Equinor abandons offshore electrification due to rising costs

Equinor, citing rising costs, informed the Norwegian government that it had scrapped its plans to reduce greenhouse gas emissions through the connection of several offshore platforms with the onshore grid.

Norway's oil and gas industry is the largest contributor to climate change emissions. It accounts for about one quarter of all emissions. Gas turbines that power offshore installations account for 80% of all industry emissions.

The key strategy for decarbonisation has been to replace them with renewable energy from the shore.

Equinor will no longer pursue the electrification for its Snorre A, B, Heidrun B, Aasgard A, and Kristin platform, but plans to continue with projects in Grane and Balder, according to a Friday letter it sent to the Energy Ministry.

Energy Ministry said that it has no comment at this time.

The Norwegian business news website E24 reported the letter first.

In an email, an Equinor representative said that "the costs of electrifying Snorre or the Halten area are so high they're no longer profitable and we recommend discontinuing the projects."

Equinor's move will mean it falls short of the non-binding target set by the Norwegian government to reduce offshore petroleum emissions in Norway by 50% by 2030. Instead, they are aiming for 45%.

Lars Haltbrekken is the newly-elected deputy chairman of Norway's parliamentary Energy Committee.

Vaar Energi said that it supported this decision. Vaar's spokesperson stated that the electrification of Balder & Grane is "challenging", but it continues to progress.

Equinor estimated that the cancelled projects would have reduced CO2 emissions by 710,000 tonnes per year. Electrifying Grane and Balder will reduce CO2 emissions by approximately 380,000 tonnes per year.

Equinor refused to provide cost estimates, but stated that they were far higher than Norway's CO2 taxes. These are expected to reach 2,400 Norwegian Crowns ($237.33) a tonne in 2025 dollars.

Harbour Energy, one of the partners in Snorre, estimated that electrification would cost as much as 5,000 crowns for each tonne.

A Harbour spokesperson stated that while electrification could play a part, it should not come at the expense of other measures. $1 = 10.1125 Norwegian Crowns (Reporting and editing by Susan Fenton; Nora Buli, Nerijus Adomaitis)

(source: Reuters)