Scotland’s oil and gas industry has helped power the Scottish and UK economy for decades. Our new Energy Strategy confirms that the sector has a major role to play.
There are very good reasons for that. Scotland remains at the forefront of the worldwide oil and gas industry. Half a century of North Sea oil and gas exploration and production has created a hugely valuable Scottish industry, with internationally renowned offshore engineering expertise. Our world leading supply chain now trades with over 100 countries.
Oil and gas production was worth an estimated £17.5 billion to the Scottish economy in 2016/17. We are estimated to be the largest oil producer and second largest gas producer in the EU, on an internationally comparable basis, producing almost six times as much natural gas as we consume, with more than 2000 companies supporting circa 115,000 Scottish oil and gas supply chain jobs in 2017.
Scotland’s first Energy Strategy includes and celebrates the strength of the sector. But it does more than simply acknowledge the oil and gas sector’s impressive past and present success – it deliberately and rightly underlines the positive role that the industry will play in our future energy system too.
Almost all future energy scenarios confirm that oil and gas will continue to play a significant role for decades to come in meeting future global energy demand. Demand for gas in particular is expected to continue to rise until the middle of this century. And our Strategy’s scenarios confirm that oil and gas remain in Scotland’s energy mix too even once we have reached our low carbon objectives.
Read: North Sea skills can support push towards low carbon future, Scottish Government says
North Sea production is highly-regulated, with some of the most advanced and comparatively least polluting production methods in the world. The latest Environmental Report published by Oil & Gas UK also shows strong progress on carbon intensity, with North Sea oil and gas production increasing and greenhouse gas emissions from production continuing to fall. This gives me confidence that our approach of supporting ‘maximum economic recovery’ of reserves under the North Sea remains the correct approach for Scotland.
The sector also contains a range of innovative and world leading companies, many of which I have had the pleasure of visiting as Scotland’s Energy Minister.
With the creation of the Oil and Gas Technology Centre (OGTC), in which Scottish Government are investing £90m, we are already seeing a drive towards new innovative approaches which will transform the North Sea. For example, the aim of using advanced robotics and artificial intelligence technologies for the inspection, repair, maintenance and certification of offshore energy platforms and assets. The recently announced Edinburgh Centre for Robotics-led ORCA Hub is a real opportunity to showcase Scotland’s stellar academic and industry expertise in this area.
Technological advances, many of which are developed here in Scotland, mean that new and innovative ways of using hydrocarbons are emerging. This will be an opportunity for decades to come, with new energy sources and technologies such as hydrogen and Carbon Capture Utilisation and Storage potentially substantially reducing the cost of decarbonisation.
Scotland’s oil and gas industry has developed a cluster of companies with internationally recognised expertise in subsea engineering which is among the strongest in the world. Approximately half of the subsea installations in the world today are in the North Sea. This is a strength that we want to build upon and develop even further.
These skills and knowledge can, as we are seeing, be transferred into other sectors such as offshore wind. We can help achieve this by supporting our supply chain, ensuring that we keep it competitive, and by investing in our infrastructure – maintaining appropriate levels of research and testing.
The transfer of skills from our oil and gas sector could also help overcome many of the challenges involved in realising our future energy system. So far, our Transition Training Fund has helped over 2,800 individuals to retrain and secure new jobs or opportunities in the oil and gas sector and wider economy and we have also supported innovative oil and gas companies to develop technology that can benefit renewables projects too.
By continuing to working constructively with the industry, encouraging new exploration in the North Sea and enhancing the capacity and competitiveness of our world leading supply chain, we will not only strengthen a key economic sector, but support the necessary transition to deliver the economy and energy system of the future.
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