NSTA Chief Says Next Chapter of North Sea Can be its Best
The next chapter of the North Sea can be its best chapter.
That’s what was stated in the transcript of a speech North Sea Transition Authority (NSTA) Chief Executive Stuart Payne delivered during industry body Offshore Energies UK’s (OEUK) annual conference in Aberdeen this week.
“We all know that oil and gas production in the UK is in decline,” Payne noted in the transcription, which was sent to Rigzone recently.
“Our projections show a continued fall through to 2050. However, the rate of this decline is not guaranteed. The projects that deliver those projections require further investment. If we get the transition wrong, the decline could be much more rapid,” he added.
“If we get it wrong it means a lost opportunity to decarbonize production, leaving only older, dirtier assets in the basin. And it means that world class supply chain dwindling or moving abroad, just at the time we need it to deliver the energy transition,” he continued.
“If we can get this right however, then the UK can be a shining example of how to transition an oil and gas province into a clean energy super basin. If we get this right the next chapter of the North Sea can be its best chapter,” he went on to state.
In the transcribed speech, Payne noted that the NSTA believes the way to make this transition work is through the integration of different energy systems.
“We are heading into a new era of hub-based development,” he said.
“Oil and gas hubs today can become decarbonized through connections with offshore wind farms, or power from shore, enabling cleaner production,” he added.
“Oil and gas production in the future will be the feedstock for industrial processes, with the carbon dioxide emissions captured, transported, and stored offshore, maybe through repurposed pipelines and into depleted fields. This infrastructure will be powered by the clean electricity seeded years before,” he continued.
“By integrating these systems, we make a virtue of what is currently a challenge – how to co-locate different technologies in the same small space of sea,” he said.
Basics
In the transcribed speech, Payne stated that, if industry is to get the chance to create this next chapter for tomorrow, then it’s essential that they’re fulfilling the basics today.
“I don’t mean basic because they are easy, but basic because they are the core foundations of a credible and successful industry,” he said.
“The first of those basics is safety … Nothing any of us is doing matters more than this. The second basic is emissions reduction,” he added.
“Every other sector of the country is working to decarbonize its processes to reach net zero by 2050, and oil and gas is no different. This industry has committed itself to this net zero goal, including interim targets of reducing emissions 50 percent by 2030 and 90 percent by 2040,” he continued.
“Let’s be clear that this is the absolute minimum required. We have seen good progress so far,” he went on to state.
Another basic highlighted in the transcribed speech was decommissioning.
“The most expensive single part – around 50 percent of all costs – in decom is well P&A,” Payne stated in the speech.
“When we grant licenses, they include a commitment to decommission wells properly and in a timely manner. Frankly, whether these obligations are met is a test of industry’s credibility. A clear and visible test of whether the sector can be trusted, of whether it pays its bills or not,” he added.
“The good news is many companies are fulfilling their duties. Decommissioning activities have been carried out on approximately 120 wells a year over the last five years. The bad news is many aren’t. There are more than 1,500 wells that will need to be decommissioned by 2030, including 500 that have already missed their original deadline,” he continued.
Payne noted in the speech that missed deadlines have a negative impact on industry’s reputation and added that it makes it harder for the supply chain to plan effectively, pushing up costs.
“Decommissioning can be a vital bridge between oil and gas work today and carbon storage work in the future,” he said in the speech.
“But if rigs continue to leave the basin because they don’t have a clear sight of upcoming work, these costs will only increase, making the transition harder to achieve and more expensive,” he added.
“The NSTA is taking action here. As well as dealing with individual companies through our regulatory processes, we have launched a consultation on our plan to shine a light on operator performance,” he said.
Another basic highlighted in the speech was diversity.
“Last month I chaired a roundtable meeting with our new minister. We invited many of the senior figures from our industry and had a cast list of about 15 people. Only one of those was a woman. Everyone was white,” Payne said.
“This isn’t just a glib, ‘woke’ observation. I don't raise this to make me feel better. It matters … It matters because to try and do these things without the best talent and a diverse and inclusive workforce is like trying to win with only half the squad available,” he added.
“So, a call to action to all of us - we need to up our game in how we appeal to talent from all different backgrounds to come and work in this sector, especially talented professionals early in their careers,” he continued.
OEUK CEO
Rigzone contacted OEUK for comment on Payne’s speech. In response, the industry body sent Rigzone a transcription of a speech delivered at the conference by OEUK CEO David Whitehouse.
“The decisions made by governments in the days, weeks and months to come will have consequences for the future of our energy landscape, consequences for the future of our country,” Whitehouse noted in the transcription.
“Delivering secure and low-cost energy sits at the very foundation of good government. Energy strategy must outlast this election cycle, and the next, and the next. It is the lifeblood of our nation, powering homes, businesses, and industries,” he added.
“We need our governments working together … We need long term planning and stability. We need collaboration between governments and industry and the workforce,” he continued.
In the transcription, Whitehouse said the UK has an opportunity to be a true energy world leader but added that “a starting point must be an industrial strategy built on partnership, that leverages our industrial strengths, recognizes that the journey to net zero is vital but will take time, puts innovation and technology at its heart, and ensures the UK is globally attractive for the energy investment we need”.
Whitehouse stated in the transcription that the North Sea, its people, skills, and companies are a strength and added that they “remain a vital part of our energy ecosystem”.
“Our world class supply chain companies use the revenue from oil and gas activity to invest in our energy future. A homegrown energy future,” he said.
“But that ecosystem, as we have made clear, is under threat,” he warned.
“With four tax changes in the last two years, the UK has become an increasingly challenging place to do energy business,” he added.
“This is an industry that requires stability and supportive policy to make the massive investment decisions necessary to secure our energy future,” he continued.
Whitehouse noted in the transcription that the journey to net zero will require an estimated GBP 1.4 trillion ($1.8 trillion) of investment in the UK by 2050 and said the lion’s share of that will come from the private sector.
“UK offshore energy companies alone could invest GBP 200 billion ($265 billion) in homegrown energy production this decade. But without a clear path to return on investment and unstable fiscal regimes, we risk driving away the very businesses we need,” he said.
“The innovative technologies that will drive our energy future – floating wind, carbon capture and storage, hydrogen production – are not born of thin air,” he added.
“Those technologies are the result of decades of expertise, engineering skill, and dedication of the people within this existing offshore energy industry,” he continued.
“These technologies are the result of every one of us in this room right now. The very people needed for our energy future,” he went on to state.
Whitehouse warned in the transcription that “the energy transition will not wait for us”, adding that “investors will simply take their capital to other basins around the world”.
“We cannot let that happen,” he said.
“This is not just about energy, it is about our economic security, our environmental responsibility, and our national sovereignty. It is about ensuring that the UK remains a leader, not a follower,” he stated.
Rigzone contacted the UK Department for Energy Security and Net Zero (DESZN), Scotland’s Energy and Climate Change Directorate, and HM Treasury for comment on Whitehouse’s speech.
In response, a Scottish government spokesperson told Rigzone, “the Scottish government understands the importance of long term certainty in attracting investment within a globally competitive market”.
“Last week we published a Green Industrial Strategy, which identified the sectors in which Scotland has a competitive advantage. It commits to long term action to sustain an environment that is attractive to investors, including action on research and development, skills, and tackling barriers around planning and consenting,” the spokesperson added.
“This represents a clear package of measures to help ensure businesses, workforces, and wider communities are supported in seizing the enormous opportunities of the green economy,” the spokesperson continued.
At the time of writing, DESZN and HM Treasury have not yet responded to Rigzone.
The NSTA regulates and influences the oil and gas, offshore hydrogen, and carbon storage industries, its website highlights, adding that the organization helps drive North Sea energy transition.
OEUK describes itself as the leading representative body for the UK offshore energy industry and “a not for profit membership organization with a history stretching back five decades”.
To contact the author, email andreas.exarheas@rigzone.com
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