UK Upstream Regulator Goes for Net Zero: Update
(Adds reactions at end)
UK upstream regulator Oil and Gas Authority (OGA) is to consult with the offshore industry on achieving the government's goal of net zero greenhouse gas emissions by 2050 it said May 6. It warned that the social licence to operate could be forfeited if it did not move faster.
The OGA believes that maximising economic recovery of oil and gas – which was the objective for setting up the agency – "need not be in conflict with the transition to net zero and that the industry has the skills, technology and capital to help unlock solutions required to help the UK achieve the target."
But as the costs of decarbonising are additional to the cost of production, it is likely to mean more oil and gas left offshore that would otherwise be recoverable.
The trade group Oil & Gas UK is already pursuing the net zero carbon goal through its Roadmap 2035; and it restructured earlier this year in order to put more emphasis on it. It was not impressed with the OGA's announcement and is already working towards the same goal (see below).
The changes proposed in the consultation, alongside the concepts assessed in the OGA’s UKCS energy integration project, have the potential to make a significant contribution to achieving net zero; both through carbon capture & storage (CCS) and through CCS plus hydrogen, it said. Offshore renewables (wind, wave and tidal) should contribute further to the abatement required by 2050.
At the same time, managing declining North Sea production to maximise value, minimising greenhouse gas emissions and reducing reliance on hydrocarbon imports are all essential.
OGA CEO Andy Samuel said the global pandemic and the rapid fall in commodity prices were major problems facing the industry and the agency was working with government to safeguard the energy supply and as best as possible the thousands of jobs and skills which deliver it, in the face of these issues.
“Even before these issues emerged, the industry was facing questions about its ‘social licence to operate’ regarding its role in climate change and changing public opinion.
“The government’s commitment to reaching net zero greenhouse gas emissions by 2050 provides an opportunity to the oil and gas industry, which should be well placed to play a leading role.
“To support this drive, we are now reviewing our strategy. This is further complemented with our other work such as: benchmarking flaring and venting data to drive performance improvements; supporting work to unlock energy integration opportunities; and supporting CCS and hydrogen projects.”
The government said that the new strategy was welcome and minimising emissions "will be increasingly important as we emerge from Covid-19 and focus on supporting a clean recovery of our economy.”
Net zero role not a given: OGUK
OGUK said May 6 that it was working with the UK government on a sector deal and that the industry remained committed to a three-stage framework published earlier this month.
The framework sets out specific steps to support the sector during the immediate coronavirus pandemic, to aid its recovery to meet as much of the UK’s oil and gas needs from domestic resources, and ultimately to deploy the sector’s skills, capabilities and infrastructure to develop the critical net zero infrastructure of the future.
OGUK CEO Deirdre Michie said that the offshore industry can play a critical role in the UK’s transition to net zero, "but it is not a given. Utilising our skilled people, capabilities and infrastructure means we can meet as much of the UK’s oil and gas needs from domestic resources while also stepping up to support the delivery of key low carbon technologies including CCUS at scale.
“We’ve welcomed the support from both the UK and the Scottish government and can confirm we are working on a sector deal proposal. We need to keep working together with governments, regulators and indeed anyone interested in a fair, inclusive, and sustainable transition to deliver what is needed for the sector and the country.”