Oil and Gas Industry Must Support UK's Net-zero Target, Regulator Says


UK's Oil & Gas Authority on Wednesday submitted a revised strategy for laying before the UK Parliament featuring for the first time an obligation on the oil and gas industry to support the UK’s net-zero target.

"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," OGA said.

As long as this demand exists, managing production and maximizing 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 country's oil and gas regulator said.

OGA's revised 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," the OGA said.

Related: OGA: Offshore Platform Electrification Vital For 2050 Net Zero Emissions Goal

In addition to the net-zero obligation, the revised Strategy also requires the industry to work in such a way that encourages collaboration with the supply chain and actively supports 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," OGA added.

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, it said.

Central Obligation

Under the revised strategy - see the PDF here - OGA has shared what it calls the Central Obligation:

"Relevant persons must, in the exercise of their relevant activities, take the steps necessary to: 

a. secure that the maximum value of economically recoverable petroleum is recovered from the strata beneath relevant UK waters; and, in doing so, 

b. take appropriate steps to assist the Secretary of State in meeting the net-zero target, including by reducing as far as reasonable in the circumstances greenhouse gas emissions from sources such as flaring and venting and power generation, and supporting carbon capture and storage projects."

Energy integration

The OGA said that its 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," the OGA explained.

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.”  

Energy Minister Kwasi Kwarteng said: "As the first major economy to set a target of net-zero carbon emissions by 2050 the UK is leading the world towards a cleaner future. Only last week we made another ambitious commitment to cut our greenhouse gas emissions by at least 68% compared to 1990 levels over the next decade, which will see us go further and faster than any other nation.

Minister Kwarteng said while the country transitions to a low carbon future, oil and gas remain an important part of the energy mix and that he was delighted to see net zero placed at the heart of this strategy.

Scotland’s Energy Minister Paul Wheelhouse said:   “I welcome the publication of the Oil and Gas Authority’s revised strategy which includes a requirement for industry to support the UK target of net-zero greenhouse gas emissions by 2050 and I know OGA also recognizes their strategy will, in its delivery, also support the delivery of Scotland’s earlier net zero target for 2045."

“This revised strategy reflects a commitment from the oil and gas sector to net zero, with the sector already playing a positive role in the transition by channelling resources and its innovative supply chain to help design the diverse energy system we need for the future.  

“The Scottish Government’s Climate Change Plan update, also published today, will, in giving clarity on pathways, give businesses confidence to invest in a low carbon economy. By working together, we can progress at pace and capitalize on the opportunities the energy transition will bring.”

The strategy will come into force post laying subject to Parliamentary process.

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