Dogmas of the Past and Future

Investments in offshore hydrogen entail relevant reductions in system costs summing to billions of euros (3-7% relative system cost decrease) for the North Sea region countries. It is calculated that offshore hydrogen complements onshore hydrogen production and makes up about 10-15% of total hydrogen production in the North Sea region in 2050. For individual nations this can be higher. For the Netherlands for example higher shares for offshore produced hydrogen are reported due to the very large offshore wind potential, implementation plans and sectoral demands in this country. The flip side of this prospect is that from the project and private investor perspective offshore hydrogen is still in its infancy and that technical risks, economical risks, commercial risks, organizational risks and regulatory risks reduce the appetite for private investors to bring the technology from pilot to full commercial scale applications. There are support mechanisms and risk mitigation schemes needed to remove these so-called market failures that hamper implementation of offshore system integration projects.

The same is true for CCS. In the former phases of North Sea Energy program research indicated that restricting CCS would incur system costs increasing with billions per year in 2050, just for the Netherlands. Clearly a robust set of support mechanisms and long-term commitment level is needed to ensure that system value is rapidly transferred into project value to mobilise private capital that is needed to develop the integrated offshore energy system.

Relics of the past or strategic assets? The discussion around offshore legacy assets from oil and gas production is very important for an efficient phaseout of hydrocarbon production in many parts of the North Sea. Some infrastructure elements could be of high value for the energy transition while others have no future use and should be removed, repurposed and/or recycled. Subsurface assets like wells and reservoirs are of high value for the storage of CO₂ or H2. There could be for some assets be competing use functions and clarity is thus needed by screening this potential for their future use potential and timely availability, across the North Sea basin. The same holds for transport pipelines for hydrocarbons that could be re-used for the transport of CO₂ and hydrogen or a mixture of natural gas and hydrogen. Next to technical issues that need to be resolved timing of the availability of these assets is key here and strategic planning in space and time of future backbones for hydrogen and CO₂ on the North Sea is currently missing in the North Sea region. This warrants national strategies for earmarking legacy infrastructure for hydrogen and CCS, but also the international coordination to ensure an international infrastructure for these commodities is attained over the next decades.

Sectoral borders are hampering solutions. One key example researched in the NSE programme is that of shared logistics. Sharing logistic services between offshore wind  and the oil and gas sector is anticipated to result in emission saving and cost reductions. Sometimes relatively simple barriers are blocking synergies between sectors. In a time of human capital shortages also optimal dispatch of personnel across sectoral borders would be ideal. But difference in procedures and training, salary and technical differences between the world of the electrons and molecules offshore makes sector switching cumbersome¹. The future however most likely will be a fusion of offshore electrons and molecules (hydrogen) which require its own workforce. A merge between the sectors will be needed to attain efficient operation and maintenance of the new offshore energy system. Sectoral borders will fade.

Flexibility and security of supply of energy was something almost taken for granted in the last decades. The role of liquids (e.g. oil) and natural gas is of key importance here as very large and strategic reserves are in place in Europe and North Sea countries. Large reserves (i.e. 90 days of oil imports) and seasonal underground gas storages are abundant in the North Sea countries. Throughout  the last two decades the market for natural gas could be characterized as well sourced with high competition between domestic, pipeline import and LNG suppliers; and a high storage potential of more than 1 PWh in Europe (even a surplus) for underground natural gas available in Europe. This led to low natural gas prices and low spreads for gas storage operators. The last months has reminded us that the security of supply and flexibility that the natural gas system provides is very important for the energy system, economy and society at large. A phase out of this system towards 2050 should be done very carefully and the flexibility and security of supply that the system provides with its storage should be paired with new means of flexibility to keep the system robust and affordable. The new dogma here is an integrated system with diverse sources of energy and multiple infrastructures (gas, electricity, heat, liquids) to reach end-users with the energy they need while providing the ability to unlock enough flexibility and storage potential to reach and maintain affordable, secure and clean energy for all. A clear argument can be found here for introducing hydrogen into the mix as this helps to bring flexibility to system by allowing electricity that is not being consumed to be converted to be used in sectors that are hard to electrify or to store energy to cope with supply disruptions on the weekly, monthly, seasonal and strategic scale. 

1 NSE1 North Sea Energy -D 2.1-2.3 ‘Human Capital in the Fluid Landscape - Netherlands’ Labour Market Projections and the North Sea Offshore Energy Transition