Making a snapshot of the global offshore energy sector presents a complex picture where oil and gas continues to be an important component of the energy mix, while the contribution from renewable energy sources, predominantly from wind, is becoming more established in certain locations such as the UK. The energy transition is visibly playing out on the UK’s continental shelf as the offshore oil and gas industry continues to operate while its well-established supply chain is actively engaged in supporting the installation of new renewable offshore energy capacity.

Global trends

Globally, oil and gas production rates are declining in mature offshore basins, while additional reserves are being sought in other provinces through exploration and reinvestment. Some areas such as Guyana and Namibia are at the outset of establishing an oil and gas industry with rapid growth, whereas mature basins such as offshore UK are in decline. Norway, the Middle East, Africa and the Asia-Pacific region all remain active with continued oil and gas exploration and production-enhancement activities. Continued investment in the sector is being driven by robust global demand for oil (the IEA estimates 101.9m b/d), which is expected to remain resilient for the foreseeable future.

47GW – Total global offshore wind capacity by 2023

Meanwhile, there is an emerging new offshore energy sector centred on renewable energy generation through wind, and for now to a lesser extent wave and tidal. This is in addition to potential growth in other decarbonisation solutions that will utilise offshore infrastructure such as CCS and hydrogen (storage and transportation). Offshore wind is set for significant growth, with the Global Wind Energy Council expecting that over 380GW of new offshore wind capacity will be added over the next decade (2023-32), bringing total global offshore wind capacity to 447GW by the end of 2032.

Utilising an established supply chain

There is a determination and optimism within the oil and gas supply chain about a pivot toward new energy projects. This industrial shift is happening now and is set to continue in-step with declining hydrocarbon demand over the next couple of decades as energy consumption needs are increasingly met by low- and zero-carbon solutions. The oil and gas industry has delivered decades of economic prosperity and energy security and, of critical importance looking forward, it has equipped the UK with a legacy skill base of people experienced in operating offshore energy assets in some of the most hazardous environments. This depth of experience is now supporting the UK as it develops a leading position in offshore wind and clean ocean energy, second only to China in built-out capacity.

The oil and gas supply chain and the skills, capabilities and technologies are actively being leveraged and are an integral part of the success of new low-carbon energy projects. In offshore wind, the UK has the second largest capacity globally, with almost 14GW coming from complex projects such as Hornsea, Dogger Bank and Seagreen. In addition to the UK securing a leading position in the rollout of offshore wind projects, it has also been able to create a supply chain that is largely British, which has not been the case with onshore wind.

UK businesses taking the lead

The existential threat of climate change will continue to drive significant changes across the global energy market

Aberdeen-headquartered OEG, the global leader in the provision of specialised container units to the oil and gas industry, is an example of an established supplier proactively responding to the energy transition with new ambitious growth strategies to expand into the growing offshore energy sector. OEG is growing a renewables business providing high-value services to offshore wind farm developments and other offshore energy projects in the UK and internationally. OEG’s robust revenues are underpinned by stable cashflow from oil and gas activities and growing levels of activity in the offshore wind sector, coupled by a bullish long-term outlook for the offshore renewables sector in the UK and globally.

The UK oil and gas industry, which today consists of 220,000 jobs and in 2022 generated, according to the latest OEUK economic report, around £30b ($36b) in gross value added (c1.5% of the UK economy), is a strategic asset for the UK that must be utilised for the energy transition. To ensure a successful and timely transition, a robust and capable supply chain is essential to support the meaningful growth of new offshore energy technologies into the 2030s, 2040s and beyond. That means finding a balance in supporting the oil and gas industry and its suppliers so that they can power the energy transition.

Challenges

Policymakers need to ensure that the oil and gas industry remains sufficiently buoyant to continue supporting the emerging offshore wind and other new clean-energy sectors. This means retaining the physical assets that are both required for a functioning oil and gas industry and employed in the development of windfarms such as lift barges and support vessels. It also means retaining the skilled workforce and businesses that want to support and drive the transition.

2024 and beyond

The existential threat of climate change will continue to drive significant changes across the global energy market, which means continued growth in the contribution of renewable energy into the energy mix around the world. An agile, collaborative and innovative approach from all stakeholders will be necessary given the need to develop new supply chains, technologies and business models to successfully bridge to a net-zero future, coupled with a need for long-term strategic planning to reduce investment risk.

John Heiton is the CEO of OEG.

This article was published as part of PE Outlook 2024, which is available for subscribers here. Non-subscribers can purchase a copy of the digital edition here.

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Author: John Heiton