Competition for space in the seas off the UK’s shores is becoming a major area of concern in the energy industry and others with the potential for costly conflict as offshore wind farms approach the development phase.
This is the message from a recent business conference, the Crowded Seas, hosted by business law firm Bond Pearce.
For centuries the UK waters have contributed significantly to the nation’s economic prosperity but pressure is increasing for access to key areas.
Once the territory of fishermen and commercial shipping, now wind farm developers want to site their structures alongside the rigs, platform and pipelines of the oil and gas companies which will mean significantly increased traffic not only on the surface but also subsea and in the air.
The ‘Crowded Seas’ is becoming a pressing problem with every sector convinced it is the most important whether it be oil and gas because of its ability to help drive the UK out of recession, renewables because of the need for long term energy security, or those who lay the telecoms cables which keep the financial sector and just about every internet user in the country connected.
With wind farms now at the stage where developers are seeking funding it is essential that swift resolution to these conflicts be secured to allow the industry to move to the next stage which it is estimated can create tens of thousands of jobs.
Business law firm Bond Pearce, a leader in both oil and gas and renewables, gathered key stakeholders to a ‘Crowded Seas’ conference to help chart a way through these choppy waters.
Bond Pearce Partner Chris Towner, who chairs the Renewable UK Offshore Wind Delivery Group, said the event had been a significant success and they now hoped to progress some of the ideas which had been aired. He said, “One of the main issues is that there are different consenting processes for the offshore renewables and the oil and gas sectors essentially trying to achieve different things. They both want development of their industry in an appropriate manner but clearly the aim of the oil and gas sector is to gain revenue for the private sector and the Treasury. The aim of the renewables sector is security of supply and carbon targets.
“There was a feeling at the conference that the conflict between the two is caused by government policy and a lack of certainty. Offshore wind is now at the stage of requiring project financing for the developments to be built but to secure that financing will require clarity about the future. The possibility that part of a site could be lost because DECC says it is required for an oil and gas development would undermine any project, would increase the cost and could ultimately threaten its viability.”
He said that there had been considerable dialogue about compensation but Renewable UK and Oil & Gas UK had failed to secure full agreement and had reached an impasse on certain aspects. They have now submitted a joint document to DECC which identifies areas of agreement and disagreement.
“What emerged from the conference was the need for a cross industry forum to solve these issues,” he said.
“One solution would be to have a decent market mechanism which sets out compensation so informed decisions can be made. The oil and gas developers could weigh up the cost of the technical solutions which would ensure they avoided wind farms against the compensation they would have to pay. The wind farm developers and the lenders could assess the risk of going ahead if they had a clear idea of the likely compensation if a development was stopped.”