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Posts Tagged ‘Orsted’

Denmark’s “ban” on oil and gas exploration, campaign against fossil fuels

Posted in climate, energy policy, Offshore Energy - General, tagged , , , , , , on November 4, 2024| Leave a Comment »

As the table below illustrates, Denmark’s highly publicized oil and gas exploration ban is more pragmatic than has been reported in the media. The expansion of production from existing fields is not restricted.

12/4/2020 policy announcement10/29/2024 discovery announcement
Denmark has brought an immediate end to new oil and gas exploration in the Danish North Sea as part of a plan to phase out fossil fuel extraction by 2050. TotalEnergies announces that the Harald East Middle Jurassic nearby exploration well (HEMJ-1X) has discovered additional gas condensate resources in the Harald field, in the Danish North Sea.“The success of the Harald East Middle Jurassic well, nearby our Harald facilities in Denmark, demonstrates the strength of our Exploration strategy.” 

As a result of new exploration, Danish gas production is on the rise (graphic below) after two decades of decline. August 2024 production (165.8 MMCFD) was 21% higher than August 2023 production (136.9 MMCFD)

While Total has proven to be resourceful in sustaining North Sea gas production, Denmark’s refusal to hold new licensing rounds dooms their production over the longer term. This is consistent with Denmark’s intent to cease domestic production by 2050. (Those of you who are young enough can report on whether that deadline is met 😉).

The demand for fossil fuels, which has yet to peak, will still be strong in 2050 and beyond. Phasing out domestic production may be Denmark’s choice, but it’s not a good choice for much of the world.

Denmark is a lovely country, but their rather smug commitment to “lead a global campaign on the role of fossil-fuel producing countries” is not universally welcome. Similarly, companies like Orsted (50.1% Danish govt ownership) are not always the best ambassadors for exporting Danish energy policy.

Other governments, including the US, are quite capable of risking their economic growth and energy security without Denmark’s help.

Related posts:

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Equinor buys 9.8% of Orsted – good counter cyclical investment or irrational pursuit of renewables goal

Posted in climate, energy policy, Norway, Offshore Wind, Uncategorized, tagged , , , , , on October 7, 2024| Leave a Comment »

Equinor, which is 2/3 owned by the Norwegian government, has purchased a nearly 10% stake in offshore wind giant Orsted (50.1% Danish govt ownership).

With bp and Shell reducing their wind energy investments, Equinor’s Orsted acquisition is a contrarian move. Equinor is also the only major oil company that is still in the market for new US offshore wind leases.

While the Orsted acquisition does not appear to have been directed by the Norwegian government, the State’s 2/3 ownership of the company no doubt influences renewable energy targets and broader corporate strategy.

The initial market reaction to the Orsted purchase was negative (see chart below). On a day when most oil companies’ share prices rose in response to the jump in oil prices, Equinor shares opened sharply lower.

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Orsted should not be allowed to sell the Ocean Wind leases

Posted in energy policy, Offshore Energy - General, Offshore Wind, tagged , , , , , on September 12, 2024| Leave a Comment »

A media report informs that, as expected, Orsted is marketing the suspended Ocean Wind 1 and 2 leases. BOEM should deny any request to assign these leases. Here’s why:

  • As discussed in a previous post, those leases should have been terminated when Orsted announced that they would “cease development of the Ocean Wind 1 and Ocean Wind 2 projects.”
  • Absent termination, these inactive leases would have expired were it not for BOEM’s approval of a 2 year suspension of operations.
  • For the first time in the history of the US OCS program, the lease suspensions were approved without any work commitment on the part of the operator.
  • Per the approval letter (attached), the suspensions were granted so Orsted could get “full enjoyment” of the leases by waiting for economic conditions to improve.
  • The approval relieves Orsted from complying with any deadlines in their approved Construction and Operations Plan.
  • Under the approved suspensions, Orsted’s only obligations are to reply to requests for information and participate in meetings or consultations as requested. Note that for suspensions of operations on oil and gas leases, the operator must provide “a reasonable schedule of work leading to the commencement or restoration of the suspended activity.”
  • Subsequent to BOEM’s approval of the lease suspensions, the New Jersey Board of Public Utilities correctly vacated all of its Orders that approved the Ocean Wind One and Ocean Wind Two offshore wind projects.

Suspensions of Operations are for the purpose of providing additional time, where necessary, for diligent operators to meet development milestones and initiate energy production. They are not for the purpose of waiting for improved economic conditions or providing time to sell your leases.

Any request by Orsted to assign these leases should be denied. If BOEM wants to reissue the leases, they may do so at a future sale in accordance with their regulations at 30 CFR Part 285.

Lease Suspension Approval Letter for Ocean Wind 1_ OCS-A 0498Download

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How are Orsted’s Ocean Wind 1 and 2 leases still active?

Posted in energy policy, Offshore Wind, tagged , , , , , , on August 28, 2024| Leave a Comment »

  • 10/31/2023: Citing economic factors, Orsted announces they “will cease development of the Ocean Wind 1 and Ocean Wind 2 projects.” (This should have resulted in termination of the leases.)
  • 1/19/2024: Orsted requests a 2 year “suspension of operations” to extend the leases they had ceased developing. (Presumably, this was a hedge with hopes of marketing the leases or getting better terms.)
  • 2/29/2024: True to form, BOEM approves the questionable 2 year suspension request. The approval letter was dated one day before the leases’ 8th anniversary when they would have presumably expired. (This is unconfirmed because the lease document and BOEM’s wind regulations lack clarity regarding lease expiration.)
  • BOEM’s approval letter (attached) curiously asserts that “suspension of the operations term is necessary for the Lessee’s full enjoyment of the lease in this circumstance to ensure sufficient time for project operations in support of the Project’s economic viability.” (Interesting wording that expresses the accommodative and promotional philosophy of the Federal wind program.)
  • 8/14/2024: The New Jersey Board of Public Utilities formally vacated all of its Orders that approved the Ocean Wind One and Ocean Wind Two offshore wind projects.
  • 8/14/2024: Cape May County comments that they are likely to amend their Federal Court filings “since the actions of the NJBPU would appear to have nullified Orsted’s federal permits.”
  • 8/27/2024: Despite the fact that Orsted has ceased development and New Jersey has vacated its approvals, the Federal leases are still active.
  • Good luck keeping an oil and gas lease if you cease development and request a suspension of operations. BSEE will rightfully deny your request.
Lease Suspension Approval Letter for Ocean Wind 1_ OCS-A 0498Download

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Ouch! Orsted scraps Ocean Wind 1 and 2!

Posted in energy policy, Offshore Wind, Wind Energy, tagged , , , , , on November 1, 2023| Leave a Comment »

NJ Governor Murphy, an offshore wind promoter, is not pleased:

“Today’s decision by Orsted to abandon its commitments to New Jersey is outrageous and calls into question the company’s credibility and competence,” the Democratic governor said. “As recently as several weeks ago, the company made public statements regarding the viability and progress of the Ocean Wind I project.”

6ABC NJ

Perhaps the Governor’s credibility and competence is also taking a hit, as is staking the State’s energy future on highly uncertain, intermittent, and facility-intensive power systems. .

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Tough day for US offshore wind

Posted in Gulf of Mexico, Offshore Wind, tagged , , , , , on August 30, 2023| Leave a Comment »

Yesterday was not a good day for US offshore wind. Not only was the Gulf of Mexico wind lease sale disappointing, but Orsted announced US impairments of $2.3 billion causing their share price to fall to the lowest level in more than 4 years.

Unsurprisingly, Orsted management assumes no responsibility for the company’s poor performance, blaming supply chain problems, high interest rates and “a lack of new tax credits.” Outsiders might suggest that there were other factors such as irrational exuberance in the acquisition of wind leases at inflated prices, and unrealistic expectations regarding a complementary power source that is dependent on government mandates and subsidies.

“The situation in U.S. offshore wind is severe,” Chief Executive Mads Nipper told reporters on a conference call.

Reuters

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7 NJ/NY whale deaths in just over a month

Posted in Offshore Wind, Wind Energy, tagged , , , , on January 14, 2023| Leave a Comment »

OCNJDaily

While it’s unlikely that the whale strandings are the result of pre-construction activities for offshore wind development, greater transparency on the part of the developer and regulators would be helpful:

  • What surveys and other offshore activities are being conducted? Where?
  • What is the timeframe for these activities?
  • Any sightings of distressed whales?
  • Other anomalous observations?

Absent regular activity updates, accusations and protests are likely to continue and intensify.

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