The North Sea has an exciting future ahead of it. Importantly, it’s a future that is not just being dictated by the oil price.
Just north of Aberdeen, three oil and gas companies are working together to capture, transport and store carbon dioxide in offshore reservoirs. It’s a technology the Committee on Climate Change has stated is critical and needed at scale to meet the UK’s world-leading climate change commitments.
The full-chain Acorn project is set to be operational by the early 2020s and is just one example of how this sector is working to find solutions to develop a lower carbon economy.
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It was Abraham Lincoln who said the best way to predict the future is to create it. From Peterhead to Southampton, the hundreds of companies which support the production of oil and gas from UK waters are changing to realise the opportunities of a more diverse and lower carbon energy mix.
With commercial opportunity, a societal push for faster and more effective change to reduce emissions, and government support, the foundations are in place for an energy transition. Just as the UK moved from burning wood to coal and then in the 1980’s to gas, we’re looking to a future where our needs for energy and industrial products are more diverse, sustainable and efficient. The agenda-setting Committee on Climate Change report published in May showed that oil and gas currently provide 75 per cent of the UK’s total energy needs. By 2050 we estimate this will be about a third. But what does this mean for our industry?
First, we know that the UK will continue to need oil and gas as part of this diverse energy mix. The Scottish Government has agreed that if we close down the North Sea without first reducing demand we would only ‘offshore’ even more of our emissions as we would need to increase the UK’s reliance on imported oil and gas.
We would also lose the additional benefits of the UK industry of jobs, tax revenue and the engineering expertise that is helping transform our energy system. However, it’s important we produce oil and gas with ever reducing emissions. Unlike our Norwegian partners, most North Sea platforms aren’t connected to the electricity grid and produce the power they need for cooking, heating and operations through gas or diesel generators. UK companies are already in action, with some working on linking offshore renewables to oil and gas platforms.
We know that sustainability and competitiveness are intrinsically linked. While oil price is important, efficiency and competitiveness are within the industry’s control and as we have been emerging from one of the toughest downturns in our history the sector has proved its ability to improve both.
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Second, supporting over 270,000 UK jobs and with a world-class supply chain renowned for finding solutions to complex problems, we are an industry with skill, capability and infrastructure. OGUK’s Energy Transition Outlook made the case for action to progress Carbon Capture Usage and Storage (CCUS), and our members are already in action in the UK and internationally to develop CCUS and hydrogen at scale.
As our report also made clear, this is an industry which will need to earn its position in this new energy world. It’s why earlier this year we published ‘Roadmap 2035: a blueprint for net zero’. It’s one of the first industrial responses to commitments to deliver net zero emissions by 2045 in Scotland, and 2050 in the UK. Setting out five areas where industry, government and regulator action is underway or is needed. It will help enable a safe and competitive industry that realises its full potential in the energy transition.
Finally, we know that having a vision and a plan matter. The painful transition from coal and the fate of that industry in the UK casts a long shadow. We have a duty to reflect seriously on lessons from that change as we look to Scotland and the UK’s energy future.
‘Roadmap 2035: a blueprint for net zero’, offers a compelling vision developed through over 2,500 conversations with people who work in or with our sector. Delivery of the Roadmap means that by 2035 we are on track to be a net zero basin, reducing emissions from the production of oil and gas by increasing efficiency, and switching power from gas or diesel generators to low carbon resources.
It’s a future where our industry plays a key role in a diverse energy mix and in developing the technologies to help heavy industries deal with their emissions. We continue to thrive at the cutting edge of technologies and innovation, carrying those skills into different energy sectors, and using this success, our supply chain is bringing billions into the UK through exporting its skills across the world.
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There is no doubt of the urgency to help find solutions. We live in a world where increasing demand for energy sits alongside the need for ever-decreasing emissions.
Achieving net zero will require serious and committed collaboration and action from industries, governments, regulators and every individual in every community, working together to find solutions instead of seeking divisions. As we look to COP26 in Glasgow next year, we should be in no doubt that the eye of the world will be on us and we must be prepared to come to the table with deeds and not just words. Our roadmap offers a solid start to that journey.
Mike Pholen is Oil and Gas UK Upstream Policy Director
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