies want leases of no more than five years, but the ports, which will have to make substantial investments in berths and other infrastructure, need a 15-year timetable to make it work for them.

One industry expert said: “The strike prices have been set, and the Government wants local content in the supply chain. But the turbine manufacturers looking at building factories in the UK are being put off by the length of leases they are being asked to sign.

“If it was a five-year lease that wouldn’t be a problem, but a 15-year lease is, and if the market does not develop in the way expected this would add insult to injury.

“While the Government has shown its commitment to renewable targets up to 2020, there is no visibility beyond then.”

Associated British Ports has agreed to invest £150m upgrading its port facilities as part of the Siemens deal, although details of the length of lease agreed between the two parties has not been released.



For more on offshore wind and the energy sector see: http://www.thejournal.co.uk/authors/Peter_McCusker/

Monday, 14 April 2014

Senior UK renewable's boss says offshore wind costs can be halved.

MAJOR efforts are underway to reduce costs in the offshore wind sector with the UK Government saying it aims to see a 50% cut in subsidy levels from 2020 onwards.

DONG Energy is the largest player in the European offshore wind sector and Benj Sykes, its operations director for renewables in the UK, believes it can almost halve costs.

He said: “The industry is under increasing pressure from the Government to show it can bring costs down which may explain why a number of schemes have fallen by the wayside in recent months.

“Building a supply chain will help bring costs down. We believe we are capable of bring costs down by 30 to 40% to £100 per MW/h. In fact DONG wants to go further and is looking at 100 Euros per MW/h (or £80 per MW/h).”

Offshore wind subsidies are currently £155 per MW/h, which is three times the wholesale price of electricity, with the costs being passed on through household and business electricity bills.

Sykes added: “We are currently trialling 8MW turbines and these will drive down the costs. The industry needs to earn the right to exist on a large scale.

“There are still uncertainties, but we are pretty confident. If we show as an industry we can get our costs down then the opportunity is there for the taking, but we have to earn the right to grow as an industry.

“We can create a big industry here in the UK for foundation and turbine manufacturers and the supply chain.”

ENDS

For more on offshore wind and the energy sector see: http://www.thejournal.co.uk/authors/Peter_McCusker/