Oil & Gas
Supporting resilience and transformation
DNV supported the oil and gas value chain in proving safety, reliability and performance during a challenging year. Our Oil & Gas business area also focused on supporting the industry’s decarbonization efforts.
DNV conducted more than 6,000 remote surveys for the oil and gas industry worldwide – more than triple the number in 2019. We also led a pilot project with Aker BP to remotely perform inspections on three offshore cranes in Norwegian waters.
Our research has shown that two-thirds of senior oil and gas professionals entered 2020 confident of industry growth during the year. Instead, the industry began a significant downturn at the end of the first quarter, as international lockdowns and an oil price war between Saudi Arabia and Russia affected oil and gas supply and demand. Crude oil prices fell below USD 20 per barrel in early 2020, from a high of USD 60 at the end of 2019. However, the price recovered to USD 40 per barrel in the summer and stabilized at this level towards the end of the year.
In response to the market downturn, the global oil and gas industry cut spending by approximately 30% in 2020. DNV responded by tightening its internal cost control and enhancing its focus on sales. The business area’s ongoing strategic efforts over the past five years to diversify its offering to the upstream OPEX, midstream and downstream markets helped to protect it from the volatility of the upstream CAPEX market in 2020
In addition to serving customers in traditional oil and gas markets, we assisted those targeting energy efficiency and emissions reduction as the energy transition gathered pace in 2020. Several major companies in the oil and gas industry affirmed their commitment to reducing emissions over the course of the year, spurred on by banks, investors and society. Despite market volatility and the sudden need for cost control in 2020, many of our customers ringfenced investment in research and development relating to technologies for a low-carbon future.
As interest in digital twin technologies is increasing, we published the oil and gas industry’s first recommended practice on how to build and quality assure digital twins. We also started a pilot project with Bluewater to use hybrid digital twin technology to predict and analyse fatigue in the hull of a floating production, storage and offloading vessel (FPSO) in the North Sea
DNV’s digital expertise has also gained interest in other areas, as the sector looks to data as a primary source of cost control. We secured a contract with the Research Council of Norway, resulting in a DNV report identifying how machine learning can add value through increased oil and gas volumes, lower costs, and reduced environmental footprints.
Further, our Veracity data platform now hosts OREDA@Cloud. This tool provides easier, more efficient and interactive access to decades of offshore and onshore reliability data from oil and gas operators in order to learn from past events and maintain the highest standards of safety and quality.
New contracts in oil and gas markets included a certification and classification contract for China National Offshore Oil Corporation’s Liuhua 11-1/4-1 oilfield redevelopment programme in the South China Sea. Our experience globally and locally in the Gulf of Mexico also helped DNV’s Oil & Gas and Maritime/Offshore Class teams to win our first combined class/verification project in the region. This project will support Australian operator BHP in developing a floating production unit for the deepwater Trion field.
Experts at our Spadeadam Testing and Research Facility completed safety testing work for industry-led and government programmes aiming to prove the safety case for using 100% hydrogen in existing UK gas networks to decarbonize home heating.
In the UK, Ofgem’s Network Innovation Competition approved a first-of-its-kind offline hydrogen research facility to understand how transmission assets could be used to transport hydrogen in the future to heat homes and deliver green energy to industry. DNV is the lead delivery partner, designing, constructing, and operating the facility at Spadeadam. In the Netherlands, our experts also launched an international industry consortium to develop technology for a gradual transition from natural gas to hydrogen to power energy-intensive industrial processes.
A major milestone in one of the most complex projects in DNV’s history was passed when we issued a Certificate of Conformity for the TurkStream pipelines between Russia and Turkey. Adding to our portfolio of nearly 80 standards and recommended practices for the oil and gas industry, we published DNVGL-ST-F121, a standard establishing minimum requirements and best practice for horizontal directional drilling pipe-laying projects.
In 2020, we added the AC Interference Scanner to our growing portfolio of digital tools for the pipeline industry, helping gas transmission and distribution pipeline operators to meet new PHMSA rules on preventing corrosion induced by overhead power lines. Building on a recently issued DNV recommended practice, we also launched CUI Manager - a new digital tool for assessing and managing the major risk of corrosion under insulation across the oil and gas value chain.
According to our Energy Transition Outlook, gas will become the world’s largest energy source from the middle of this decade. Demand for liquefied natural gas (LNG) will grow, with significant associated investment in liquefaction, regasification and the pipeline infrastructure needed to connect emergent supply hubs with demand centres around the world.
In 2020, DNV secured a contract to perform yard and laboratory testing in China and Singapore for the quality assurance and control of the Arctic LNG2 project in Siberia. We also won funding from the US Pipeline and Hazardous Materials Safety Administration (PHMSA) to develop guidance on potential cascading effects from flammable vapour cloud explosions at LNG facilities.
We secured a marine warranty contract and advisory projects on safety studies related to an LNG floating storage and regasification unit (FSRU) project in Hong Kong, intended to facilitate access to the competitive LNG global market. This comes in addition to a contract with CPC Corporation in Taiwan to assess the technical feasibility of an FSRU as a backup supply source before an onshore terminal is ready for operation.
Decarbonization rapidly rose up the oil and gas industry’s agenda in 2020. Emissions reductions from oil and gas production will dominate the decarbonization agenda in the shorter term, while the sector invests in researching and developing solutions to hasten deep decarbonization by scaling carbon capture and storage (CCS) technology from the mid-2030s.
In 2020, we facilitated discussions between operators on the Norwegian Continental Shelf so that they could share their experiences and identify areas for collaboration to meet decarbonization roadmap targets for the industry
To accelerate CCS adoption in emissions-heavy industries, we signed a memorandum of understanding in 2020 with research organization SINTEF and Technology Centre Mongstad to further develop carbon capture technologies and make full-scale CCS a global reality. We also qualified technology for two full-scale demonstration CCS projects in Norway, one at a waste-to-energy plant and another at a cement factory.