REG - Orcadian Energy PLC - OGA Electrification Competition

Orcadian EnergyAnnouncement

06/12/2021 16:05

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RNS Number : 7251U  Orcadian Energy PLC  06 December 2021

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 (MAR). Upon the publication of this announcement via
Regulatory Information Service (RIS), this inside information is now
considered to be in the public domain.

 

 

 

 

6 December 2021

Orcadian Energy plc

("Orcadian Energy", "Orcadian" or the "Company")

OGA Electrification Competition

Orcadian Energy (AIM: ORCA), the North Sea focused oil and gas development
company, is delighted to announce that following a competitive process it has
been selected by the Oil and Gas Authority ("OGA") to evaluate an approach to
the electrification of North Sea oil and gas platforms which will dramatically
cut carbon emissions.

Highlights:

·     Orcadian has been awarded £466,667 by the OGA to evaluate a new
concept for the electrification of key producing oil and gas fields initially
focussing on Central Graben area fields owned and operated by others

·     Orcadian will also produce an Industry White Paper which describes
this approach to electrification of offshore oil and gas platforms

·     Orcadian's concept would use renewable energy, generated from local
wind farms, for the bulk of the electricity required; with back-up power
generated from gas or net zero fuels, supported by batteries for a fast
response

·    Orcadian is working with Crondall Energy, Enertechnos, Petrofac,
North Sea Midstream Partners ("NSMP") and Wärtsilä; together the working
group will undertake an evaluation of this concept and deliver a report to the
OGA and Central Graben Operators by the end of March 2022

·     The evaluation will include a commercial proposal for the delivery
of electrical power to Central Graben and Central North Sea Operators
interested in rapidly implementing electrification of their platforms

OGA Competition

The OGA launched a £1 million decarbonisation competition to explore the
electrification of offshore oil and gas installations on 23 September 2021.
The OGA was looking for studies (technical, engineering, and/or commercial)
that would bring electrification projects a step closer to reality. On behalf
of the working group, Orcadian submitted an entry to the competition, and has
undertaken to evaluate this concept and deliver a report, and an Industry
White Paper, to the OGA and the Central Graben operators by the end of March
2022.

Orcadian Electrification Concept

Orcadian has been an active participant in the Central North Sea Accelerated
Energy Transition Plan (CNS AETP) working group and has selected a floating
wind turbine as a key means of reducing emissions from the Pilot field
development. Operators in the CNS AETP have largely focussed on
power-from-shore as a means of electrifying the CNS.

Orcadian's proposal is to utilise renewable energy, generated in local wind
farms, for the bulk of the electricity required on the fields; with back-up
power generated efficiently from gas or net zero fuels, supported by batteries
for a fast response. It is, taken together, one of the most effective and
practical ways to lower emissions in the oil and gas production process.

This approach would dispense with the requirement for a cable to shore, be
significantly less costly, and the project could be implemented on a faster
timescale, with simpler brownfield modifications on the existing platforms and
less disruption to supply from these critical assets, which supply about a
quarter of UK gas production. In addition, the Directors believe the UK's
energy supplies would be much more secure using this approach when compared
with relying on a single high voltage direct current (HVDC) cable from shore
to support production of oil and gas from the area.

Orcadian submitted this proposal on 25 October 2021 and was one of three
winners. Orcadian will utilise the funds from this competition to engage the
working group to prepare and deliver this report on an accelerated timescale.

Commercial Opportunity

The Directors believe that this opportunity presents an additional commercial
benefit to the Company and its investors. Orcadian plans, with support from
North Sea Midstream Partners (NSMP), Petrofac as EPC (Engineering, Procurement
and Construction) and O&M (Operations & Maintenance) contractor, and
Wärtsilä as a potential key supplier, alongside Crondall and Enertechnos, to
develop a commercial proposal for the delivery of electrical power to Central
Graben and any North Sea Operators interested in rapidly implementing
electrification of their platforms.

 

Carlo Procaccini, OGA Head of Technology, said:

"Decarbonisation of oil and gas operations is an industry imperative over the
next decade, and platform electrification from renewable sources will be an
effective way to achieve that.   We were delighted with the strong industry
interest in the £1m BEIS / OGA electrification competition and the quality of
the winners' submissions.  Orcadian Energy's study, alongside the two other
selected projects, will assess innovative solutions to kickstart O&G
electrification on the UKCS"

 

Steve Brown, Orcadian's CEO, said:

"We are delighted with this news, which is a vote of confidence in the
sustainable production methods Orcadian has helped to identify. From our
perspective, minimising the cost of Net Zero is of paramount importance, the
lower we make the cost of abatement, the more we can afford to do. Industry
and Government have both committed to electrification of North Sea platforms -
which will be vital in the energy transition. We intend that our contribution
be to radically reduce the cost of implementing electrification.

"We had worked very closely with our consulting engineers, Crondall Energy, to
minimise emissions on Pilot, and together we had learned a lot about how best
to integrate renewable energy generation with oil and gas production
facilities. In terms of emissions reduction, maximising renewable energy usage
compared very well with the alternative of "onshoring" the responsibility for
decarbonisation to the national grid, and, in the case of Pilot at least, was
much less costly.

"We have identified a new, but well advanced, enabling technology which
minimises power losses associated with transmitting medium voltage alternating
current over miles of cable. We understand the cable designer, Enertechnos, is
planning to install a 28km cable in Wales in 2022, to prove the concept in a
real-world setting.

"As part of the evaluation of this alternative concept, we intend to select
the very best renewable energy system to provide the bulk of the power to the
platforms; we have already entered into discussions with both Floating Power
Plant A/S and Wind Catching Systems AS, and we intend to listen to what every
potential wind technology provider has to offer.

"Backing up the system with highly efficient gas reciprocating engines is a
practical and proven method to provide a reliable power supply and enables
implementation of the project on an accelerated time scale.

"Since we conceived this approach in early October 2021, we have been
delighted with the enthusiastic response of all of the companies with whom we
have shared our conceptual solution. We are excited to work with North Sea
Midstream Partners, Petrofac and Wärtsilä to develop a commercial offering
to CNS Operators which we believe will be truly compelling."

 

Orcadian has published a short presentation which explains more about our
concept, please follow this link to watch the video:
https://bit.ly/OGA_Electrification (https://bit.ly/OGA_Electrification)

 

For further information on the Company please visit the Company's website:
https://orcadian.energy

 

 

Contact:

 

 Orcadian Energy plc                                 + 44 20 7920 3150
 Steve Brown, CEO

 Alan Hume, CFO
 WH Ireland (Nomad and Joint Broker)                 +44 20 7220 1666
 Harry Ansell / Fraser Marshall (Corporate Broking)

 Katy Mitchell /  Andrew de Andrade (Nomad)
 Shore Capital (Joint Broker)                        +44 20 7408 4090
 Toby Gibbs / James O'Neill (Advisory)
 Tavistock (PR)                                      + 44 20 7920 3150
 Nick Elwes / Simon Hudson / Matthew Taylor          orcadian@tavistock.co.uk
 Charlesbye (PR)                                     + 44 7403 050525
 Lee Cain / Lucia Hodgson

 

About Orcadian Energy

Orcadian is a North Sea oil and gas operator with a difference. In planning
its Pilot development, Orcadian has selected wind power to transform oil
production into a cleaner and greener process. The Pilot project is moving
towards approval and will be amongst the lowest carbon emitting oil production
facilities in the world, despite being a viscous crude. Orcadian may be a
small operator, but it is also nimble, and it has grasped opportunities that
have eluded some of the much bigger companies. As we strike a balance between
Net Zero and a sustainable energy supply, Orcadian intends to play its part to
minimise the cost of Net Zero and deliver reliable organic energy.

Orcadian Energy (CNS) Ltd ("CNS"), Orcadian's operating subsidiary, was
founded in 2014 and is the sole licensee of P2244, which contains 78.8 MMbbl
of 2P Reserves in the Pilot discovery, and of P2320 and P2482, which contain a
further 77.8 MMbbl of 2C Contingent Resources in the Elke, Narwhal and
Blakeney discoveries (as audited by Sproule, see the CPR in the Company's
Admission Document for more details). Within these licences there are also 191
MMbbl of unrisked Prospective Resources. These licences are in blocks 21/27,
21/28, 28/2 and 28/3, and lie 150 kms due East of Aberdeen.  The Company also
has a 50% working interest in P2516, which contains the Fynn discoveries.
P2516 is administered by the Parkmead Group and covers blocks 14/20g and
15/16g, which lie midway between the Piper and Claymore fields, 180 kms due
East of Wick.

Pilot, which is the largest oilfield in Orcadian's portfolio was discovered by
Fina in 1989 and has been well appraised. In total five wells and two
sidetracks were drilled on Pilot, including a relatively short horizontal well
which produced over 1,800 bbls/day on test. Orcadian's proposed development
plan for Pilot is based upon a Floating Production Storage and Offloading
vessel, with over thirty wells to be drilled by a Jack-up rig through a pair
of well head platforms and will include a floating wind turbine to provide
much of the energy used in the production process. Emissions per barrel
produced are expected to be about an eighth of the 2020 North Sea average and
to lie in the lowest 5% of global oil production.

About Crondall Energy

Crondall Energy Ltd is a leading independent consultancy providing strategic,
commercial and technical services for offshore energy projects. Crondall works
with a range of project stakeholders, including energy companies, investors
and law firms; and helps their clients to manage technical, commercial and
strategic risks and achieve positive project outcomes. Crondall are passionate
about the role of the offshore industry in providing society's sustainable
energy and are actively engaged in supporting their clients to confront the
challenges of generating low carbon energy and renewable energy in the
offshore environment.

About Enertechnos

Enertechnos Limited is an electrical engineering business, founded in 2014,
that is focused on improving the efficiency of cables used in any kind of
electrical distribution grid. Enertechnos's Capacitive Transfer System (CTS)
allows cable manufacturers to manufacture more efficient cable for
Transmission & Distribution grids at a similar cost to incumbent cables on
the market and using their existing manufacturing equipment. CTS uses a unique
and patented topology to balance the reactance inherent in distribution cable
with capacitance, thus substantially reducing losses and allowing transmission
of greater amounts of energy with lesser amounts of conductor than with
conventional cable. Enertechnos works with the incumbent cable manufacturers
to improve their offering and markets alongside them to the end buyers (e.g.
Distribution Network Operators who install, maintain and upgrade grids, as
well as Renewable Energy, Offshore Oil & Gas, Mining, and Electric Vehicle
companies).

About Petrofac

Petrofac is a leading international service provider to the energy industry,
with a diverse client portfolio including many of the world's leading energy
companies.

Petrofac designs, builds, manages, and maintains energy infrastructure. Our
purpose is to enable our clients to meet the world's evolving energy needs.

Petrofac's core markets are in the UK North Sea, the Middle East and North
Africa (MENA)  region where we have built a long and successful track record
of safe, reliable, and innovative execution, underpinned by a cost effective
and local delivery model with a strong focus on in-country value. We operate
in several other significant markets, including India, Southeast Asia, and the
United States. We have 9,400 employees based across 31 offices globally.
Petrofac is quoted on the London Stock Exchange (symbol: PFC).

For additional information, please refer to the Petrofac website
at www.petrofac.com (https://www.petrofac.com)

About NSMP

NSMP is a leading independent midstream business with large-scale gas
infrastructure assets serving the North Sea. NSMP transports and processes
natural gas from customers across the West of Shetlands, Northern North Sea,
Norwegian North Sea, Central North Sea and Southern Gas Basin. NSMP provides
essential services to over 35 fields owned by energy majors, utilities and
independent producers, through a combined gas pipeline length of nearly 600km
making NSMP's infrastructure the largest and most diversified gas
transportation and processing system in the UK. NSMP also owns and operates a
small-scale Bio/LNG plant in Norway. NSMP is committed to using its assets to
make a positive difference to both security of supply and the energy
transition.

Learn more about NSMP's commitment and involvement in relation to ESG and
Energy Transition at: https://nsmp-limited.com For more information on NSMP
please contact: Laura Jarvie: Laura.Jarvie@nsmp-limited.com
(mailto:Laura.Jarvie@nsmp-limited.com)

About Wärtsilä

Wärtsilä is a global leader in innovative technologies and lifecycle
solutions for the marine, oil & gas and energy markets. We emphasise
innovation in sustainable technology and services to help our customers
continuously improve their environmental and economic performance. Our team of
17,500 professionals in 200 locations in more than 70 countries shape the
decarbonisation transformation of our industries across the globe.

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