A new agreement signed between an oil and gas operator and a green energy and infrastructure developer will see the creation of one of the UK’s first wind-powered oil and gas production facilities.

Ping Petroleum, a subsidiary of Malaysia’s Dagang NeXchange Berhad (DNeX), and Cerulean Winds on Tuesday signed the agreement in a meeting hosted by the Secretary of State for Business, Energy and Industrial Strategy, Kwasi Kwarteng.

Under the agreement, the production facility at Ping Petroleum’s Avalon site, located in the UK Central North Sea, will be mainly powered by floating offshore wind, helping the project meet the emissions reduction targets agreed between government and industry in the North Sea Transition Deal in March 2021.

According to the partners, the provision of wind power will remove up to 20,000 metric tonnes of CO2 emissions every year from the offshore production facility – the equivalent of taking over 4,000 cars off the road – and demonstrate the use of floating offshore wind in decarbonising oil and gas production.

Ping Petroleum UK acquired a 100 per cent stake in the Avalon site in August 2021, with production expected to begin in 2025. The field has a total estimated recovery of 23 million barrels of oil. Plans for the proposed development concept have already been cleared by the North Sea Transition Authority (NTSA), and a field development plan is to be submitted later this year.

Under these plans, Cerulean Winds with its consortium of Tier 1 industrial partners will provide a large floating offshore wind turbine, which will be connected, via a cable, to Ping Petroleum’s floating production and storage (FPSO) vessel.

The project partners claim that this will be one of the largest floating wind turbines built in the UK and will provide the majority of power required by the vessel. It is expected that green power produced by the turbine will exceed the energy needs of the production vessel, with the partners exploring options to supply excess energy to other nearby production facilities.

As part of the agreement with Ping, Cerulean Winds has committed to fully manufacturing and assembling the offshore wind turbine in the UK and the project is expected to realise between £80-100 million in investment in the development and in the UK’s renewable energy supply chain.

The FPSO in question is Sevan Hummingbird, which Teekay delivered to Ping about a month ago. The vessel will be modified to facilitate electrification from an external source. It has a storage capacity of 270,000 barrels of oil and is capable of producing up to 30,000 barrels of oil per day.

Tan Sri Syed Zainal Abidin Syed Mohamed Tahir, Group Managing Director of DNeX, pointed out that the project enables the company to seize market opportunities arising from the energy sector’s low-carbon transformation and development. In addition, the creation of an additional revenue stream via the supply of excess energy to nearby facilities will positively contribute to the company’s financial performance.

Dan Jackson, Founding Director of Cerulean Winds, said: “Our partnership marks a significant milestone for the oil and gas industry in creating one of the UK’s first production facilities to be powered by clean, green and affordable offshore wind energy.”

Jackson also emphasised that this is a critical step in scaling the UK supply chain, adding: “The UK has a golden opportunity to make our domestic oil and gas production the cleanest in the world – scaling the green economy and creating thousands of jobs in the process.”

The project was also welcomed by the UK government and Kwasi Kwarteng who said: “We must keep supporting production on the UK Continental Shelf for security of supply as we transition to clean, affordable, home-grown energy.

“In the meantime, we need to cut emissions from production. Platform electrification projects such as this are a welcome step forward to reduce emissions from oil and gas production, secure jobs and new skills and deliver on the commitments of the landmark North Sea Transition Deal.”