Cerulean Winds has revealed an ambitious plan to accelerate decarbonisation of oil and gas assets through an integrated 200-turbine floating wind and hydrogen development that would shift the dial on emissions targets and create significant jobs.
The £10 billion proposed green infrastructure play would have the capacity to abate 20 million tonnes of CO2 through simultaneous North Sea projects West of Shetland and in the Central North Sea.
The venture is now calling on UK and Scottish governments to make an ‘exceptional’ case to deliver an ‘extraordinary’ outcome for the economy and the environment. A formal request for seabed leases has been submitted to Marine Scotland.
Cerulean Winds is led by serial entrepreneurs Dan Jackson and Mark Dixon, who have more than 25 years’ experience working together on large-scale offshore infrastructure developments in the oil and gas industry.
They believe the risk of not moving quickly on basin-wide decarbonisation would undermine the objectives set out in the recent North Sea Transition Deal.
Dan Jackson, founding director of Cerulean Winds said the UK is progressing the energy transition, but a sense of urgency and joined-up approach is required to enable rapid decarbonisation of oil and gas assets or there is a risk of earlier decommissioning and significant job losses.
“Emissions are quite rightly no longer acceptable, but with emissions penalties and taxes coming, the UK oil and gas industry’s role in homegrown energy security during the transition could be threatened unless current decarbonisation efforts can be greatly speeded up. The consequences of not moving quickly enough will be catastrophic for the economy and the environment,” Mr Jackson said.
The proposed development involves:
- Over 200 large floating turbines at sites West of Shetland and in the Central North Sea with 3GW per hour of capacity, which would feed power to offshore facilities and excess 1.5 GW per hour power to onshore green hydrogen plants.
- Ability to electrify the majority of current UKCS assets as well as future production potential from 2024 to reduce emissions well ahead of abatement targets.
- 100 per cent availability of green power to offshore platforms at a price below current gas turbine generation through a self-sustained scheme with no upfront cost to operators.
- The development of green hydrogen at scale and £1 billion hydrogen export potential.
- No subsidies or CFD requirements and hundreds of millions of pounds to government revenue via leases and taxation through to 2030.
Cerulean has undertaken the necessary infrastructure planning for the scheme to ensure the required level of project readiness, targeting financial close in the first quarter of 2022. Construction would start soon after with energisation commencing in 2024. An Infrastructure Project Finance model, commonly used for major capital projects is being adopted.
Société Générale, one of the leading European financial services groups, is advising Cerulean Winds. Allan Baker, Global Head of Power Advisory and Project Finance commented: “The Cerulean UKCS decarbonisation project has the potential to meet all of the basin’s transition needs by reducing oil and gas emissions as quickly as possible whilst also introducing large scale green energy.”
Corporate finance advisors to the energy industry, Piper Sandler, are also advising.
Tim Hoover, Managing Director, Project Finance Investment Banking at Piper Sandler added: “We are pleased that [the UKCS decarbonisation model] is now at the regulatory approval stage; it is a scheme that understands the needs and requirements of the financial markets to make it bankable.”
Cerulean estimates that the current 160,000 oil and gas jobs can be safeguarded and 200,000 new roles within the floating wind and hydrogen sectors will be created within the next five years.