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Northern Lights Facility in Norway

What impact will CCS have on the offshore market in the near future?

CCS technology may not be new, and it has been utilized offshore for a number of years, but there is a marked push towards such projects in the race to meet global emission reduction targets. Here, Spinergie provides an overview of offshore CCS, looks at the key ongoing projects of today and what the market impact from upcoming projects will be.

Carbon Capture and Storage (CCS) technology is not new, however, with the International Energy Agency (IEA) and Intergovernmental Panel on Climate Change (IPCC) each emphasising its importance in keeping global warming below 1.5°C, the number of new licences and projects in development is increasing. 

The oil and gas industry is one of the largest contributors to global greenhouse gas emissions, however, emissions-reduction technologies are now being utilized with increasing frequency on offshore drilling units, and emission-reducing projects, such as CCS are becoming more prevalent. 

The IEA has stated that global energy-related CO2 emissions grew by 0.9%, or 321 MT, during 2022 creating a new height of 36.8 Gt. Emissions from natural gas fell by 1.6%, however, oil emissions rose by 2.5%, or 268 Mt, to an overall 11.2 Gt (CO2 emissions in 2022). The IEA has previously estimated that over 700mT of CO2 emissions from oil and gas operations can be avoided by using CCS. It can also save on operator costs during gas processing and, depending on the country, the storage of CO2 is set to become cheaper than the cost of the carbon tax. 

There is still a long way to go, however, with the Global CCS Institute stating that “To meet climate mitigation targets, an estimated 2,000-plus large-scale CCS facilities must be deployed by 2050…and a 100-fold increase in the number of [facilities] in operation relative to today.”  (GCCSI, 2022)

Here, we examine what offshore CCS is, what the current situation is and what the immediate future is likely to entail. The chart below shows a clear overview of anticipated global CCS activity from 2024 to 2030 and beyond with two peaks of drilling activities. As such, CCS will have an impact, not only on the drilling market but also vessels and associated services, all at the same time as other offshore sectors, including wind, are seeing similar increases in demand.

What is CCS and how does it work?

CCS entails a three-step process: capturing carbon dioxide (CO2), transporting it, and storing it underground. Most CCS currently comes from the upstream sector with onshore natural gas processing plants in the US. 


The capture of CO2 is generally from industrial processes where it will be separated from other naturally occurring gasses before it can be transported via pipelines or by ship. Sometimes, in order to reduce carbon emissions, this CO2 could also be pumped back into geological formations. The following examples are the primary sources of CO2 capture.

Onshore Industrial and Coal Power Plant Sites -
These sites can be onshore or offshore depending on reservoir availability. These projects are among the most viable due to the cost of capture, the distance to storage sites and the proximity to feeding pipes and ports. 

Hydrogen Production -
This is expected to be at the forefront of the global energy mix in the future with three separate production classifications: grey, blue and green. 

  • Grey Hydrogen is produced from steam methane reforming (SMR) with rejected CO2 entering the atmosphere. However, this method shows no reduction in CO2 emissions and is in line with traditional fossil fuels, therefore not part of the CCS analysis.
  • Blue Hydrogen is produced in the same way as grey hydrogen, but the CO2 is captured and stored underground.
  • Green Hydrogen is produced from water electrolysis to split H2O (water) into H2 (hydrogen) and O (oxygen). If this process is powered by a renewable source then the hydrogen produced can be classified as “green”. 

Currently, blue hydrogen is around two-to-three times cheaper than green hydrogen and so, while the market waits for the cost of producing green hydrogen to reduce, blue hydrogen will be key in meeting short-to-mid-term decarbonization goals. It is blue hydrogen which requires the use of CCS technology. 

Natural Gas Processing & High CO2 Field Development -
CO2 is most naturally present when processing oil and gas, particularly gas. Some fields have huge CO2 content and are now required to be developed in combination with a CCS project in order to be produced for example Petronas’ Kasawari field offshore Malaysia, and Chevron’s Gorgon gas field offshore Australia. Sleipnir, offshore Norway, was the first of these offshore projects. 

Following capture, the next stage is transportation which can be done via pipeline or by ship. Currently, there are only two vessels globally under construction. With the development and construction of pipes prohibitively expensive, further vessel capacity will be required. This is likely to be especially true in the North Sea and Europe which will have the highest number of projects, and installing transportation pipelines will not be suitable for all of them. This trend is likely to be the same as each global region increases in activity. 


There are three possible storage solutions in offshore CCS: Greenfield, Brownfield and Enhanced Oil Recovery (EOR). For the drilling market, Greenfield and EOR projects are the most relevant. 

Greenfield -
This method is utilized through new exploration licences which are awarded for potential CCS activities on unexplored blocks. The work scopes of these projects will entail starting from scratch with surveys, drilling and pipelaying. The Northern Lights project (described in further detail below) is a Greenfield project. 

Brownfield - Decommissioned oil and gas fields will be re-used specifically for CCS with gas injected using both old and new wellheads. While it is unclear how much drilling will be required, some sources have indicated that retrofitting could be more expensive than drilling new wells, therefore it is likely that further drilling will be required at most projects. At Brownfield sites, the reservoir is already well known and mostly depleted with no more oil and gas activity to be undertaken there. 

Enhanced Oil Recovery - In EOR projects, the CO2 which is injected into produced reservoirs is used to push oil towards the production well. These wells are already in place and used with water/gas injection. Any new development at these sites will require further drilling activities. As opposed to Greenfield and Brownfield, which are beginning and end of life respectively, EOR will be implemented during the life of the field in order to support the production of oil and gas. 

Ongoing CCS Projects 

The North Sea, particularly Norway, currently dominates ongoing offshore CCS activity. The world’s first commercial CO2 offshore storage project emerged in the mid-1990s at Sleipnir offshore Norway. Since its beginning in 1996, it has become the world’s longest-running CO2 project, with around 1 million tonnes of CO2 from natural gas captured and stored each year.

Newer projects include Northern Lights (detailed in the case study below) and Acorn off the coast of Scotland. Acorn has the aim of generating low-carbon hydrogen from natural gas landed at St Fergus. Meanwhile, injection test operations began earlier this year at the Greensand Project offshore Denmark with jackup Noble Resolve undertaking the drilling operations supported by PSV Aurora Storm. Greensand, which is located in the decommissioned Nini West oilfield, will store up to 1.5 million tons of CO2 annually from the development completion date in 2025. By 2030, this number will have risen to 8 million tons of CO2 annually. 

Case Study: Northern Lights

The Northern Lights Project is Norway’s first CO2 storage licence on the NCS and one of the landmark projects globally. Part of a greater Norwegian Government CO2 capture initiative called Longship, Northern Lights’ scope entails the transportation of liquid CO2 - which has been captured from cement and waste-to-energy sources - to an onshore terminal, followed by pipeline transport to an offshore storage location and finally, from there, the CO2 is permanently stored at a subsea North Sea location via injection into a saline aquifer. 

In January 2019, licence EL 001 (Aurora) was awarded to operator Equinor, alongside equal partners TotalEnergies and Shell, with the Eos confirmation well drilled by semisub West Hercules in the winter of 2019/2020. In August last year, semisub Transocean Enabler began further drilling works at EL 001. The first task was to sidetrack the Eos confirmation well. This was followed by drilling a contingent well for injection operations should the primary well be out of operation for any reason.  

In April this year, a Northern Lights announcement marked the formal start of construction works at Dalian Shipbuilding, China, on the first two ships to be used for the project. The vessels, which will have a cargo capacity of 7,500m3 and a length of 130m, will be launched in 2024 and operated by K LINE on behalf of Northern Lights.

Phase One of the Northern Lights transport and storage development is expected to be completed by 2024. At this point, it is anticipated that the project will have the capacity to store 1.5 million tonnes of CO2 each year with room to expand that capacity moving forward.

How Northen Lights plans to store CO2

Future CCS Projects 

The number of offshore CCS projects which are ongoing is relatively low for now, however, an increase is expected in the near term. As the number of announced projects grows - a four-fold increase is expected between 2024 and post-2025 - as mentioned earlier, this will also impact the rig market, support vessel market and services markets.

The number of CCS projects in Europe is growing, with a number of licences awarded in Norway and the full results of the UK’s first-ever CCS bidding round expected soon (20 licences have been granted from 26 bids). 

Looking at the global picture, Australia launched its first CCS bid round in late 2021 with Inpex, Woodside and TotalEnergies all landing a permit in the Bonaparte Basin as a partnership and Woodside alone awarded a Browse Basin permit. In May this year, the Australian government released a public consultation of its next release of offshore CCS areas to gauge potential impacts amid reports the country is planning to scale up its CCS capabilities.

While outside of Europe, Australia has the highest number of anticipated projects albeit mostly still at the study stage, Southeast Asia also has a significant number of projects, mainly brownfield, including the aforementioned Kasawari project. At least three other Malaysian projects are in the pipeline at either the FEED or FID stage. Meanwhile, projects are also planned in Thailand and Saudi Arabia. 

To sum up, while CCS technology may not be new, it remains a budding segment of the offshore sector. While Europe dominates for now and is expected to get busier thanks to the recent UK licensing round, there is an uptick in activity globally led mainly by Australia but Malaysia also sees some significant programmes to watch in the pipeline. 

An increase in CCS demand will create challenges throughout the industry whether in rig capacity or suitable transport ships being built. However, in the fight to meet carbon emission targets, the benefits of this technology are clear from reduced CO2 and the potential for lower costs. To discover how Spinergie can help you track upcoming CCS projects and their impacts on the market contact us for a demo today

Photo of Sarah McLean
Sarah McLean
Marketing Content Writer
Published on
June 7, 2023
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