The North Sea oil and gas sector must regain lost public trust by proving through action that it is committed to the energy transition, according to the leader of the UK industry regulator.
Andy Samuel, chief executive of the UK Oil & Gas Authority (OGA), said the North Sea industry has the potential to set a global example by reducing operational emissions through electrifying platforms and integrating facilities with offshore wind, while also delivering large carbon capture and storage projects.
However, he is frustrated at the poor behaviour of some operators in the face of intensifying public concern about climate change and legally binding targets for the UK to become a carbon-neutral economy by mid-century.
“I think trust needs to be re-earned, because I just don’t think the industry — probably for good reason — is particularly trusted,” Samuel told delegates at the SPE Offshore Europe 2021 virtual conference.
“I think the way to do that is through action. This is a real emergency and we’ve got to move apace.
“And if there’s one thing that frustrates me, it is that some in industry are still mucking around in commercial disputes, stuff that is just not important when you’re facing an emergency.
“So, everyone’s got to put aside petty squabbles, focus on the important stuff, work together and actually deliver on the plan.”
Samuel called the North Sea Transition Deal, signed in March by the industry, the government and regulators, a “global exemplar”.
In tandem with the deal, the UK has committed to establishing a “climate compatibility checkpoint” for future oil and gas licensing rounds to ensure new developments are aligned with the government’s climate change ambitions.
Samuel warned that there are likely to be “consequences” for industry if it fails to deliver on its deal commitments, which include a pledge to cut operational emissions by 10% by 2025 and 25% by 2027 ahead of a previously announced target of a 50% cut by 2030, which remains in place.
“I can tell you the UK government will be looking at this industry and I imagine the climate compatibility checkpoint will have an element of teeth, so that if the industry doesn’t deliver on the deal, there will be consequences,” he said.
“And delivering on the deal actually requires action now, because 2025, 2027 are not a long way away.”
Samuel said successfully delivering platform electrification to replace conventional diesel generation on platforms would be a “vital demonstration” that the industry understands the need for change.
“It’s not easy, but we would argue it’s an imperative,” he said. “It’s what industry have signed up to under that North Sea Transition Deal.
“It requires action also and support from government on things like grid connections. So, it’s a real collaboration. It’s going to require regional working and it needs to be done at a pace.
“The exciting aspect to that, of course, is the potential to integrate with new technologies like floating offshore wind and actually create a real legacy, an offshore grid that is very much fit for the future.
“This would really, I think, demonstrate an industry that gets the transition and, again, is leading the way, along with our fellow North Sea partners, the Norwegians, and turning the North Sea into something that we can all be proud of.”
Also on the panel was Simon Roddy, senior vice president for Shell’s upstream business in the UK, who said his company was “learning and learning fast” about platform electrification, but challenges remain.
Shell has formed a partnership with TotalEnergies, BP and Harbour Energy to look at replacing conventional diesel-powered generation with electricity generated from shore at assets in the central North Sea.
“I think we’ve come a long way in understanding exactly what that’s going to take to move forward,” he said.
“I think we’ve learnt a lot. It’s still going to be a challenge. But I think we see a path forward and we’re indeed doing our very best to move at pace.”
Samuel and Roddy also talked about Siccar Point Energy and Shell’s proposal to develop the Cambo oilfield in the west of Shetland area, which has been at the centre of opposition from environmental groups and sections of the public.
Samuel described Cambo as a “lightning rod” that is “bringing to the fore a very polarised debate” about oil and gas use in the UK.
Shell holds a 30% non-operating interest in Cambo.
Roddy said the controversy called into question the future of the North Sea oil and gas industry and its ability to invest in low-carbon forms of energy.
Roddy said “investment stability” for Shell was “absolutely key”.
He said: “It’s really not about Cambo specifically, it’s about the future of home-produced oil and gas in the UK, which is absolutely consistent and allied with net zero ambitions.”
The reality, he said, is that the UK is a net importer of oil and gas, and in most scenarios will continue for some time to need more oil and gas than can be met by indigenous supplies alone.
“Today, the gap is met by imports. Restricting home-produced supply would very likely only drive up import levels, offshore emissions and negatively impact jobs and the economy,” Roddy added.
“Therefore, in parallel to investment in low-carbon energy, we believe it’s crucial that the UK continues to focus on home-produced oil and gas supply.
“It might sound counter-intuitive, but actually focusing on UK oil and gas is in some sense enabling the energy transition and the road to net zero, because as well as maintaining energy security and supporting jobs in the economy, it provides the economic basis for investment in new low-carbon solutions.
“And this is the essence of what’s laid out in the North Sea Transition Deal.”