UK Gov Agrees North Sea Deal with Industry

UK Gov Agrees North Sea Deal with Industry
The UK government vowed Wednesday that high-skilled oil and gas workers and the supply chain will not be left behind in the transition to a low carbon future.

The UK government vowed Wednesday that high-skilled oil and gas workers and the supply chain will not be left behind in the transition to a low carbon future as it agreed a North Sea Transition Deal with the industry.

The deal will support workers, businesses, and the supply chain through the transition by harnessing the industry’s existing capabilities, infrastructure, and private investment potential to exploit new and emerging technologies such as hydrogen production, carbon capture usage and storage, offshore wind, and decommissioning, the government noted.

Key commitments in the North Sea Transition Deal can be seen below:

  • Targets to reduce emissions by 10 percent by 2025 and 25 percent by 2027 and a commitment to cut emissions by 50 percent by 2030.
  • Joint government and oil and gas sector investment of up to $21.9 billion (GBP 16 billion) by 2030 to reduce carbon emissions.
  • A commitment that, by 2030, 50 percent of the sector’s offshore decommissioning and new energy technology projects will be provided by local businesses.
  • The appointment of an Industry Supply Chain Champion who will support the coordination of local growth and job opportunities with other sectors, such as carbon capture usage and storage and offshore wind.

The UK government also revealed that it will introduce a new climate compatibility checkpoint before each future oil and gas licensing round to ensure licenses awarded are aligned with wider climate objectives, including net-zero emissions by 2050. The government said the checkpoint will use the latest evidence, looking at domestic demand for oil and gas, the sector’s projected production levels, the increasing prevalence of clean technologies, and the sector’s continued progress against its emissions reduction targets.

If evidence suggests that a future licensing round would undermine the UK’s climate goals or delivery of net zero, it will not go ahead, the government confirmed. The government noted that it will design and implement the checkpoint by the end of 2021 through “extensive engagement with a wide range of stakeholders”.

In a further move to support the shift to green technology and renewable energy in the UK and around the world, the UK government also announced that it will no longer provide support for the fossil fuel energy sector overseas from March 31, 2021. This follows the Prime Minister’s commitment to end taxpayer support for fossil fuels projects overseas as soon as possible at the Climate Ambition Summit last December and the decision on the date to end this comes after consultation with industry.

“Today, we are sending a clear message around the world that the UK will be a nation of clean energy as we build back better and greener from the pandemic,” UK Business and Energy Secretary Kwasi Kwarteng said in a government statement.

“We will not leave oil and gas workers behind in the United Kingdom’s irreversible shift away from fossil fuels. Through this landmark sector deal, we will harness the skills, capabilities and pent-up private investment potential of the oil and gas sector to power the green industrial revolution, turning its focus to the next-generation clean technologies the UK needs to support a green economy,” he added.

Commenting on the deal, the chief executive of Oil & Gas UK (OGUK), Deirdre Michie, said, “the North Sea Transition Deal is a transformative partnership which will harness the expertise of the UK offshore oil and gas industry to urgently meet the country’s climate ambitions of net zero emissions by 2050”.

“It will unlock billions of pounds of investment and see government and industry work together to deliver a homegrown energy transition, realizing innovative low carbon solutions that can be exported globally,” Michie added.

“The deal will safeguard UK energy security, providing affordable energy to millions of households, secure tens of thousands of jobs in industrial heartlands across the country and support the UK economy. It is the first deal of its kind by any G7 country and a striking example of the UK showing global leadership on climate change ahead of COP26,” the OGUK chief went on to say.

Subsea UK’s chief executive, Neil Gordon, said, “with this deal we now have genuine collaboration and financial commitment from industry and government to deliver a just transition to net-zero that balances the country’s current and future energy needs, will protect and create jobs through the development of new world-leading projects and technologies in cleaner, greener energy which will be in demand globally”.

“It’s encouraging to see the prominence of the supply chain in the deal. Only by having the UK’s energy supply chain at the heart of this, fully engaged in the opportunities and understanding their enablers, will we deliver the real net gains in terms of net-zero, jobs, and GVA,” he added.

“Working together with industry and government, the supply chain will be able to identify the gaps and build the capabilities, including new research, technologies and skills, required to tender and win work nationally and internationally, propelling these projects forward, driving exports and delivering value for the UK,” Gordon continued.

The Chief Executive of the Oil & Gas Authority (OGA), Andy Samuel, said, “this deal marks an exciting new chapter for the North Sea, confirming energy transition in action”.

“It is the culmination of a lot of work between government, industry and the OGA. As long as oil and gas remain part of the UK’s energy mix, they must be produced more cleanly and in line with net zero,” he added.

Michael Burns, an energy partner at law firm Ashurst, said, “the energy transition is full-steam ahead”.

“Human capital is key to delivering the transition – be that experience of delivering large-scale, capital intensive projects in energy companies, development of nascent technologies in the tech industry or designing new energy efficiency solutions in the digital sector,” he added.

“Government support is welcome as part of ensuring that those skills are effectively captured today for the benefit of speedy pursuit of the transition,” Burns continued.

To contact the author, email andreas.exarheas@rigzone.com



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