How might Brexit affect the oil and gas industry?
Information in a study commissioned by Oil & Gas UK, which looks at the possible cost of trade for the sector and illustrates where the UK sector‘s workforce comes from, has been highlighted in a letter to the Prime Minister which focusses on the potential impact of Brexit on the energy industry. The letter was sent to the Prime Minister on Monday.
On trade costs, the data shows:
- Around £73 billion worth of oil and gas related trade (fuel and non-fuel) flows between the UK and the rest of world
- Approximately £61 billion of this is related to traded goods, which may be subject to tariffs (services account for the remaining £12 billion)
- Under the current ‘status-quo’ scenario with the UK as part of the EU, the total cost of this trade in goods is around £600 million per annum (less than 2 percent of the total value of trade subject to tariffs)
- Under a worst-case scenario where the UK reverts to WTO rules with the EU and the rest of the world, the likely cost of trade will almost double to around £1.1 billion per annum; assuming trading behaviours remain unchanged
- If the UK can negotiate minimal tariffs with the EU and improved tariffs with the rest of the world, the total cost of trade could fall by around £100 million per annum to £500 million
On labour movement, the data shows:
- Of those directly employed by the oil and gas industry in the UK, 90 percent are UK national, 5 percent are EU workers from countries other than the UK and 5 percent are non-EU
- Around 70 percent of the EU workers in the industry are skilled, with one in two holding managerial roles
- Oil & Gas UK understands that these skilled roles filled by EU workers are often critical for projects and asks Government to consider these posts when developing domestic immigration policy.
To minimise any Brexit cost burden and to secure beneficial trading conditions, Oil & Gas UK recommends the UK Government prioritises the following during negotiations:
- Frictionless access to markets and labour
- Maintaining a strong voice in Europe
- Protecting energy trading and the internal energy market
Deirdre Michie, Chief Executive of Oil & Gas UK, said: “Oil & Gas UK is an apolitical organisation representing a large and diverse membership where there will be a variety of views. While the trade body can’t take a position on Brexit, we commissioned the research because we need to understand the possible impact on our industry - and the possible opportunities - from exiting the EU.
“We also identified other EU policy issues as critical to the oil and gas industry and will require negotiation with European counterparts, as well as discussions at the domestic level between Government, regulators and industry during the Brexit process.
“During the global industry downturn, our industry has continued to focus on increasing its production efficiency, and on its unit operating costs which have improved by almost 50 percent.
“We are becoming a more globally competitive industry, but we continue to be very sensitive to any additional burdens either in relation to cost, or restrictions on the movement of key personnel required for critical operations.
“There are still up to 20 billion barrels of oil and gas to recover from the UKCS and, if properly supported, our already world-class supply chain could double its turnover by 2035.
“Oil & Gas UK would welcome discussions with Government officials to outline industry’s concerns and opportunities and help identify a path forward during Brexit negotiations.
“Our request of Government is that any change, whether domestic or European, is managed in a manner that minimises risk to the oil and gas industry and provides predictability and clarity wherever possible, through constructive dialogue and consultation.”
Form Energy receives funding power for iron-air batteries
Form Energy believes it has cracked the conundrum of commercialising grid storage through iron-air batteries - and some of the biggest names in industry are backing its potential.
The startup recently announced the battery chemistry of its first commercial product and a $200 million Series D financing round led by ArcelorMittal’s XCarb innovation fund. Founded in 2017, Form Energy is backed by investors Eni Next LLC, MIT’s The Engine, Breakthrough Energy Ventures, Prelude Ventures, Capricorn Investment Group and Macquarie Capital.
While solar and wind resources are the lowest marginal cost sources of electricity, the grid faces a challenge: how to manage the multi-day variability of renewable energy, even in periods of multi-day weather events, without sacrificing energy reliability or affordability.
Moreover, while Lithium-ion batteries are well suited to fast bursts of energy production, they run out of energy after just a few hours. Iron-air batteries, however, are predicted to have theoretical energy densities of more than 1,200 Wh/kg according to Renaissance of the iron-air battery (phys.org)
The active components of Form Energy's iron-air battery system are some of the cheapest, and most abundant materials: iron, water, and air. Iron-air batteries are the best solution to balance the multi-day variability of renewable energy due to their extremely low cost, safety, durability, and global scalability.
It claims its first commercial product is a rechargeable iron-air battery capable of delivering electricity for 100 hours at system costs competitive with conventional power plants and at less than 1/10th the cost of lithium-ion and can be optimised to store electricity for 100 hours at system costs competitive with legacy power plants.
"This product is our first step to tackling the biggest barrier to deep decarbonisation: making renewable energy available when and where it’s needed, even during multiple days of extreme weather, grid outages, or periods of low renewable generation," it states.
Mateo Jaramillo, CEO and Co-founder of Form Energy, said it conducted a broad review of available technologies and has reinvented the iron-air battery to optimise it for multi-day energy storage for the electric grid. "With this technology, we are tackling the biggest barrier to deep decarbonization: making renewable energy available when and where it’s needed, even during multiple days of extreme weather or grid outages," he said.
Form Energy and ArcelorMittal are working jointly on the development of iron materials which ArcelorMittal would non-exclusively supply for Form’s battery systems. Form Energy intends to source the iron domestically and manufacture the battery systems near where they will be sited. Form Energy’s first project is with Minnesota-based utility Great River Energy, located near the heart of the American Iron Range.
Greg Ludkovsky, Global Head of Research and Development at ArcelorMittal, believes Form Energy is at the leading edge of developments in the long-duration, grid-scale battery storage space. "The multi-day energy storage technology they have developed holds exciting potential to overcome the issue of intermittent supply of renewable energy."
Investors in Form Energy's November 2020 round included Energy Impact Partners, NGP Energy Technology Partners III, and Temasek.
In May 2020, it signed a contract with Minnesota-based utility Great River Energy to jointly deploy a 1MW / 150MWh pilot project to be located in Cambridge, MN. Great River Energy is Minnesota's second-largest electric utility and the fifth largest generation and transmission cooperative in the US.
Last week Helena and Energy Vault announced a strategic partnership to identify additional opportunities for Energy Vault’s waste remediation technologies as the company begins deployment of its energy storage system worldwide. It received new investment from Saudi Aramco Energy Ventures (SAEV) in June.
Maoneng has revealed more details of its proposed 240MWp / 480MWh Battery Energy Storage System (BESS) on Victoria’s Mornington Peninsula in Australia (click here).
The BESS represents hundreds of millions of dollars of investment that will improve electricity grid reliability and network stability by drawing energy from the grid during off-peak periods for battery storage, and dispatching energy to the grid during peak periods.