RE: Energy Integration2 Apr 2022 16:52
Hi Dick
Interesting take.
Like you, I'm not technically qualified to comment on the detail of the oil operations.
Having looked back over the RNS issued in the last calendar year or so, there has to my mind, been a change to the project delivery anticipated (just my guess).
The fundamental 3 phase approach remains the same, I assume.
The desire to be net zero with electrification remains the same (I think).
The options for electrifying the platform have changed ie increased - previously on shore supply seemed like the only option; offshore wind now (on the face of it) appears to be a viable alternative option.
JOG's RNS history from March 21 - June 21 approximately seem pretty focused on the costs, surveys etc from shore electrification.
I think from October notifications onwards, the possibility of an alternative solution appear.
JOG should have the shore option capital costs pretty much firmed up.
It would only be common sense to establish the alternative option capital costs prior to committing a final financial investment decision. If I was JOG or a Farm In Partner, I would want that information.
My mind deals with these options as though it were simply two isolated events, shore or offshore wind, whereas the reality of the "knock ons" to the technical process may well be significant.
My reading of the electrification issues are that, from shore, there may be a guaranteed full time electrical supply, but technical issues with fluctuating current due to the distance the cable has to travel.
The offshore wind solution has the problem of supply when the wind doesn't blow, gas turbines are required to power the equipment.
(As to the capital costs for both solutions? - pass - no idea).
Reading the RNS and Design Solutions, I see JOG have opted for electric down the hole pumps instead of gas, for greater productivity returns. How the part time use of gas turbines would affect that - again, pass - no idea.
I think in reading the information issued in the public domain, the capital cost premium for the shore electrification was somewhere around £80 million.
The Cash projections that detailed payback period of 3 years for capital had a number of assumptions - industry best guess allowances for price of oil, inflation etc. There was also the mention of assumed carbon gas tax level until 2030.
All of these will change (have changed since the figures were issued), but I think carbon tax will become much more of an issue as time goes on.
Carrot and stick approach from Government. Don't electrify - no license, more prohibitive taxation - do electrify - increased capital cost but reduced operational taxation.
Will be needed to encourage collaboration.
Collaboration features prominently in JOG's RNS statements. Will be needed for electrification (I think) and for the GBA Hub to be effective.
No doubt there will be lots of interest. The downside - timescale to get all involved. Like herding cats and will need OGA pressure. Just my thou
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