Expert calls for much better interaction between oil/gas and wind

“The Tyra field is the core of the Danish part of the North Sea. If we don’t proceed with Tyra, we will begin the dismantling of Danish oil and gas production, and, once we do that, there’s no going back.”

Such is the unambiguous diagnosis from Morten Mønster, who is head of KPMG’s Danish advisory practice. He has been monitoring the Danish oil and gas industry for many years, and has worked with the offshore industry in both Norway and the US for 20 years. However, he sees no reason for the Danish oil adventure to end now. On the contrary, he believes the authorities should create framework conditions, which enable renewable energy and oil and natural gas to play well together through 2040.

The best of both worlds
“Nothing prevents wind energy and oil and gas extraction from working in perfect harmony. It’s a question of cooperation,” says Morten Mønster.

“Denmark is unique in the sense that we have managed to combine the best of both worlds. We have succeeded in building solid revenues from oil while at the same time kick-starting a wind industry. We need to stick with that model and, to that end, the authorities need to set up framework conditions that show they support both options and are taking the entire energy industry into consideration.”

Seen from that perspective, it is an advantage, in Morten Mønster’s opinion, that discussions around the energy policy of the future, including the PSO charge, are conducted in parallel with discussions on framework conditions for North Sea oil operators.

“Right now, we’re seeing the different needs and wishes being put forward on the table: the need to get the last oil and gas out of the North Sea; the desire for cheaper power that is also as green as possible given the general economic conditions; the need to be self-sufficient,” says Morten Mønster.

“Then it’s up to the energy policymakers to find the golden mean. Luckily, that’s something we’re good at in Denmark.”

He emphasises the importance of bearing in mind that offshore wind and oil/natural gas are both offshore investments, which means there is shared experience and infrastructure to be leveraged – not least in relation to the electrification of the North Sea.

“The Tyra plant requires a lot of power. Instead of building small gas-fired power plants at the individual installations, we could erect offshore wind turbines to supply power for the installations in question,” he explains.

Don’t forget offshore subcontractors
Morten Mønster also stresses the importance of involving service providers to the oil and gas and offshore industries in the debate on framework conditions: “We need to take care of our service providers to ensure that they will still be there to take care of the oil and gas industry and the offshore wind industry going forward. Operators should be careful not to pressure subcontractors on price to a point where they fold. Money shouldn’t just change hands within the sector. In order for the industry to be sustainable, there has to be a return on investment for all parties.”

The contribution of oil
Lastly, Mr Mønster calls on policymakers to consider what the oil and gas industry has done for Denmark.

“Denmark is the only EU member state to export hydrocarbons, and the authorities should take that into consideration. There has been a tendency to neglect this industry and to forget all the good things that have been created in Esbjerg, for example, and Danish society in general as a result of the oil industry and offshore activities.”

This is a translation of the Danish article published in Port of Esbjerg Magazine 2, 2016.