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News from the UK Power Industry 26th March 2019

Posted by: James Turner
Industry News

UK power industry needs £200 billion to maximise potential

£200bn needs to be spent to fully exploit the UK oil and gas sector's remaining potential, a new report has said.

The oil and gas industries have seen a production increase of 20% over the past five years, and 62% of contractor companies had an improved outlook for 2019. And there’s no sign of slowing down. 

Industry body Oil and Gas UK (OGUK) said its Business Outlook Report 2019 showed that the need for a focus on cost and efficiencies was the "new reality".
The £200bn figure is seen as pivotal for adding a generation of productive life to the area.

OGUK chief executive Deirdre Michie said: “Following 14 years of decline, production has increased by a fifth over the past five years. Cost improvements are being sustained and there is building momentum around exploration, with more new opportunities being drilled and the largest two conventional discoveries for a decade made in the second half of 2018.”

Michie attributed production increase to the industry’s continuous progress and developments. “Our report finds an industry that's getting better at what it does, getting smarter in how it does it and is well positioned to deliver attractive returns on investment within this environment, maintaining our global competitiveness,” she said. “This is the new reality and we need to embrace it.”

When asked about the spend available to the industry, Michie conceded that supply chain companies faced challenges with a stretched cash flow, calling for more investment moving forward. Specifically, Michie highlighted a figure of £200bn which is needed to keep up with the industry’s in-house growth.

“If capabilities and resources are to stay anchored here in the UK, there must be a competitive proposition for supply chain companies to invest in too. Our report reveals around £200 billion will need to be spent to find, develop and operate the reserves of the future.”

The investment would be beneficial across the boards, resulting in more jobs, a healthier environment, and a boost to the UK’s economy. 

“This is a UK industry which is critical for security of energy supply, at the heart of the move to a lower carbon economy, supports hundreds of thousands of jobs and contributes billions to the economy. With the new reality clear and clarity around the future potential, there is all to play for.”

Energy Minister Paul Wheelhouse supported the report, saying that it showed the strategies adopted by operators and the supply chain were now helping to deliver sustained efficiencies across the sector. “We continue to press for more action by UK ministers to stimulate further investment in the sector,” he said. Full story.

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Northern Powergrid investigates heat recovery technology 

Northern Powergrid is investigating the reuse of heat generated by its transformers to help manage losses from its power network.

Every day the region's electricity network loses electricity, and while this is unavoidable to a point, energy loss levels can be reduced and managed.

The project builds upon the success of UK Power Network’s Bankside Project which recovers heat from transformers. The project has also shed light on how to reuse low grade heat. Research has subsequently been carried out into the loading data of the transformers to estimate the heat loss, as well as proximity to heat networks or local heat loads to utilise each substation's waste heat.

The project concluded that heat recovery from existing Northern Powergrid substations is technically achievable where local heat demands can be identified.

Despite a question around the project’s commercial viability, enhanced profitability and scheme viability is possible through the development of a novel-engineered heating system and a heat purchase agreement with sufficiently high tariffs. 

Mark Nicholson, Northern Powergrid's head of smart grid implementation, said: “The project was a useful, practical investigation into the feasibility of applying such technology across our network. It will help inform the debate on heat networks.” Full story.

Oil & gas industries to foster closer ties with renewables

The UK Oil and Gas Authority (OGA) is looking to foster closer ties with the renewables industry as part of project explore a more integrated offshore energy sector.

Areas of interest are powering offshore oil and gas platforms using clean power, offshore hydrogen production and transportation, monetisation of offshore produced gas using in-situ power generation and carbon and capture, transportation and storage.

OGA is working with the Department for Business, Energy and Industrial Strategy, The Crown Estate, Ofgem and other stakeholders to test for potential technical and regulatory opportunities in the short-term. It is also considering opportunities to maximise the value of the UK Continental Shelf through energy integration.

OGA chief executive Andy Samuel said: “This is a really exciting opportunity to advance the energy transition agenda, looking at practical steps that can be taken and how we as regulators can support that. Oil and gas will be required to power our economy and heat our homes for the foreseeable future, but to me it is clear there are great opportunities now to more closely link up all forms of offshore energy production to generate power more cleanly and efficiently.”

Will Apps, the Crown Estate head of energy development said: “As managers of the seabed around England, Wales and Northern Ireland, we are pleased to be working with the Oil & Gas Authority and other partners to support this project, helping to pave the way for greater market innovation in the critical area of energy integration, and support the UK’s ongoing transition to a low carbon energy mix.” Full story.

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