Industry watchdog the Oil & Gas Authority submits revised strategy to Parliament that for the first time includes obligation for sector to support pursuit of UK's 2050 net zero goal
The UK's oil and gas industry watchdog has the first time set an obligation for the sector to contribute to the nation's 2050 net zero emissions target, in a revised strategy submitted to Parliament yesterday aimed at driving as clean and efficient production as possible "as long as this demand exists".
The revised strategy "reflects the ongoing global energy transition", with obligations for operators to limit reliance on imports, boost efficiency of production, and harness their skills and infrastructure to support hydrogen production and carbon capture and storage projects, the Oil & Gas Authority (OGA) said.
However, it also stressed the sector currently provides around 75 per cent of UK energy consumption, and that government forecasts expect fossil fuels to remains important to the overall energy mix "for the foreseeable future, including as we transition to net zero". The continued commitment to on-going fossil fuel exploration and production drew immediate condemnation from environmental groups, who contrasted the strategy with Denmark's recent announcement of a plan to end North Sea oil and gas exploration.
The OGA defended its new approach, arguing that "as long as demand exists, managing production and maximising value from the UK continental shelf 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."
It added that maintaining UK production was "especially important as some imports, such as liquified natural gas has a carbon footprint more than twice that of UK produced gas".
The strategy, which is subject to Parliamentary approval, calls on owners and operators of oil and gas infrastructure to ensure optimum levels of production, energy, and cost efficiency for the expected duration of projects, and facilitate "the maximum value of economically recoverable petroleum".
It also states operators should "reduce as far as reasonable the circumstances greenhouse gas emissions resulting from sources such as flaring and venting, and power generation", and that the maximum potential for infrastructure to be reused or repurposed is considered, while taking into account the UK's net zero emissions target.
Industry operators are also encouraged to collaborate with their supply chains to actively support carbon capture and storage projects, and the OGA has committed to ensuring carbon costs are considered in its regulatory decisions.
Those deemed in breach of the obligations could be subject to regulatory penalties, including revocation of their license to operate.
OGA's chief executive Dr Andy Samuel said the revised strategy was "an important moment in the North Sea story, bringing a key sector of the economy into the overall net zero project".
"We have a clear vision for how to achieve this, supporting industry to reduce production emissions and to provide the infrastructure, expertise and capital to unlock game-changing carbon capture and storage and hydrogen production at scale," he said. "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."
The move follows hot on the heels of a flurry of government green policy in recent weeks, including Prime Minister Boris Johnson's plan to accelerate decarbonisation efforts over the next decade, with an enhanced 2030 target to cut UK emissions by 68 per cent below 1990 levels. His recently announced Ten Point Plan for a Green Industrial Revolution also touts the creation of 200,000 green jobs, and a plan to ramp up offshore wind capacity to 40GW by 2030.
Meanwhile, the global oil and gas industry has endured a torrid year in the wake of the Covid-19 outbreak, which saw prices briefly collapse into negative territory, and many of the biggest oil firms including Shell, BP, and ExxonMobil announcing plans to cut tens of thousands of jobs amidst growing speculation that global oil demand may have peaked.
In a landmark report on delivering the UK's net zero ambitions last week, the Climate Change Committee stressed the importance of ensuring a smooth, orderly and 'just' transition that enables workers in high carbon sectors to retrain for the growing green economy.
Energy Minister Kwasi Kwarteng welcomed the OGA's revised strategy, but stressed the industry still had a part to play in the UK economy for the foreseeable future.
"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," he said.
However, Greenpeace UK head of politics Rebecca Newsom argued the new approach did not do nearly enough to curb emissions and fossil fuel production in the short to medium term.
"This is a classic example of wanting to have your cake and eat it," she 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 per cent renewables in the North Sea and supporting offshore workers to access new secure green jobs."