OTC slowly getting greener
Industry finding value in cleaner forms of energy
The Offshore Technology Conference is not just about drill, baby, drill anymore.
After 50 years, the conference has found a growing place for green energy, putting an unprecedented spotlight on renewable technologies, particularly offshore wind farms that are spreading throughout Europe and beginning to gain traction in the United States. OTC — which has devoted its programs to drilling oil faster, better and cheaper — this year is holding not one, but three separate sessions on alternative energy, while the conference chairman, Wafik Beydoun, is highlighting the need for the oil and gas industry to diversify into cleaner forms of energy as governments around the world move to slow global warming.
“We have to adapt,” said Beydoun, an executive at the French oil major Total.
The increasing interest in renewable energy at OTC is part of growing recognition by the oil and gas companies that concerns about climate change are all but certain to transform their business. Consumers are buying electric vehicles, com-
panies are investing in energy efficiency and clean power, and some 200 nations are taking steps to lower greenhouse gas emissions to meet the goals of the Paris climate agreement.
Already, the world’s biggest oil companies, including Exxon Mobil, Royal Dutch Shell and BP, are spending of billions of dollars on wind, solar, biofuels and other alternative energy sources as both their investors and customers ask for more renewables, industry leaders said during a panel discussion this week. “There is a good business reason,” said Ernest Moniz, the secretary of energy under President Barack Obama.
Against that backdrop, OTC is jumping on board. For much of the past half-century, OTC has drawn energy companies from around the world to learn about engineering marvels and technological advances that would allow them to explore in ever deeper waters. But this year, OTC brought together a high level group of CEOs, including the chief executives of the European oil majors Statoil and Total, to discuss how to harness alternative energy. Another conference session will address advances in floating wind turbines while yet another will focus on the status of the offshore wind energy.
Offshore wind has gained particular interest because developing the projects is similar to engineering offshore oil and gas platforms, oil and gas executives said. Statoil, a Norwegian company, has emerged as a pioneer in offshore wind farms and, most recently, floating wind turbine facilities that can be built even farther offshore where the winds are stronger. Statoil has invested $2.6 billion in renewables over the past five years.
“We are the biggest offshore operator in the oil and gas space. We have all the marine engineering and logistics competence. All the people who run these wind projects come from oil and gas,” said Statoil CEO Eldar Saetre. “We can switch employees between oil and gas and offshore wind. That has given us an immense starting point.”
Total, meanwhile, is getting requests from shareholders to put more resources in renewable energy, said its CEO, Patrick Pouyanne. Total last year spent nearly $300 million to buy a stake in a European renewable energy company to expand its investment in solar and wind energy. While Total has no offshore wind projects, analysts have said such developments would make sense for Total, which, like Statoil, has extensive offshore oil and gas drilling projects.
“We want to be socially responsible,” Pouyanne told an OTC audience on Monday.
When it comes to offshore wind development, the United States lags Europe, where renewable industries have incubated for 30 years. In the United States, the spread of offshore wind has hit several barriers, according to executives with DNV GL, a Norwegian research and consulting firm that works with energy companies.
The capacity of some U.S. ports in the Northeast, where the nation’s first offshore wind farm is located, is limited and can’t accommodate the scale of the offshore wind equipment. Europe has managed the problem by creating super ports that serve as hubs for projects across several regions and countries. But the idea of a super port that can serve projects in the waters of multiple states has not gained traction in the United States, where local officials and governments want to protect and grow jobs in their own ports, according to DNV GL.
That has contributed to higher costs in the United States, where building an offshore wind farm costs between 25 and 27 cents per kilowatt hour of capacity compared to 5 cents in Europe, according to DNV GL. Development of offshore wind projects in the U.S. has also been hampered by the Jones Act, which limits the vessels that can transport equipment between U.S. ports.
All of this helps explain why offshore wind is only beginning to gain attention and space at OTC, said Frank Ketelaars, director of region Americas at DNV GL. “It will get there,” he said, “but it will take time.”
Gulf Island Fabricators agrees. The Houston company, which builds foundations for offshore wind turbines, sends employees to OTC, but it doesn’t rent a booth to promote its products and raise visibility among potential customers. “I think that in the future we may,” said David Schorlemer, executive vice president and chief financial officer.
Meanwhile, the wind industry isn’t waiting for OTC. Last year, Renewable Energy World, a website that collects news and research about alternative energy, sponsored a two-day conference in Houston designed to attract offshore oil and gas drillers to build wind projects offshore. It has scheduled another conference for September.