Oil and gas play a crucial role in providing modern Britain with the energy it needs; the importance of that role is unlikely to change any time soon. The products of our industry underpin modern society, supplying energy for heat and power; fuel for transport; and the raw materials used to produce a host of items we depend on for everyday living.
The UK Government states that in 2030 we will still rely on oil and gas for some 70% of our needs. In short, demand for oil and gas is not waning, and any oil and gas that we do not produce ourselves will have to be imported, at significant extra cost to the economy.
Britain’s requirement for oil and gas for many years to come is not an option; it is a reality.
But are the people of Britain aware of the crucial role oil and gas play in their lives? Are all those publicly commenting on our industry fully appraised of its economic, social and environmental impact?
I suspect not.
A recent article by FT columnist Martin Wolf, challenging investors in fossil fuel exploration and production to rethink their investments, is one such example.
A ‘climate fix’ would be the ‘ruin’ of fossil fuels, he contends. The nub of his argument is that global limits on carbon emissions required to keep average temperatures from rising more than 2⁰C above pre-industrial levels would mean that only a fraction of existing hydrocarbon reserves could be burned.
“Where would that leave investments in companies that own reserves today and are investing in exploration and production for tomorrow?” he asks.
What irks me most about this viewpoint is that it hugely simplifies a complex situation. It conflates energy use with power generation, ignoring the substantial need for primary energy for heating and transport which account for roughly two thirds of our demand.
It also ignores the vital differentiation between coal and gas, and the huge benefit which could flow from substituting the former with the latter. And it takes a dangerously cavalier view of the absolute need for continued investment in the recovery of oil and gas if we are to sustain modern living standards.
Using gas instead of coal in power generation is one of the most effective measures which can be taken to reduce emissions in substantial quantities.
In power generation, gas produces half the amount of CO2 that coal does, for the same amount of electricity generated; and a tonne of carbon saved today is a tonne of carbon saved forever.
Furthermore, gas also produces much smaller quantities of other pollutants, such as the oxides of sulphur and nitrogen, heavy metals and particle matter, with a significant benefit to air quality.
It is therefore entirely wrong to lump coal, oil and gas together, in one large geologic mass. Our role in the industry must be to make the distinction clear.
Of course we recognise the need, over time, to move towards a lower-carbon economy. But the truth is that oil and gas can help facilitate that journey.
Malcolm Webb is chief executive of Oil & Gas UK
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