The Oil and Gas Authority (OGA) has today submitted a document to the UK Parliament, obliging the industry to support net zero targets.
The revised Maximising Economic Recovery Strategy, which the industry regulator has heralded as a “landmark”, sets out, for the first time, the UK Continental Shelf’s (UKCS) role as a key enabler in the transition to a low carbon economy.
It puts the onus on operators to ramp up efforts to slash emissions from existing and new production, as well as to support carbon capture and storage projects and to help unlock clean hydrogen.
Earlier this year, the Aberdeen-headquartered body announced it was seeking views on plans to refresh its core aim, with the intention of bringing it in line with the energy transition.
In the consultation document, the OGA insisted maximising economic recovery from the downturn and Covid-19 pandemic should be carried out in a way which is “fully compatible with the transition to net zero”.
The updated strategy, which will come into force subject to parliamentary process, features a number of decarbonisation goals for the industry to adhere to.
Oil and gas currently provide about 75% of the UK energy consumption, with hydrocarbons forecast to play a part in the overall mix for the foreseeable future.
According to the OGA, while the demand exists, managing production and maximising value from the UKCS as cleanly and efficiently as possible is necessary for security of supply, to ensure an orderly energy transition and to reduce reliance on hydrocarbon imports.
On top of the net zero obligations, the revised strategy also requires industry to stimulate collaboration with the supply chain.
Currently the OGA can hit firms deemed to be in breach of the provisions it has set out with penalties, including revocation of a licence or operatorship.
And the industry regulator has warned that will continue to be the case for the revised strategy once it becomes live.
Dr Andy Samuel, OGA chief executive, described the document as an “important moment” in the North Sea story.
He said the industry regulator has a “clear vision” for bringing the sector into the net zero project by supporting industry to “reduce production emissions”, while also unlocking “game-changing carbon capture and storage and hydrogen production at scale”.
Dr Samuel added: “With around 30 energy transition projects already underway, this Strategy lays the foundation for that vision to become a reality, unlocking significant high value opportunities and jobs to last long into the future.”
Alongside the direction set out in the revised strategy, the OGA said industry is also making progress in commitments to reduce greenhouse gases arising from production.
The regulatory body is currently working with the sector and government to speed up the deployment of net zero solutions in the North Sea, including announcing targets for offshore emissions.
The OGA’s revised strategy follows hot on the heels of the UK Government’s long awaited energy white paper.
According to the Department for Business, Energy and Industrial Strategy, the document sets out plans to turn the energy system green and support more than 200,000 indigenous jobs.
Westminster also pledged to help support the North Sea industry through the transition by utilising expertise currently deployed in the sector elsewhere.
Kwasi Kwarteng, UK Government energy minister, said: “As the first major economy to set a target of net zero carbon emissions by 2050 the UK is leading the world towards a cleaner future.
“Only last week we made another ambitious commitment to cut our greenhouse gas emissions by at least 68% compared to 1990 levels over the next decade, which will see us go further and faster than any other nation.
“Our Ten Point Plan and Energy White Paper show how we continue to set the pace for the green industrial revolution, but as we transition to a low carbon future, oil and gas remain an important part of our diverse energy mix and I’m delighted to see net zero placed at the heart of this strategy.”
Scotland’s Energy Minister Paul Wheelhouse said: “I welcome the publication of the Oil and Gas Authority’s revised strategy which includes a requirement for industry to support the UK target of net zero greenhouse gas emissions by 2050 and I know OGA also recognise their strategy will, in its delivery, also support delivery of Scotland’s earlier net zero target for 2045.
“This revised strategy reflects a commitment from the oil and gas sector to net zero, with the sector already playing a positive role in the transition by channelling resources and its innovative supply chain to help design the diverse energy system we need for the future.
“The Scottish Government’s Climate Change Plan update, also published today, will, in giving clarity on pathways, give businesses confidence to invest in a low carbon economy. By working together, we can progress at pace and capitalise on the opportunities the energy transition will bring.”
Industry Reaction
Sir Ian Wood, north-east oil tycoon and chairman of economic body Opportunity North East, said the strategy is a “critical step” in ensuring the regulatory framework is in place for decarbonisation, as well as in encouraging the uptake of CCS, hydrogen and wind.
He added: “The OGA has accelerated and facilitated projects and promoted an integrated energy approach. This revised strategy will enable the regulator to take a much greater role to drive collaboration and action and support the industry in energy transition.”
Collete Cohen, chief executive of the OGTC, highlighted the importance of technological innovation in “driving decarbonisation, economic opportunity and enabling a just transition”.
CEO @ColetteOGTC on @OGAuthority's Revised Strategy. 💡 Find out more here. 👇https://t.co/9xxZ5zJKO8#HelloFuture #NetZeroFuture #NetZeroEnergy #FutureofOilandGas pic.twitter.com/tTpvF6M7TO
— OGTC (@theogtc) December 16, 2020
However, the revised strategy didn’t tick everybody’s boxes, with Greenpeace accusing the OGA of wanting to have its cake and eat it.
Rebecca Newsom, the environmental body’s UK head of politics, said: “The UK Oil and Gas Authority’s solution to net zero is to carry on producing oil and gas as if fossil fuels had nothing to do with the climate emergency we face.
“Rather than tying themselves up in knots trying to justify the unjustifiable, their new strategy should be focused on delivering a fundamental shift away from fossil fuels to 100% renewables in the North Sea and supporting offshore workers to access new secure green jobs.”
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