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Collaboration in the North Sea

Key players in the oil and gas and renewables industries are being brought together in Aberdeen in a bid to resolve potential challenges to working side by side before they become obstructions.

The first of a series of events being held by legal firm Bond Pearce take place tomorrow (April 19) at their Albyn Terrace offices involving representatives from wind energy, oil and gas supply chain and Aberdeen Renewable Energy Group (AREG).

“We want to encourage an understanding in the oil and gas industry of the interests of the wind industry,” said Finlay Crossan, a partner in the firm. “Similarly we want to encourage an understanding on the wind energy development side of how the oil and gas industry operates.

“They will have to work together if we are going to make the most of our energy resources and everyone will benefit if both industries flourish.”

Bond Pearce has unrivalled experience in the renewables sector having advised on almost 250 projects since 1989.

Its dedicated team of more than 50 energy lawyers also has extensive North Sea and international experience in oil and gas.

“Windfarm developers are moving from an onshore to an offshore environment and discovering it has different challenges including the cost and availability of contractors’ resources.

“Wind companies onshore may be used to paying relatively predictable prices to transport a turbine by road to a site where it can be erected relatively easily within a very tight timeframe.

“To install a turbine offshore may require specialist vessels which not only command substantial day rates but for which there is likely to be considerable demand.

“Wind developers might expect to source the resources they want when they want them and for a fixed price.

“Unfortunately it isn’t as simple as that offshore and, for example, when a vessel is obtained, additional risks have to be factored in such as the cost of delays due to weather which may make diving operations or lifting dangerous.”

Mr Crossan said that they would also be looking at potential financing challenges.

“Lenders are obviously more familiar with onshore wind farms and can assess the revenue which will be generated and the risks involved in recouping their money. When you take that offshore lenders may have different concerns. Will there be unforeseen challenges that take the construction over schedule and over budget? Is the windfarm going to maintain its projected performance and generate the revenue to repay the loan? It is inevitable that banks, particularly in the current lending climate, are going to be a lot more cautious about lending for offshore developments.

“Developers are going to have to make plans in a way which persuades the banks there is a sound basis for lending so they have to understand the practical and economic problems they face.

“We feel that our experience makes us ideally placed to broker the discussions to deal with all these issues before they become obstructive and that process will start with a breakfast forum.”

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