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Oil & gas and offshore renewables must cooperate

The oil and gas industry will have to work together with the offshore renewables industry, according to legal firm Bond Pearce.

By Renewable Energy Focus staff

“We want to encourage an understanding in the oil and gas industry of the interests of the wind industry,” says 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.”

He continues: “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.”

Financing challenges will also have to be looked into for offshore wind.

“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 wind farm 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.”

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