THE North Sea could provide an example of how oil and gas firms can help tackle climate change that would provide inspiration for other regions around the world a report has found.

The study highlights the potential for firms in the North Sea to play a key role in the development of lower carbon energy sources and technologies that will reduce or help absorb carbon emissions.

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The report notes the entry of new players into the North Sea is encouraging the kind of innovation that is needed to help the industry clean up the oil and gas production process.

However, it underlines the need for a new approach in the industry, with competitive behaviours learned in the past potentially standing in the way of change. After slashing costs in response to the crude price plunge from 2014 firms need to shift their focus to value.

The findings also highlight the challenge the North Sea could face attracting investment from the likes of pension funds in future years, in spite of the moves made to boost competitiveness in recent years. This could leave firms that want to develop North Sea fields increasingly reliant on funds provided by wealthy overseas investors.

The Turning the Tide report is published today by accountancy giant PwC with the Oil & Gas UK trade body amid mounting calls for oil and gas production activity to be curbed.

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“The activities of Extinction Rebellion, media focus on Greta Thunberg and the UK government’s ‘net zero’ announcement are collectively underlining the urgency of climate change but are also stoking hostility in some parts of the public against the oil and gas sector,” states the report.

Warning that changing public attitudes could make it harder for funders to invest in the North Sea, it adds: “Most respondents feel that there is an important and perhaps unpopular narrative to be told to the public about the UKCS (United Kingdom Continental Shelf) contribution to the national economy and its role in the energy transition.”

Industry champions say oil will be needed for decades to come for use in hard to electrify sectors such as aviation while gas could be employed as a relatively clean fuel until enough renewable energy capacity is developed.

“There is a necessary urgency to move to a low carbon world,” said Drew Stevenson, Energy Sector leader at PwC in the UK. “As our report illustrates, there is huge potential for the North Sea to play a significant role in the energy transition, setting a precedent for facilitating the move to a clean energy future.”

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Based on interviews with 23 senior energy industry figures, the report notes the skills and infrastructure developed in the North Sea could help in the development of offshore wind production in the area.

In the longer term other low carbon energy facilities could be developed, such as plants that harness wind power to produce hydrogen from natural gas.

While new energy-generating technologies are rolled out, depleted oil and gas reservoirs could be used to store carbon. The report reckons Carbon Capture Storage and Usage projects could become a major aspect of North Sea activity.

Firms in the area are using innovative approaches to reduce emissions associated with their activity, such as harnessing renewable energy to replace gas-powered turbines on some offshore platforms.

But the report says more innovation is necessary in terms of business models and technology to ensure productivity and sustain the UK North Sea.

It cautions: “The supply chain in the UKCS has perhaps been financially squeezed as far as possible. New ways of working between operators and oil services companies are critical.”

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On changing investor sentiment, the report notes: “Traditional providers of funding will find it increasingly challenging to invest in the UKCS. Changing public attitudes could mean that pension funds may be reluctant to invest due to the sustainability hurdles.As a result operators may increasingly seek private capital. And this capital is likely be provided by sovereign wealth funds and family businesses emanating from Asia and the Middle East.”

Oil & Gas UK said the shift to a lower carbon, diverse energy mix was an exciting opportunity for a transforming industry.