advertisement

"

T

hose who lead a quiet life, lead a good life.” That has been the historically resounding proverb for the Danes when it comes to business – and its oil and gas industry is no exception. Upon arriving in Copenhagen, one senses that everyone abides by the same rules: you do not shout about what you do, you do not boast to your neighbors, and you should never ever assume you are better than the next person. Even commuting to work is a humble affair: from politicians to CEOs to delivery boys, 50% of Copenhageners commute by bicycle, each one hidden amongst the rush of other cyclists on the town’s busy streets.

The

Danish Twist

This sponsored supplement was produced by Focus Reports. Publisher: Ines Nandin; Project Coordinator: Kirsty Avril Jane Walker; Editorial Coordinator: Herbert Mosmuller; For exclusive interviews and more info, plus log onto energy.focusreports.net or write to [email protected]

www.ogfj.com • Oil & Gas Financial Journal  July 2013

energy.focusreports.net

49

This modest approach could also be used to describe the country’s attitude towards its energy

gen is now a candidate to host the next World

industry. Few people know that Denmark is the only country in the European Union that supplies

Petroleum Congress, which would bring the

all of its own energy. For the last few years, Denmark’s energy production has been about 20%

country an extra boost and more recognition.

higher than its energy consumption.

Martin Næsby, managing director for OGD,

Denmark is still one of Europe’s biggest oil and gas producers. Figures from 2012 show that

said, “A key focus of the association is on the

a proven 870 million barrels of oil equivalent (BOE) lurk under the extremely tight chalk of the

continued development of the service compa-

Danish Continental Shelf (DCS). This means a supply of black energy for roughly the next 10 years

nies that supply the oil industry. International-

at current rates of consumption. While Denmark’s reserves may not be the largest, the country

ization is also part of this: Danish service com-

nonetheless is producing 0.3% of the world’s oil. That’s good news for govern-

panies that have matured in the Danish sector

ment, too, as just last year the industry generated $5.2 billion in tax revenues.

of the North Sea are now applying for projects

So a change in the traditionally reserved attitude appears to be creeping in: it

in Brazil or Norway.”

seems both the public and the private sector are taking notice of their neigh-

Indeed, many companies that have contrib-

bors’ backyards and wondering just what lies in their own.

uted to Denmark’s status on the international

The Danish Energy Agency (DEA) forecasts that oil production will drop 30% by 2014, but this has not overshadowed the country’s remaining potential. Denmark has made some substantial technological contributions to the global

scene learned from the highly challenging conBjarne Corydon, Minister of Finance

ditions in the Danish North Sea and took that expertise abroad.

oil and gas industry, such as the horizontal drilling techniques developed by

Yet despite these advancements in the oil

the Danish Underground Consortium (DUC). The challenge lies now in that

and gas sector, there is a twist in the coun-

even more innovation will be needed to increase extraction rates from the

try’s energy focus. In addition to its expertise

country’s mature chalk fields. Each percentage increase in the extraction rate

in black energy, Denmark has set perhaps the

means more than $8 billion gross value at today’s rates.

most ambitious targets for green energy the

Innovation requires talent and investment. But investment requires Denmark to communicate its stability and potential more forcefully. Over the first months of 2013, the government announced a change in tax regime on oil and gas revenues for companies producing in the Danish North

world has seen so far. The government has Martin Lidegaard, Minister of Climate, Energy and Building

established the goal of being 100% powered by renewable energy as of 2050. Lidegaard reiterates, “We want to be self-sufficient and

Sea, proposing “a level playing field” for them. “We believe it will provide us

prove that it is possible for a modern welfare

with a more modern and neutral tax system in the North Sea than we have

state to become independent of fossil fuels in

right now,” said Bjarne Corydon, Denmark’s Minster of Finance. As such, the

30-40 years’ time.”

DEA – together with Martin Lidegaard, the Minister of Climate, Energy and

This growing political focus on renewable

Building – will organize the 7th licensing round for fields in the DCS, attracting

energy prioritizes offshore wind and that is

more attention and brining more investment to the Danish North Sea strong-

drawing resources and top talent away from

hold. The ambition is to organize the round before the end of 2013. On May 1, 2012 the industry’s new voice, Oil Gas Denmark (OGD), opened its doors to make the country more visible on the world energy map. Copenha-

Martin Næsby, Managing Director, Oil Gas Denmark

the oil and gas industry. Lidegaard offers assurances that this way of dealing with Denmark’s energy future is not intended as an aggressive opposition to the oil industry; rather they go

Fig. 1: Energy consumption in Denmark (1990-2022) Share of total energy consumption in Denmark (%)

Percent

100 90 80 70 60 50 40 30 20 10 0

43.3%

10.0%

39.9%

6.8%

38.7%

40.4%

Oil

% Change 1990 - 2010

% Change 2010 - 2022

-4.6%

1.7%

hand-in-hand. “The Danish parliament is completely green when it comes to the Danish demand, but we are also in complete agreement that we should be a part of the fossil fuel supply system, as long as international demand

20.6%

18.1%

22.5%

16.9%

Gas

10.6%

-3.7%

14.7%

Coal

-21.8%

-3.4%

Renewables

15.8%

5.5%

28.0%

’90 ’92 ’94 ’96 ’98 ’0 ’2 ’4 ’6 ’8 ’10 ’12 ’14 ’16 ’18 ’20 ’22

Source: The Danish Energy Agency: “Danmarks olie-og gasproducktion 2010”

remains,” said Lidegaard. Despite this assurance, the spotlight is certainly cast on green, with black in the supporting role. That raises questions: Is the oil and gas industry merely an instrument to pay for Denmark’s ‘green transition’? Or can the two offshore industries work together to create the right energy mix for Denmark?

50

energy.focusreports.net

July 2013  Oil & Gas Financial Journal • www.ogfj.com

After all one must not forget, as Næsby states, that the Danish oil and gas industry “represents 15,000 work places; $8.4 billion; 9% of Danish exports, and a great deal of innovation.”

Shell, Chevron, and since July 2012, NSF. Another example is Welltec. “Welltec has looked at great new ways to decrease the costs of wells,” said Steen. “If we wish to produce more than the

E&P on the DCS: a never-ending story?

current percentage, we need to keep costs low in all

Never before has the Danish oil and gas industry seen its three opera-

aspects of drilling, and the completion techniques

tors so active at the same time: with Maersk Oil and its partners Shell

that Welltec is working with could be a possible cost

and Chevron responsible for 85% of production, DONG E&P 10% and

reduction in the completion of these wells.”

Peter Helmer Steen, CEO, North Sea Fund

Hess 5%. All three have new building projects going on, as well as exten-

Interestingly, Welltec, which has developed from a start-up to generat-

sive modifications of existing installations due to changing environmen-

ing $300 million annual revenue in under 20 years, did not develop from

tal and reservoir conditions, ageing of the installations and technical

a focus on Denmark, but on northern neighbor Norway. “We decided

development.

from day one to be an international company,” Welltec founder and

Denmark’s current oil and gas production comes exclusively from

CEO Jorgen Hallundbæk told Focus Reports. “Even on our website, you

mature chalk fields, an area the country has developed great expertise

have to look carefully before you will find anything Danish and that is

in. “The techniques used globally in the production from tight reser-

fully intentional; why consider to be tied to one market when you have

voirs have for an important part been developed in Denmark,” said

the entire world to play with?”

Peter Helmer Steen, CEO of national oil company North Sea Fund (NSF)

Today, the rest of the world should look up and take notice of what

which has been the state participant since 2005 and holds a 20% stake

is happening in Norway when it comes to enhanced oil recovery, Hal-

in all licenses as a commercial partner. Indeed, many of the techniques

lundbæk explained. “Norway has been focusing on enhancing recovery

Steen refers to have been developed or improved by the DUC, which

rates for more than 20 years and still today is the global benchmark

traditionally has dominated exploration and production on the Danish

for enhanced oil recovery,” said Hallundbæk, adding that, “The rest of

continental shelf. DUC is comprised of Maersk Oil (operator) along with

Fig. 2: Majority of the Danish oil and gas reserves have been produced – increasing recovery requires substantial technological leap Oil reserves in 2011 MMboe (percent of total)

899 (21%) 2,271 (52%)

264 (6%)

629 (15%)

283 (6%)

4,346 (100%)

~11 years remaining reserves with 2011 production level

Produced Commercial Contingent Techn. reserves resources resources

Exploration resources

Total Possible resources Proved resources

Gas reserves in 2011 MMboe (percent of total)

964 (53%)

343 (19%)

205 (11%)

99 (5%)

198 (11%)

1,808 (100%)

~9 years remaining reserves with 2011 production level

Produced Commercial Contingent Techn. reserves resources resources

Exploration resources

Total

Production value of the remaining proved oil resources and possible oil resources are estimated to be worth DKK 700B = USD123B and DKK 550B = 97B respectively* Reserves as per 1.1.2011. Gas reserves and gas production is sales gas *Based on 2010 average exchange rate and oil price (USD/DKK exchange rate of 5.5 and Brent oil price of USD 110 Source: The Danish Energy Agency

52

energy.focusreports.net

July 2013  Oil & Gas Financial Journal • www.ogfj.com

Fig. 3: Oil and gas government’s top revenue source Corporate tax contributing industries in 2010 DKK billions

DKK 8.2 23.7 16.4 7.4 5.2 3.8 2.5 2.0 1.4 1.2

23.7

16.4

8.2

The Danish Energy Agency estimates the total direct corporate tax contribution* from the oil and gas sector to be DKK 23.7 billion 5.2

3.8

7.4

Financial and insurance 17.0%

Extraction of oil and gas

Wholesale and retail trade

15.3%

10.8%

2.5

Transportation

Pharmaceuticals

7.9%

5.3%

USD 1.4 4.2 2.9 1.3 0.9 0.7 0.4 0.3 0.2 0.2

2.0 Manufacture of furniture and other manufacturing 4.1%

Additional tax* not included in DST data

1.4

1.2

Knowledgebased services

Telecommunications

2.9%

2.5%

Share of total (percent) In 2010, for every 1 million barrels of oil equivalent produced, government revenues of DKK ~170 million were generated *In addition to ordinary corporate taxes, government revenues from the oil and gas sector includes carbon tax and profit-sharing Source: Statistics Denmark; the Danish Energy Agency

the world and the other North Sea countries are not

The Hejre-field that Hansen refers to is one of the most significant

there yet.” According to Hallundbæk, “Denmark is

developments that the DCS has seen in a long time. DONG estimates

still at an average point in terms of recovery factors,

probable reserves at 44,000 boe/day, most of it oil. More significantly,

and the UK is nowhere near the levels of Norway.” Denmark could take Hallundbæk’s comments as Jørgen Hallundbæk, CEO, Welltec

clear advice. Nonetheless, the Danish industry takes pride in the significant rise of its extraction rates over the past decades. “The current recovery rate is

around 26-27%, which is low in comparison with other producers such as Norway,” said Martin Næsby, OGD managing director. “We should consider, however, that it went up from 5-6% on the outset, and seen in that light it actually is a great achievement.” Indeed the phrase ‘vacuum-cleaning the Danish Continental Shelf’ recurred several times throughout our interviews with Denmark’s operators. “At the outset, DONG focused on small field development, or ‘vacuum cleaning’ as we like to call our activities Søren Gath Hansen, Vice President, DONG E&P

on the DCS,” said Soren Gath Hansen, vice president DONG E&P. “Our Siri-field is a success story as we have actually been able to keep the area alive by vacuum cleaning.”

That is one kind of strategy and it takes a particular kind of company, but Hansen realized that he would not be able to develop the company and the portfolio on the long term only focusing on late-life fields and vacuum cleaning. “Although one of our largest developments, the Hejre-field, is in Denmark, almost 70% of our production actually comes from Norway today, while we are also investing heavily west of Shetland. DONG is the biggest holder of acreage in that area,” Hansen said.

www.ogfj.com • Oil & Gas Financial Journal  July 2013

energy.focusreports.net

53

Hejre is the first field coming into production that is not situated in the

Bayerngas responded to government efforts to harmonize the differ-

low-temperature and low-pressure chalk fields in the southern part of

ent tax arrangements under which oil companies currently operate on

the Danish North Sea.

the DCS. The amendments follow a 12-month investigation into the pos-

The water-depth at 60/65 meters is slightly deeper than existing pro-

sibility to change a deal, the North Sea Agreement, which the former

ducing fields, but some of the reservoirs are also more challenging than

government made with the DUC in 2003. When the current government

the traditional mature chalk fields. “The Hejre-field is the first High Pres-

realized that it could not change taxes for the DUC without setting off

sure, High Temperature (HPHT) field put in production in Denmark, and

costly compensation clauses in the contract, it instead took the tax rules

a good example of the not-so-low hanging fruit on the DCS,” said Flem-

that the DUC operates under and applied them to the rest of the oil

ming Horn Nielsen, country manager Denmark, DONG E&P.

companies operating in the Danish North Sea.

The question, however, is how much of this not-so-low hanging fruit

Whether this is the right strategy to optimize exploration and produc-

will be harvested. While a recent find by Wintershall of potentially 100

tion is hotly debated by key stakeholders of Denmark’s energy industry.

million barrels of recoverable oil in the Hibonite exploration well inspired

“It is extremely important for the Danish government to realize that the

hope, the number of appraisal drillings in the past three years averages

country is a net exporter of oil and gas and that the oil and gas industry

close to zero for Denmark. Furthermore, oil produc-

generates around $30 billion in tax revenues, but also that the extrac-

tion is declining rapidly and a mid-size player in the

tion rate stands at a mere 27% for the current fields while the world

Danish

announced

is screaming for more energy,” said Steen Brødbæk, CEO of Semco

it might pull out of Denmark, citing far-reaching

context,

Bayerngas,

recently

Maritime, a project engineering company and one of Denmark’s fastest

changes in the tax regime and consequent devalua-

growing energy companies of the past decade. “We cannot produce

tion of its assets. “Denmark no longer appears attractive,” Bayerngas’ country director Denmark, Trond Bjerkan, said. “We have stopped all preparations for bidding in the next licensing round because it no longer makes sense.”

enough energy to substitute the growth rate for countries outside of the Flemming Horn Nielsen, Vice President and Country Manager, DONG E&P Denmark

Organization for Economic Co-operation and Development (OECD),” Brødbæk added. “Therefore, Denmark has to continue exploring as the UK and Norway are doing. We need the government to support that strategy. If they do not, the outcome is easy to predict. This is an inter-

national business and international oil companies are

Before the end of this year the DEA hopes to orga-

putting their money where they can get most back.”

nize the 7th licensing round. “My expectations are

In a response to industry criticism, Finance Minister

high. A lot of good, new data has been developed

Bjarne Corydon told Focus Reports that, “The rules

in the last years,” said Peter Helmer Steen of NSF.

that apply to new concessions for the DUC partners under the North Sea Agreement should also apply to the concessions handed out before 2004. We are creating a level playing field, more neutral taxation, and

Steen Brødbæk, President and CEO, Semco Maritime

Lars Nydahl Jørgensen, Vice President, Head of Exploration, Maersk Oil

we are enhancing revenues for a nation that has to invest in growth.” Corydon can put forward that Maersk Oil announced its plan to invest

“Denmark has been known for many years as a chalk reservoir. Therefore much of the seismic investigation has been targeted to chalk. The other layers have not been targeted that much, which perhaps has led some opportunities to stay below the radar until

now.”

$800 million in the development of Tyra South East, the largest invest-

“Data collected since the 6th licensing round in 2006 indicates that

ment by the DUC partners since the approval of Halfdan Phase 4 in

there is a lot of oil left in the Danish subsoil,” Steen said. “It is not easy

2007, only weeks after the proposal came out, a decision taken on the

oil, but very interesting nonetheless.”

basis of the new tax rules. However, critics would say that this again is not an example of the type of forward-looking activity that the DCS

Esbjerg: the Missing Link?

needs in order to avoid becoming a sunset production area.

The board of the World Energy Cities Partnership (WECP), a non-profit

Asked about the significance of the DCS for Maersk Oil, VP of Explora-

organization comprised of the mayors of the different member cities, will

tion Lars Nydahl Jørgensen, Vice President, Head of Exploration, Maersk

soon welcome Johnny Søtrup as its 20th member. Søtrup is the mayor

Oil said: “It is clear that the Danish Continental Shelf is a mature area

of Esbjerg, a city of 70,000 on the Danish west coast, 709 km south of

where exploration has been going on for many years. I would like to

fellow member city, Stavanger.

point out Johan Sverdrup in Norway. Forty years and four generations

It might come as a surprise to some to see the name of Esbjerg among

of exploration had been going on with companies coming in and trying

the likes of Aberdeen, Houston, Stavanger, Port Harcourt, Perth, Luanda,

their best, and still Johan Sverdrup was not found.”

and Villahermosa. But to Søtrup it is logical. “We bring a new dimension

Esbjerg's Fishing Harbour in the 1950s. Courtesy of the Fisheries and Maritime Museum, Esbjerg

founder of Q-Star Energy, a provider of multi-skilled manpower to the oil and gas and renewables industry. “This made it very hard to attract new people to the oil and gas industry; they simply did not believe there was a future and would prefer to work in wind energy.” Hansen knows the challenge all too well, with around 300 of his people active on North Sea platforms. Although it remains a serious challenge, the shortage of human resources for Esbjerg’s oil and gas industry seems to be changing, and in the right direction. “I am confident that, in a couple of years, young people will start looking at the oil and gas business again and realize that it is a viable and even attractive alternative,” Hansen said. “Also, in Esbjerg we clearly show that it is possible to swap between the oil and gas and the renewables industry and that it is possible to

to the table among these 19 members,” Søtrup said.

apply expertise and experience from the oil and gas

“We are undoubtedly the member with the biggest

industry in the renewables industry.”

offshore wind industry. On top of that, we are a front-

People familiar with the city’s business community

runner in uniting that offshore wind industry with our

maintain that it is more than a good geographic loca-

offshore oil and gas industry.” For Esbjerg, joining this organization is an acknowl-

Johnny Søtrup, Mayor of Esbjerg

edgment of its contributions to the global energy industry. But the title of ‘Member City’ brings more. The WECP is not

Anders Eldrup, Chairman, Offshore Center Denmark.

tion that has led to Esbjerg’s success. “Many cities in Denmark have seen industries crucial to their economy leave, and they have to do something different now,” said Anders Eldrup, the chairman of Offshore

just a way to share experiences, but to actually capitalize on mem-

Center Denmark and former CEO of DONG Energy. “Many are waiting

ber’s expertise and set up partnerships between organizations and

for something to happen; in Esbjerg they do not wait, they just start

companies. Esbjerg’s success can be seen as proof that the green profile of Denmark’s energy policy actually has positive effects on the country’s oil and

Fig. 4: Most People in the sector work in Esbjerg

gas industry. “The city of Esbjerg is the best illustration that we do not

Main oil and gas employee distribution areas in Denmark (avg. 2008 - 2010) %

see our green energy industry as a substitute for an economically efficient and progressive way of using our oil resources: its offshore industry mixes both green and black, and many local companies have a foot in both,” Minister of Finance Bjarne Corydon said. “It is the same companies and decision makers, successfully harnessing both sectors.” Indeed, many of Esbjerg’s key oil and gas players have been quick

DENMARK

to grasp opportunities resulting from the national government’s push for a greener energy mix. Their expertise was happily welcomed by a wind industry that desperately needed to build up offshore expertise. “The first offshore wind park was constructed by a company that had experience building these parks onshore,” said Steen Brødbæk, CEO of Semco Maritime. “They ran into serious trouble dealing with the harsh environment and weather conditions. Now they are using competences from the oil and gas industry and leaning heavily on

Esberg -1,020 (60%)

the oil and gas industry’s supply chain.”

Copenhagen -680 (40%)

Still, the marriage between te city's oil and gas and wind industry is not perfect. “Just two years back, most Danes thought that the oil and gas industry would close down within a couple of years and that the industry would be fully replaced by renewables, mainly offshore wind,” said Henrik Hansen, CEO and

56

energy.focusreports.net

Henrik Hansen, CEO, Q-Star Energy

Source: Statistics Denmark – “Registerbaseret arbejdsstyrkestatik”

July 2013  Oil & Gas Financial Journal • www.ogfj.com

something new. It would be great if we could make

Still, parts of the virtues ascribed to Esbjerg are

the spirit of Esbjerg spread to the rest of the country.”

born out of necessity. “The willingness to do some-

Blue Water Shipping, a provider of freight solu-

thing else is crucial,” said Søren Fløe Knudsen, CEO

tions, seems to be an exponent of this praised Esb-

of Danbor, Esbjerg’s largest offshore base with opera-

jerg mentality, transporting oil rigs to every corner of the planet. Thomas Bek, global manager of the company’s oil and gas division said: “Since the early years of the Danish oil and gas industry, Blue Water

Thomas Bek, Global Manager Oil & Gas Division, Blue Water Shipping

has supplied drilling equipment to the industry, with

Søren Fløe Knudsen, CEO, Danbor

tions in Australia, Brazil, Venezuela, Italy, Norway, and the UK, when asked what enables Esbjerg’s business community to box above its weight internationally. “Denmark is a small country but has to be global. We

cannot just sit here in Esbjerg and wait for things to happen,” he said.

shipments ranging from small courier parcels containing o-rings to proj-

“This does not just go for the biggest companies like Ramboll and

ect transport of complete oil rigs to the Middle East, the North Sea,

Maersk Oil, but also for the smaller and mid-sized companies,” Knudsen

Irish Sea and West of Shetland, Atlantic Frontier, the Faroe Islands and

continued. “Around the North Sea, in Brazil, the Middle East, Asia; many

Greenland, and the Far East. Also, we have a particularly strong position

companies have shown that they are capable of capitalizing on opportu-

in Central Asia.”

nities in the oil and gas industry around the world.”

Asked how on earth an Esbjerg-based company developed a particu-

Esbjerg is also home to Dancopter, Europe’s fast-

lar expertise in dealing with freight in one of the former Soviet Union’s

est growing helicopter company between 2009 and

most remote areas, Bek explained: “One of the biggest customers we

2012. Just ten years ago, Dancopter performed its

have in the industry is Keppel, the world’s largest rig manufacturer, and

first flight in Esbjerg. Today, the offshore operation has

it was through this relationship that we went into the Caspian. We move

expanded to 16 helicopters on two continents with

around with our customers. That also means that, when we are entering

the world’s most respected oil and gas companies.

a new market, it is not necessarily part of a long term strategic decision that took years to develop; it can also be an opportunity that shows up.”

“Dancopter has indeed been through a fantastic growth period,” said Jens Jensen, managing director.

Jens Anders Jensen, CEO, Dancopter

“In 2011, we won the biggest contract in the Danish North Sea, servicing

lated deep know-how all along the value chain, satisfying demand is not

Maersk Oil and the 15 fields of the DUC. A year earlier, in 2010, we had

a problem… we have the portfolio and all the skills to bring this to life.”

established ourselves in Nigeria through a five-year contract with Shell.

But Leupold also notes: “Suppliers need to understand that if offshore

We also started to work with Shell from Den Helder in the Netherlands

wind wants to maintain a long-term perspective, we need to make sure

and Norwich in the UK.”

that it remains within the cost frame acceptable for society in the long term. We must be able to compete with other alternatives for power

Offshore Wind: Causing a Stir

generation, and that is why I say that our suppliers must understand

In 1991 Denmark erected its first offshore wind park, and now the coun-

that it is in their best interest that they help us be creative, come up with

try’s 2012 Energy Agreement prescribes that Denmark’s energy sup-

new concepts, industrialize those concepts, develop the value and sup-

ply must consist of 100% renewables by 2050. Further to this, DONG

ply chain to such a degree that the cost really come down to the level

recently announced that, by 2020, the cost of offshore wind needs to fall

we have indicated.”

to 100 euro per megawatt hour for parks constructed from 2020. Samuel

His comments are echoed by Thomas Gellert,

Leupold, DONG Energy Wind Power’s new vice president puts it simply,

COO of CT Offshore, an offshore cable laying com-

“If it does not happen, we jeopardize our industrial future”.

pany, part of the installation vessel company A2SEA,

DONG Energy Wind Power, the world’s market leader in offshore

partly owned by DONG Energy. Gellert feels that

wind, and responsible for building 38% of European capacity, is fully

“where this industry might be in the verge of taking

aware of this responsibility and the challenge of bringing the cost of

a wrong turn is in terms of the lack of cooperation

offshore wind down in order to make it a competitive source of energy.

between parties especially at early project stages.

This would enable the wind industry to sit side by side with Denmark’s

Otherwise, it might be very difficult to bring down

oil and gas industry in keeping the country energy self-sufficient in the

cost to a sustainable level for the industry.” He adds, “We can do some-

years to come.

thing as a single entity… We can always strive to complete projects more

Leupold is not concerned about delivery, “given that we have accumu-

Thomas Gellert, COO, CT Offshore

efficiently, perform early commissioning by using the experience we

have. But to really lower the cost of energy is a joint

and increase visibility on every country’s specific

task… it is a matter of joining forces and managing

procedures.”

the interfaces.”

Leupold, on the other hand, believes that as the

Michael Hannibal, CEO Offshore E W EMEA OF, Siemens Wind Power remarks on his optimism about bringing down the cost of offshore wind. “Since 1991, we have been able to reduce costs by 40% per decade. These cost reductions have for a very large

wind industry has grown so fast, there are many Michael Hannibal, CEO Offshore E W EMEA OF, Siemens Wind Power

Samuel Leupold, Executive Vice President Wind Power, DONG Energy

part been caused by turbine design and turbine innovation. The turbines

challenges faced from a managerial, procedural and best-practice point of view. There is still almost a ‘start-up’ environment in the industry that would benefit greatly by being more stable and industrial like Denmark’s oil and gas industry.

have grown; they have become more efficient with larger rotors, larger

There is one threat that faces the oil and gas

generators and other features resulting in increased production.” Hanni-

industry from offshore wind in Denmark: the ‘brain

bal has his work cut out for him, saying that “the answer to the future

drain’, or migration of talent from the black energy

solution will require companies like Siemens to continue to innovate on

industry to the green one. A2SEA has installed more

the turbines.” He concludes that it is not the oil and gas industry they need to look to as a cost example, but the commodities sector to learn how to industrialize and mass produce offshore wind.

Jens Frederik Hansen, CEO, A2SEA

than 50% of the world’s total offshore wind turbine capacity, and although Hansen admitted that “finding highly skilled engineers and professional project

So, if offshore wind does not look to the oil and gas industry for cost

managers is always a challenge”, he also pointed out

reduction capabilities, what can green learn from black? Hannibal sug-

that, “Denmark is well recognized for clean energy and wind power and

gests that harmonized legislation across Europe, as the oil and gas

for that reason we receive a large community of international engineers

industry has managed to secure, could help. A2SEA CEO Jens Frederik

wanting to be part of our unique ability to promote and develop green

Hansen notes that, “Ultimately, harmonization would drive costs down,

energy.” Moreover, “the growth we have achieved over the last years

60

energy.focusreports.net

July 2013  Oil & Gas Financial Journal • www.ogfj.com

has given our company a worldwide reputation, and

as service ships, where we have technicians on board

this factor has really improved our capacity to meet

with a workshop and a warehouse for spare parts.”

and retain the best talent available on the market.

If companies like Esvagt can successfully leverage

Also, we have been working closely with universi-

capabilities to their advantage both ways in offshore,

ties, by promoting discussion and debates on wind energy.” Surely this does not sound like the “quiet life” we

Søren Nørgaard Thomsen, Managing Director, Esvagt

expect Danes to lead.

Morten Mønster, Partner, Deloitte

then perhaps this is where green and black can see eye to eye. The key for Denmark’s offshore energy success may lie in making a ‘black and green’ industry

prosper under a stable government framework.

Some companies have made the jump into offshore wind from the

Denmark has, over the decades, been progressive in developing its

oil and gas industry where they so comfortably sat, having seen the

energy industry. The Danes were pioneers in exploration and production

opportunities and having the ability to leverage their capabilities. One

of oil and gas in the North Sea. They were the first country to develop

example is Esvagt, a company that operates a fast-growing fleet of

a district heating system, and now they are driving the development of

Emergency Response and Rescue Vessels (ERRVs) and Anchor Handling

offshore wind energy.

Tug Supply (AHTS) vessels in the North Sea from its base in Esbjerg.

When asked about the offshore industry from an external perspective,

The company’s business was firmly anchored in the oil and gas industry

Morten Mønster, partner with Deloitte, summed it up: “I would say that

from the start, but talking offshore in Denmark is not just about offshore

it is black and green. The best way of advancing the development of

oil and gas anymore. It is also offshore wind. “Wind energy is decisively

renewables is to work with the oil industry and integrate the two from a

moving offshore and there is a requirement for maintenance,” Esvagt’s

competence perspective. Denmark is a small country, and its unique trait

managing director Søren Nørgaard Thomsen said. “As the wind turbines

is that we are good at working together. We can apply that in black and

are placed further from shore, travelling from shore to the turbines for

green, too. It is not either or, or even transitioning from black to green;

maintenance takes too much time. We can provide vessels that can act

it is about offshore together, and combining our different initiatives.”

www.ogfj.com • Oil & Gas Financial Journal  July 2013

energy.focusreports.net

61