OPINION: Oil companies embracing the energy transition tend to see offshore wind power as a starting point, perceiving it as a ready fit with their own offshore expertise.
This is particularly true in floating wind, where synergies are perhaps most apparent.
Yet a few of the big offshore contractors have been even quicker off the mark than their oil-company clients in pursuing work in offshore wind.
While some oil companies are still struggling to explain the shift to their investors — essentially lower risk, lower returns and a debt-driven approach to financing — and others are only beginning to put projects into place, contractors such as Subsea 7 and Saipem are already deeply engaged.
Their investors seem increasingly happy with their results.
Subsea 7’s third-quarter earnings report showed revenue from renewables helping to plug a gap left by falling activity in the oil sector, and accounting for 31% of the company’s backlog of $6.8 billion.
The contractors are still adapting to differences, of course.
In a recent interview with Upstream, Saipem’s head of renewables Guido D’Aloisio said he will pursue piecemeal transport and installation contracts often favoured by early-stage wind developers, but admitted that an experienced full-scope offshore contractor like Saipem is itching to more fully utilise its project-development skills.
New factors are also emerging which will help offshore contractors make the most of their capabilities in a new field: The scale and number of wind farms look set to increase exponentially, perhaps offering growing prospects for rolling different projects into single contracts.
Joe Biden’s presidential election win in the USA — bringing new commitments to support renewables development — has boosted expectations there.
While the North Sea has served as the testing ground for offshore wind, there are a growing number of projects in the Mediterranean, where conditions are seen as ideal for floating wind.
Projects are also starting to proliferate in the Far East. Prospects will be helped by carbon-neutrality commitments from big Asian economies such as Japan, South Korea and China.
The push of oil companies such as Total, Equinor and Shell into offshore wind may bring some cultural changes, encouraging the kind of more broadly scoped engineering, procurement, construction and installation contracts that seasoned contractors like Saipem and Subsea 7 see as their forté.
The growing participation of oil companies in the wind sector may provide impetus for another kind of transition, whereby knowledge and practices in project management, integrated energy trading and digitalisation can bear more fruit.
Far-sighted oil companies and contractors are already forging partnerships, covering such fields as engineering and design, to provide leverage for their own push into offshore wind.
Some of this work includes synergies with other clean energy technologies, such as green hydrogen.
There are many in the renewables sector whose dislike of the oil sector is so deep-seated that they would rather see no role for re-branded fossil-fuel companies.
The oil companies' best response would be to show that they can deliver clean energy more efficiently than others, while working with old — and new — partners.
Contracting and engineering practices from the offshore oil sector may be morphing into something new, but they will bring the oil sector's best competencies into offshore wind.
(This is an Upstream opinion article.)