DONG Energy
more competitive as technological frontrunner

The increasing competition in the libe-ralized inner market in EU makes DONG Energy the little brother of the giant energy mastodons of France, Germany and Sweden, but what it may lack in financial resources and market share it may compensate for by being faster to develop new energy techno-logy.

DONG Energy is a merger where the government-controlled oil and natural gas concern through acquisition and strategic share agreements have gathered a major part of the Danish production of oil, gas and electricity. Some two thirds of Danish production of electri-city, the network in the capital, the gas transmission and distribution and exploration and production of oil and natural gas have been concentrated in one concern with the government and certain private companies as its shareholders. 49% of the share capital are planned to be owned by private investors.

Senior Vice President Knud Pedersen is attached to the concern management and responsible for creating new business opportunities through advanced development of technology.

“The companies merged in DONG Energy all to a certain degree have acted as entrepreneurs within Danish energy policy, and the skills obtained will be important for our future competitiveness. These skills, however, can only pay off, when the development of technology has reached a global level.”

At the Esbjerg power plant DONG Energy Vestkraft an EU-financed
project is cleaning smoke gas of CO2 – in the future to be re-injected
in the oilfields

DONG Energy is working with two types of technology development. The concern is actively participating in more basic strategic research with politically formulated targets of significance to society, and where the energy companies and the developers of technology are partly financed by the state. In addition to that DONG Energy undertakes a comprehensive process development of its core technologies to make them more efficient.

“Through strategic research we can maintain attractive high-tech jobs in Denmark and join international networks important to our commercial activities. Even if we are a major player in Denmark we need strong partners in the European competition, and here high-profile projects in the EU are an obvious way to get the right partners.”

Knud Pedersen points at important projects like IBUS combining heating/power production and production of bio ethanol, UpWind aiming at developing 5-10 MW wind turbines for offshore wind farms, and CASTOR developed to split CO2 from smoke gas and use the CO2 instead of water injection at offshore oil fields. In these projects DONG is either the project manager or participating actively.

DONG Energy has qualified for this position thanks to many years of Danish development of technology, and it is most important for DONG’s continued development that the politicians once more give priority to research and development within energy technology.

“DONG is participating in a project evaluating the re-injection of CO2 in the Danish reservoirs, and we are heading a network involved in second-generation of bio ethanol, where the government’s decision to provide 200 million DKK for the research is of great interest to us.”

 

Senior Vice President Knud Pedersen:
“What others regard as garbage we
consider a potential resource for energy.”

The entire chain of value
DONG Energy is staking on optimising its various technologies and exploiting its access to the entire chain of values from production to distribution and costu-mers contact within supply of electricity, heating, oil and natural gas.

The market share of DONG Energy within Nord Pool is only 5%, so there is a potential for expansion thanks to its know-how within environment-friendly energy technology. The increasingly harsh climate-political obligations of the European governments should gradually increase the market for environment-friendly technologies. DONG in this respect will stake on its skills in transforming technological innovation to commercial activities.

We shall make use of the fact that we can offer total energy solutions comprising all a customer’s requirements for energy. Recently we made an agreement with Rudersdal municipality for providing a package consisting of electricity, gas, oil and consultancy for increasing the efficiency of energy.

We want to gain market shares by establishing new production capacity in our priority market of Northern Europe. Here we consider it to be our strength that we have excellent references concerning conventional power plants as well as wind power. We are leaders in establishing and operating offshore wind farms, and we have good referen-ces from conventional power plants. We are aiming at increasing our reserves of natural gas in order to optimize the total chain of values. Here our purchase of part of the Norwegian Ormen Lange has been most significant.”

CO2 – a special challenge
In the European market environmental regulations will gain increasing importance. Pricing of CO2 emissions will be significant for the competitiveness of DONG Energy, as it owns a considerable amount of conventional power plants contrary to Sweden and France emitting only little CO2 thanks to their use of hydro and nuclear power.

“For competitive reasons we must focus on reduction of our CO2 emissions. We are using coal in a most efficient way, we use a lot of biomass, and we are staking on wind power both here in Denmark and in the promising British offshore market.

We would like to contribute to an active interrelation between the oil and the wind power industry in order to make the Danish offshore activities more efficient. It would be natural for DONG Energy to be in focus of such endeavours.

The interrelation of conventional production of electricity and oil production is an area of strategic interest to us, and it will increase our competitiveness if we can separate the CO2 from the smoke gasses of the power plants and re-inject it in the oil fields, but it will take years to make such a technology commercial.”

Denmark has traditions for exploiting garbage as an energy resource for power plants and bio gas. It would be perfect if coping with a serious environmental load created by conventional power plants could result in increased production from the oilfields in the North Sea. Conventional power plants must be flexible regarding their in- and output, so their fossile input might be supplemented by biomass and garbage, and we might get a more varied output. What was once regarded as a pollution problem should be regarded in the perspective of how to make it useful – like re-injection of CO2.