The North Sea oil and gas industry faces new challenges and opportunities as it strives to reduce its greenhouse gas emissions in line with the UK’s target of net-zero emissions by 2050.
The industry is under increasing scrutiny from courts, regulators and environmental groups over the impact of its operations and products on the climate.
Scope 3 Emissions
One of the key challenges that has emerged in recent years is the appropriate approach to Scope 3 emissions – those emissions which occur in a company’s value chain, including those associated with the use of its products.
Generally speaking, these emissions have been excluded from environmental impact assessments (EIA), which are a key aspect of the approval process for offshore (and onshore) developments in the oil & gas industry and more widely, for various reasons, including that they are picked up in assessments further down the supply chain.
This issue has been brought into sharp focus in the recent case of R (on the application of Finch on behalf of the Weald Action Group) v Surrey County Council and others – an ongoing legal challenge by Sarah Finch and the Weald Action Group against Surrey County Council’s decision to grant planning permission for a proposed oil extraction development in the south of England. The claimants argue that the EIA for the proposed development should have included an assessment of Scope 3 emissions from the oil to be produced, because the development’s purpose is the extraction of oil, and it is inevitable that the oil will be used in a way that generates greenhouse gas emissions.
The High Court held that Surrey County Council’s decision not to require an assessment of Scope 3 emissions in the EIA was lawful; a majority in the Court of Appeal agreed, but with a dissenting judgment that concluded that an EIA could require to take account of Scope 3 emissions. The Court of Appeal’s decision has been further appealed to the UK Supreme Court. The Supreme Court’s decision is still awaited, but is likely to have significant implications for the way EIAs are conducted and therefore planning approvals are sought and granted for future developments. The case has also sparked a broader conversation about the correct approach to ensure comprehensive climate impact assessments.
OGA Plan
In response to growing concerns about climate change and the role of Scope 3 emissions, the North Sea Transition Authority (NSTA) published the OGA Plan on emissions reduction on 27 March 2024 (Plan). The Plan sets out the NSTA’s requirements for relevant persons to meet the second limb of the Central Obligation in the OGA Strategy, to support work to reduce greenhouse gas emissions in line with the UK government’s net-zero target.
The operator-specific targets in the Plan cover all greenhouse gas emissions from offshore installations, including CO2, methane, and other gases. Operators will need to develop detailed action plans outlining how they intend to achieve these targets through operational improvements, technology deployments, and investment in decarbonization projects.
A key focus area is reducing routine flaring and venting of greenhouse gases offshore. The Plan sets out stricter limits on permissible flaring levels and requires operators to implement flare gas recovery systems where feasible. The Plan also emphasises the need for greater electrification of offshore platforms to reduce reliance on gas turbines and diesel generators – to do so, industry is expected to increase the use of offshore wind, interconnected offshore power grids, and subsea cables to supply renewable electricity from shore.
Additionally, the NSTA advocates the rapid up-scaling of carbon capture and storage (CCS) technologies in the UK Continental Shelf (UKCS). The Plan outlines potential “CCS clusters” where multiple offshore fields could route their emissions to shared onshore CCS hubs for permanent geological storage.
For further information head over to the CMS website.
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