The “natural development” of the supply chain is the key to the energy transition

The offshore supply chain is critical to the energy sector’s net zero goal, with the commitment to a smooth energy transition and relevant opportunities from industry leaders essential to achieving carbon neutrality, writes David Hutchinson, director at Engineering and manufacturing specialists Pryme Group.

The accelerating global energy transition requires an integrated and collaborative approach from industry rather than a binary mindset.

The ideal outcome will result in the expertise, experience and innovation inherent in various sectors – through cross-fertilization, transferable skills and quality of service – making an essential contribution to a low-carbon journey.

Companies like Pryme Group, which includes Pryme Group Manufacturing, Caley Ocean Systems, IMES International, SengS and Hydratron, are committed to enabling a range of solutions required for a sustainable and climate-friendly energy future.

The opportunity is real to use existing knowledge, skills and experience gained over years in traditional energy sectors in solutions that enable the growth of sustainable and renewable energy sources.

Change is the only constant

The immediate future of the energy sector is in all hands.

According to McKinsey and Company’s Global Energy Perspective 2021[1]While the “reference case” of demand for oil is expected to peak in 2029 and gas in 2037, both will continue to “play an important role in the energy system through 2050”, fueled by growth in areas such as chemicals and aerospace.

Even in McKinsey’s accelerated transition scenario and a much earlier peak in oil demand, fossil fuel needs will remain high – and even increase – through 2050, largely driven by global gas hunger.

The continued growth of clean energy is even more dramatic. According to Net Zero by the International Energy Agency by 2050[2] Report, annual renewable energy installations must reach 1,080 GW by 2030 to meet the mid-century target. The construction rate is four times as high as the record value of 2020.

Technological innovation will then take center stage, according to the IEA report, with nearly half of the CO2 reductions after 2030 expected from initiatives that are currently only in the demonstration or prototype phase.

Tackling this landscape – continued demand for traditional sectors, increasing appetite for proven low-carbon solutions, the need to accelerate technological innovation – is the challenge facing every part of the established supply chain.

Take an integrated approach

In practice, an integrated approach to the energy transition is about having the ambition and will to serve multiple sectors, underpinned by a clear commitment to the customer. This starts with advice and collaboration, progress towards identified and tested solutions, and leads to reliable, on-time and on-budget delivery.

For a company like the Pryme Group, this process is based on the ongoing specialization of what we have always offered the market: our skills as an engineering, procurement and construction (EPC) contractor and the management of the complex structures and solutions that are so important for projects in a range of technologies. Investing time, infrastructure and funding in renewable energy projects is critical to the Pryme Group’s current and future business plans. Almost 45% of the Pryme Group’s annual sales come from the renewable energy / low carbon markets. In the 2022 financial year (FY22), nuclear projects now account for over 30% of previous annual sales and offshore wind for 13%. In parallel with adapting our ability to serve customers in these high-growth markets, the Pryme Group continues to provide solid and innovative support to customers in the oil and gas, defense, aerospace and other key sectors.

In the offshore wind sector, for example, Caley Ocean Systems, a Pryme Group company, has teamed up with industry specialists to develop and deploy solutions that facilitate the installation of turbine foundations in difficult seabed and swell conditions.

The tailor-made concepts, which are based separately on monopiles and encased foundations, are currently being used in European projects. These contracts build on our many years of experience with ship constructions from several tons to several hundred tons and are an example of how one tailors long-term know-how to new challenges.

For the nuclear sector, the know-how of the Pryme Group is used in the development and delivery of tailor-made solutions for the inlet and outlet systems in a groundbreaking new building project. Again, this is an example of how to build on proven technical skills and years of experience in major heavy industries.

And of course, by definition, new technologies are becoming increasingly important for the energy supply chain. The great promise of the floating wind will only come true if we build on solutions that have often been further developed over many years in the oil and gas sector, for example in moorings.

But that’s not all: Large-scale hydrogen rollout depends on pipelines, compressors and renewable energy expertise, while the wave and tidal sector faces challenges common to more mature shipping industries.

All of this will and must develop in parallel with ongoing engagements in the oil and gas sector, where the need for safe, reliable and proven expertise and experience will not go away overnight. The energy transition is an ongoing process.

Eyes on the price

In the course of the COP26 climate conference, national governments around the world made a clear commitment to decarbonisation. Ambitions are based on renewable energies, emissions reductions, hydrogen, carbon capture and a number of other solutions.

Political decision-makers also recognize that security of supply is essential, which prescribes orderly progress from where we are today to what we want to be tomorrow. Companies like Pryme Group strive to support all parts of this equation in this accelerating trend of energy transition.

Operators, EPC contractors, and installation specialists founded in the oil and gas era are rapidly diversifying into low-carbon solutions. The supply chain is changing as part of this natural evolution, nurturing and improving relationships that have already been formed – in new and existing markets – but also expanding into emerging businesses and forging exciting and innovative new partnerships.

To enable the desired rapid pace of the energy transition, traditional win-lose contracting relationships must be replaced by much more collegial and collaborative models based on promoting the implementation and scaling of new technologies as effectively as possible. These agreements are a necessity for success and sustainability both at the individual company level and in the entire energy sector of the future.

[1] https://www.mckinsey.com/industries/oil-and-gas/our-insights/global-energy-perspective-2021
[2] https://www.iea.org/reports/net-zero-by-2050

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