New net zero requirement for UK oil and gas industry

Dec 20 2020

A revised Strategy from the Oil & Gas Authority has been submitted for laying in the UK parliament, featuring for the first time an obligation on the oil and gas industry to support the UK’s net zero target.

Oil and gas are expected to remain a vital part of the UK’s energy mix for the foreseeable future, and the Strategy positions the UK Continental Shelf (UKCS) as a key enabler for the transition towards net zero carbon. The onus is on industry to step up efforts to reduce emissions from existing and new production; support carbon capture and storage projects; and help unlock clean hydrogen production.

The revised Strategy reflects the ongoing global energy transition. Oil and gas currently provide about 75% of the UK energy consumption and official government forecasts expect oil and gas to remain important to the UK’s overall energy mix for the foreseeable future, including as we transition to net zero.  

As long as this demand exists, managing production and maximising value from the UKCS as cleanly and efficiently as possible is necessary for security of supply, to ensure an orderly energy transition, and to reduce reliance on hydrocarbon imports. This is especially important as some imports, such as liquified natural gas (LNG) has a carbon footprint more than twice that of UK-produced gas.   

The Strategy requires industry to operate in a way consistent with net zero ambitions, lowering production emissions and making serious progress on the solutions that can contribute to the UK achieving net zero. The OGA believes the industry has the skills, infrastructure and capital to help unlock net zero solutions, such as Carbon Capture and Storage (CCS) and hydrogen production. 

In addition to the net zero obligation, the revised Strategy also requires industry to work in such a way that encourages collaboration with the supply chain and actively support carbon capture and storage projects. The OGA will monitor governance closely and ensure that carbon costs are considered in its regulatory decisions. 

Alongside the direction set out in the Strategy, Industry is also making progress in commitments to reducing production greenhouse gas emissions, and as well as stewarding towards emission reductions, the OGA will track, monitor, benchmark and report on this overall emissions reduction, and published its first benchmarking report on emissions from flaring and venting earlier this year.    

The OGA is working with industry and government to unlock net zero opportunities at pace, and many in industry have already made real progress by taking positive action such as announcing targets for production emissions. 

The OGA’s analysis of Energy Integration illustrated the substantial overall net zero potential of the UKCS. Integration has the potential to make a deep and meaningful impact, with a possible 30% contribution towards the country’s overall net zero target, primarily through CCS projects and through CCS plus hydrogen production. Adding offshore renewables (wind, wave and tidal) could take that up to 60% of the abatement required in 2050. 

Dr Andy Samuel, OGA Chief Executive, said, “This is an important moment in the North Sea story, bringing a key sector of the economy into the overall net zero project." 

“We have a clear vision for how to achieve this, supporting industry to reduce production emissions and to provide the infrastructure, expertise and capital to unlock game-changing carbon capture and storage and hydrogen production at scale."  

“With around 30 energy transition projects already underway, this Strategy lays the foundation for that vision to become a reality, unlocking significant high value opportunities and jobs to last long into the future.”   

Read the strategy

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Issue 78 - Nov - Dec 2020

CCUS in Asia: Japan’s Tomakomai project - achievements and future outlook .. China’s policy framework to achieve ‘historic ambition’ of net-zero emissions Norway launches £2.1 billion ‘Longship’ project .. Rystad: Europe could see $35 billion in CCS.....