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Gas-to-wire ticks the right boxes for Nu-Oil and Gas

The big plus for GTW is that all the stakeholders involved want it to happen

North Sea
North Sea is one of many mature assets worldwide

How to exploit marginal or stranded gas fields and those nearing the end of their commercial life has taxed the minds of engineers for decades.

Nu-Oil and Gas Plc (LON:NUOG) has spent a decent chunk of time itself trying to find a workable solution, but now believes it might just have identified one.

It’s called gas-to-wire (GTW) and involves the use of turbines at the point of offshore gas production to generate electricity that is transmitted ashore using subsea cables.

According to the UK's Oil and Gas Authority (OGA): “This spare capacity presents an alternative route for electricity generated offshore from gas fields or even from undeveloped discoveries and stranded gas resources.

Flexible and fast

 “As a relatively flexible and fast responding form of power generation, it could play a useful role in balancing the electricity grid as supply and demand fluctuate,” the OGA added.

Nu-Oil’s involvement at present is through its 50% owned joint venture MFDevco, which as its name implies specialises in marginal field development.

Events really took off in January when just a day after North Sea veteran Graham Scotton took over as Nu-Oil's executive chairman, MFDeveco signed a memorandum with offshore fleet operator Marnavi to collaborate and target the GTW opportunity.

Marnavi, an Italian firm, will supply vessels for the projects and give MFDevco a seabed mapping capability through its Next Geosolutions arm.

In March, there was another high profile signing when engineering giant Siemens’s Dresser-Rand arm agreed to supply information to help identify project candidates for GTW in return for a first option to supply equipment.

Alison Pegram, now the managing director of MFDevco and Nu-Oil, says this is a good example of how its consortium approach works.

By having a pool of partners, it can choose those with the most appropriate expertise for a project.

There is nothing new in the technology, she adds.

It is all proven and widely in use already but with GTW the electricity gets carried onshore instead of being used as an internal source of power for an oil rig, for example.

All stakeholders engaged

The big plus for GTW is that all the stakeholders involved want it to happen, she adds.

“Governments want the maximum recovery from areas such as the North Sea and boost energy security.

“Owners want to delay decommissioning costs and also make use of a resource that otherwise might just have been capped and closed in.”

Gas can be overlooked by companies exploring for oil due to the processing and infrastructure it requires, but GTW opens a new market, she adds.

There are mature basins, such as the North Sea, all over the globe, while for second and third world countries desperately short of power it can be an energy source right on their doorstep.

The application is global

“Wherever there is an appropriate amount of gas close to shore and electricity infrastructure, there is the capacity to create a GTW project.”

January’s tie-up with Marnavi has already sparked huge interest from companies with gas assets and this response from the operators has reinforced the company’s belief in the potential.

MFDevco’s role in the process will be to identify potential targets and to use its partners to put the project together.

“We will be the overseer,” she says, adding there is no ambition to become an integrated oil and gas business.

“Siemens, for example, can fulfil a key component of taking a project forward. They have the technology but we can identify the projects and put the pieces together.”

Discussions are underway already with numerous operators.

“They are motivated to find a solution,” says Pegram, especially with gas seen as a bridge towards greener energy sources in future.

Motivation there

And that motivation on all sides to get things moving can be a differentiator this time for Nu-Oil/MFDevco as progress on marginal oil fields so far has been slow.

A letter of intent has already been signed with Manarvi to establish a funding vehicle to support GTW projects and once the first is signed that can be a shop window for the whole process.

Even though it is only a shareholder in MFDevco, Nu-Oil’s value should move in step with its partner’s progress given the close links between the companies

Nu-Oil will still assess projects of its own and funding rounds in March and May raised £380,000, but its two oil projects in Newfoundland are likely to take a back seat while its partner develops the GTW operation.

Management is reluctant to talk numbers at this stage but with Nu-Oil’s market cap currently just £3.4mln at 0.23p it is not going to take much to shift the dial.

 

 

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Price: 0.056 GBX

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