The offshore energy industry’s journey to net zero

I began my career with a degree in Chemistry from Manchester University followed by a Ph.D?from Cambridge.?I’m currently studying for a Masters in Renewable Engineering at the University of Aberdeen. ?

After 11 years with Shell in a variety of operational roles in the Netherlands, the USA, and the Philippines, I joined CNR International in 2002 where I had overall accountability for its businesses in the UK and Africa.?

A month ago, against the backdrop of a potential recession, energy security pressures, a major conflict in Ukraine and, sometime soon, a general election where energy and the cost of living will be top of the political agenda, I started my role as the new CEO of Offshore Energies UK , the leading trade body for the UK’s offshore energy industry. It’s certainly a busy time to take the helm.

I’ve always been proud of the people in our industry and what we deliver together. The North Sea has supported the nation for 50 years with a steady flow of homegrown energy to keep lights on, vehicles moving and the whole economy working, while also supporting hundreds of thousands of jobs. Currently oil and gas provide 75% of the UK’s total energy, including 42% of electricity generation. Meanwhile, 85% of homes in the UK rely on gas boilers for heating, and 10% of the oil and gas we produce is used to make plastics, clothing, medicines, carpets, computers and more.

At OEUK, our members understand and support the drive to a net zero world. We recognise that this is a transition, and that the energy mix will not change overnight. Oil and gas will continue to support the UK’s energy needs for the foreseeable future. We need to continue to support our ongoing activity while embracing the opportunities that the energy transition offers.

It is right that our industry is changing. Our people understand and support the drive to a net zero world. We recognise that this is a transition, the energy mix will not change overnight. We need to continue to support our ongoing activity while embracing the opportunities that the energy transition offers.

We are committed to investing in getting to net zero emissions from our operations and have clear targets in place. In 2021 the industry achieved a 20% in total emissions reduction versus the 2018 benchmark. There is more to do, and the electrification of our platforms, which is necessary to achieve our targets remains a key challenge, but the industry’s drive is evident.?

With our focus on investment to reduce emissions in line with the government’s net zero ambitions, it is right to support investment in our North Sea fields, as well as in other low-carbon technologies.

We are seeing new opportunities in the energy transition in carbon storage, hydrogen, and wind. Our industry is stepping up and leading. To be successful, we must work together across the sector and with government. We must continue to nurture our existing supply chain and use this as the platform to drive the future opportunities. Our members are involved in 9 of the 17 successful awards from the Scot Wind Licensing round – testament to the sector’s commitment to the energy transition.

By managing the transition well, we will create excellent jobs, real value for the country, real value for our communities, and huge export opportunities.

However, if the transition is managed poorly, our existing supply chain will be undermined, and as a result the UK will import the energy transition. In this scenario, many thousands of new jobs and the value add for the UK will be a missed opportunity.

Our sector has committed to a target of local content of greater than 50% in new energy projects and decommissioning. I’ve already seen OEUK’s members in action to achieve this. It was great to attend OEUK’s Share Fair in February, an event to bring suppliers and clients together to discuss future opportunities.

However, despite the headlines of major operators recording record global profits, it is clear that our sector in the UK is suffering. The profits that are hitting the headlines are not being made in the UK.

We had a slow-down in activity due to COVID and have now been hit by tax changes that undermine investor confidence at a critical point for the sector. Without continuing to attract investment, our supply chain will contract, and operators will move capital and expertise elsewhere. Under these circumstances, it’s hard to envisage a successful transition. We need to fix that.

So, after 40 days in my new role, what do we need to prioritise?

1.??????Align with governments urgently to deliver an environment that allows continued investment in the sector to meet our energy demands.

2.??????Deliver on our sector plans for the decarbonisation of oil and gas production.

3.??????Use our existing operational strength and supply chain capability as a platform to seize the opportunities that will arise during the transition. We cannot do this without delivering on priorities 1 and 2.

4.??????Inspire our teams to keep driving. None of this is going to be easy; but the great people in our sector are our greatest strength. Working together we can achieve so much.

We have an industrial heritage that we are rightly proud of, we need to use this strength as the springboard to the future.