Diversification to include renewable energy development can help the oil and gas (O&G) industry while boosting the goals of various European Union (EU) policymakers, according to a report from the U.S.-based consulting firm Frost & Sullivan (F&S). It said “one of the most attractive areas” of diversification for O&G is offshore wind projects.

With the global and EU emphasis on alternative energy approaches, “a carbon-free future threatens O&G companies with declining business growth in Europe unless they successfully transfer their technology and skills into renewable energy where they can potentially discover more new business opportunities,” F&S said in its report.

The analysis, “Diversification of Oil and Gas Companies into the Renewable Energy Industry,” concluded that the European renewable industry of offshore wind, geothermal, solar, marine and biofuels boomed in 2008, despite the global economic crash. From 2006 through 2008 renewables’ share of the overall European energy market continued to climb from 14.6% to 16.3%, the F&S report said.

Another F&S report said the German biogas market is growing again after an 80% plunge less than two years ago. “Other countries are starting to mimic German renewable energy policies,” said the report, citing more than 30 new plants planned to start this year.

In the O&G report, Frost & Sullivan analysts noted that the biofuels area is one of the first to attract oil/gas companies, and EU commitments for 10% of its renewables coming from biofuels further boosts this interest. “If second generation biofuels are successful, more O&G companies are expected to invest in the biofuels market.”

Noting that general consumption of electricity is declining in Europe, F&S analyst Zeinegul Hassan said consumption of electricity from renewable-based power supplies continues growing. “Since Europe is dependent on O&G imports, the increase of renewable energy’s share in the energy mix is of great importance to the region.”

O&G is in a perfect position to help offshore wind development with its experience, technology transfer and equipment and labor force-sharing potential. The same is true for the geothermal sector, according to the F&S analysis. “The geothermal market requires more investment to achieve economies of scale and cost reductions,” the report said.

“To meet stated renewable energy goals while concurrently severing dependence on foreign oil and gas imports, EU governments are laying favorable groundwork for attracting investments into the renewable energy industry and other carbon abatement technologies,” F&S said.

Even in solar energy, which the consulting firm said needs more subsidy to develop further, the O&G companies’ engineering and research/development expertise could help lower solar equipment costs.

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