Associate Feature: Scotland's deep green seas
For 50 years the North Sea has been powering the UK – with the oil and gas pumped from deep beneath the seabed also fuelling much of Scotland’s industrial economy.
Now, we are moving away from oil and gas, but the North Sea is going to remain central to our nation’s energy supplies, powered instead by offshore wind and other low-carbon technologies.
That evolution is already having its impacts, not least among the leaders of the trade bodies representing our offshore industries. This month saw OGUK, the organisation formerly known as Oil and Gas UK, and whose membership used to be focused on the fossil fuel industry, transform itself into Offshore Energies UK.
The new organisation has not just changed its name but is evolving its scope – and now welcomes all the low-carbon energy industries. That includes offshore windfarm operators and companies pushing emerging technologies like hydrogen production or CO2 capture and storage (CCUS).
“We are changing our name to be very clear about what we do,” said Deirdre Michie, chief executive of OEUK. “What it says on the tin is what you get. We’re now representing all the offshore energy industries.”
Michie also dismisses suggestions that the name change is just pandering to the green lobby. “We are now representing an integrated energy mix. This is not ‘greenwashing’ - it’s about the way energy is changing and how our members are leading the way.”
Michie’s key point is that Scotland and the UK are at the start of a long and difficult path. Right now, the nation gets 73 per cent of its energy from oil and gas. The vision is to get to net zero – meaning no overall emissions – by 2050. Attaining that vision will be a huge challenge needing careful planning to ensure that change happens, while keeping the energy flowing and the lights on.
“When the Scottish Government made its commitment to net zero by 2045, we produced our own roadmap for the phase to 2035,” she explains.
“That led into the North Sea Transition Deal, which we signed with the UK Government in 2021. A key commitment of the deal is focused on reducing our production emissions – those generated by extracting, processing and transporting oil and gas. We’ve pledged cuts of 50 per cent by 2030 and 90 per cent by 2040, with a target of becoming a carbon neutral basin by 2050.
“The Deal also covers the UK’s offshore oil and gas producers’ scaling-up of technologies like hydrogen and CCUS which can support the decarbonisation of the UK’s other heavy industries.
“I think the oil and gas sector has a very powerful part to play today and in the future. Our role is to get the balance right between security of energy supply and driving forward to net zero. I believe we can do both and have a managed transition that is fair and just.
“The important thing is to maintain energy supplies during that transition – we mustn’t drive one industry [oil and gas] off a cliff before we get the renewable industries up and running.”
The rebranded OEUK will still be a powerful advocate for major energy companies as well as the industry’s extensive supply chain. However, they are changing too. All have declared their support for the energy transition and pledged to add their financial and operational weight to expanding net zero carbon projects.
Shell, BP and TotalEnergies were all successful in the recent ScotWind offshore leasing round, as were more than a dozen supply chain companies whose history was mainly in the oil and gas sectors. In fact, OEUK member companies were involved in 13 of the 17 ScotWind projects. As things stand, energy from renewable sources is on track to overtake oil and gas production by the end of the decade.
The spotlight is on cleaner and greener sustainable energy from the North Sea, but the offshore oil and gas production will remain essential to both the energy industry and the UK for many years yet.
OEUK believes it will have a crucial role in the transition. Michie says the transition will range from grassroots work such as helping workers move from traditional to new industries, to working with policymakers to ensure that the lights stay on. “Energy security is going to become increasingly important with the continuing uncertainty over global markets and the political volatility in Europe.”
The quest for sustainable clean energy from the North Sea is at a pioneering stage right now that makes it comparable to the frantic rush for ‘black gold’ back in the 1970s, when applications to drill for oil and gas won easy approval.
Nowadays environmental and climate change concerns have moved centre-stage, with renewables increasingly being seen as the industry’s real long-term future.
“We are having to be quite brave, I suppose,” says Michie. “We have to be prepared to think outside the box. We know what the goal is. The goal is the big challenge of achieving net zero by 2050. We see that goal but we also see the challenges along the way. To get there we are going to need resilience, innovation and a pioneering spirit.
A key point, says Michie, is that although demand for oil and gas might decline it will never disappear. That’s partly because they are a vital source of raw materials as well as energy.
“We want to provide what the nation needs for the transition – we will never produce more oil and gas than the UK requires. But if you look out to 2050 and beyond there is still, in every scenario, demand for oil and gas and to ignore that would mean we would lose all the benefits of producing from our own resources and would have to increase imports as a consequence.”
That predicted continuing demand is why, besides promoting renewables, OEUK continues to press for development of new fields – like the Cambo oilfield in the North Atlantic, west of Shetland. It would have produced 175 million barrels of oil in its first phase. That sounds a lot but it’s about enough to fuel the UK for just a few months.
Development was halted last year when Shell pulled out of its partnership with Siccar Point, the main developers. Since then, Cambo has become a touchstone for environmental campaigners who say it is impossible to reconcile opening a new oil field with the need to reduce emissions to meet climate change targets.
Michie argues the opposite, warning that many of the UK’s older oil and gas fields are depleted and will be closing down. Cambo and fields like it, she says, are needed to replace those lost supplies. “If the UK lets its North Sea supplies dwindle it will create an ‘energy gap’ which will have to be filled by higher emission imports.
“That’s because the real driver of oil and gas consumption is not the oil companies but the UK’s consumers. The UK has 24 million homes heated by gas, plus 32 million vehicles running on diesel and petrol. About 41 per cent of our power comes from gas fired power stations.”
Michie argues that until all that infrastructure is replaced, it’s far better to fuel them from UK-produced oil and gas. “That not only boosts our energy security but also minimises our emissions because oil and gas from overseas generally has a higher carbon footprint – meaning the emissions generated by extracting, processing and transporting it.”
It also boosts the government’s income from taxes. “Over the last 50 years the taxes on UK oil and gas production have contributed £375 billion to the Exchequer and supported hundreds of thousands of jobs,” said Michie. “It’s logical and in the UK’s interests for new fields like Cambo to go ahead as part of the managed transition.
“Remember, the UK oil and gas sector has committed to cut emissions to ensure we play our part in delivering net zero while supporting energy security and that commitment takes account of the fact that many older fields will close down and new ones be opened. The overall trend in both production and emissions will remain downwards.”
Influential voices echo this stance. Prime Minister Boris Johnson, in a recent interview with the Press and Journal during a visit to Rosyth in Fife, said “everybody credible” understands the oil and gas sector cannot be abandoned in the near term and a “proper transition” to net zero can only be achieved with ongoing fossil fuel extraction as part of the energy mix. OEUK says that kind of political support is needed from all parties to ensure investment is attracted into the basin and people’s livelihoods in traditional energy communities like Aberdeen, along with their vital skills, are safeguarded.
Michie believes that, properly managed, the transition to low-carbon energy will be good for workers as well as the nation. She recently told the Energy Voice website: “We seek to deliver a managed transition that supports the UK’s energy security as well as its climate goals.
“That transition means making sure we take our skilled workforce on this journey. Our sector’s skills are highly transferable and there is potential for them to work across different industries like offshore wind, hydrogen and carbon capture too.”
Michie believes OEUK’s expansion reflects changes in the UK energy industry that could make it a world leader. “If we in the UK can get it right, the solutions we find are very exportable,” she says.
Asked outright if there might come a day when the oil runs out, she replies: “The stone age didn’t come to an end because we ran out of stone. If North Sea production were to end it would be because we have moved on and found new technologies and new sources of energy to replace it. We can ensure it happens within the context of a fair and just, carefully managed transition.
“But until then we should recognise the importance of maintaining the UK’s rich and diverse sources of energy. For the next few decades at least, our nation’s future depends on it.”
This article is sponsored by Offshore Energies UK.