The combination of Covid-19 and the sharp drop in oil and gas demand created the perfect storm over the last six months. For the people and businesses of north-east Scotland the impact has been significant and unfortunately, there are likely to be further challenges to come.
Professional services firm EY has warned that between April and June this year, more profit warnings were issued by UK-based oil and gas companies than in the whole of 2019. Unsurprisingly, companies across the region are anxious about what the future holds.
But we can be optimistic and positive about the journey ahead – creating a competitive and sustainable oil and gas industry while taking advantage of the exciting new opportunities the energy transition brings for a region with the skilled people, infrastructure and innovation to help deliver a net zero economy. There’s no doubt: the journey to net zero has begun and the energy sector has a critical role.
In the future, energy systems will become more integrated. Wind power and other renewable energy sources will operate alongside oil and gas, with huge growth in carbon capture, utilisation and storage, and low carbon alternative fuels like hydrogen. And the opportunity to create a net-zero North Sea is firmly within our grasp.
The region’s ambition is to maximise the energy transition opportunity to create an integrated net-zero energy system. Our region’s natural capital uniquely positions us to play an important role in developing innovative low-carbon solutions and help drive the nation’s ambitious plans for a green recovery. With a quarter of Europe’s offshore wind resources, we can turn wind energy into electricity, convert gas and water into hydrogen and in turn into fuel, and use subsurface aquifers in the North Sea for the safe storage of carbon dioxide.
Other important attributes include our highly developed offshore energy infrastructure, technology and innovation centres, and our new state-of-the-art port facilities are a gamechanger at Aberdeen South Harbour. In addition, our skilled and experienced offshore workforce play a vitally important part. Last month, a survey of oil and gas professionals by Scottish Renewables found that 77% are positive about retraining to join the renewables sector.
For our energy supply chain, this provides the platform to diversify into new markets – not least exploiting the tremendous potential of fixed and floating offshore wind that will be unlocked by the Crown Estate’s recently-announced ScotWind leasing round, which could attract up to £8 billion of investment.
As a leading global hub for energy transition activities, the north-east can also attract new international investors – developers, manufacturers and technology firms – who share our vision and have the capability and commitment to help make it a reality. This will create new opportunities in areas such as high-value manufacturing, digitisation and underwater engineering.
The same innovative engineering spirit that saw us build the offshore infrastructure for some of the most hostile environments on Earth can potentially be deployed at Aberdeen Harbour, St Fergus and Peterhead. Now, though, instead of rigs and refineries, the opportunities range from construction of everything from floating wind centres to carbon dioxide storage to hydrogen distribution sites and more hydrogen-fuelled transport.
At ONE Energy we are committed to harnessing this potential to position Aberdeen at the forefront of the energy transition. Our strength lies in being both neutral and independent. We connect the public and private sectors and foster collaboration between groups. By connecting companies to opportunity, we can help them grow at home and internationally, as exporters.
ONE Energy is supporting Neccus, alongside government, academia and industry, to ensure a Scottish scheme for carbon capture, utilisation and storage is a strong contender for the UK Government’s Industrial Strategy Challenge funding. We are also working with partners to make sure the region fully capitalises on the substantial opportunities represented by the ScotWind leasing round.
The Scottish Government’s £62m Energy Transition Fund is a catalyst in unlocking north-east Scotland’s ambitions and several regional projects are earmarked for funding, including the Acorn project, a hydrogen hub, a Global Underwater Hub and an Energy Transition Zone (ETZ).
The ETZ is a transformational project which will create a world-leading facility and encourage fast-track investment, development, demonstration and manufacturing in the renewable energy industries. This will accelerate the region’s plans to become a globally recognised centre of expertise for the energy transition.
At ONE Energy we recognise the critical importance of oil and gas production in guaranteeing energy security, whilst sustaining and developing our offshore supply chain to support the transition to net zero. By leveraging our knowledge and expertise, we can support the drive to decarbonise oil and gas activities and to grow new renewable energy businesses to secure jobs and create employment opportunities.
Over the last half century, Aberdeen has emerged as a world-class player in the fossil fuel economy. The cluster of skills, technologies, innovative culture, infrastructure, supply chain and ambition that made that achievement possible are all transferable to the net-zero carbon era.
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