The UK’s offshore oil and gas sector today made an ambitious pledged to wipe out half of its emissions over the next decade.
Representative body Oil and Gas UK (OGUK) added talks had “formally” begun with Westminster on a “transformational” sector deal.
It said the planned emissions reduction from North Sea operations would have the same effect as taking nearly “two million cars off the road”.
But OGUK warned of a “gap” between “what is currently technically feasible and what is commercially feasible” to deliver its green goals.
It also acknowledged that between half and two thirds of emissions cuts in the next 10 years would come from fields ceasing production.
The new target covers emissions from offshore platforms, onshore processing terminals (but not refineries), North Sea oil supply vessel voyages and helicopter flights.
It builds on the September 2019 publication of North Sea industry’s “roadmap” to becoming a net-zero basin by 2050.
The roadmap was issued against a backdrop of increasingly loud calls from green groups and investors for the oil sector to clean up its act.
Since then, the industry has been blindsided by a slump in crude prices, partly caused by the Covid-19 pandemic’s impact on demand, leading to thousands of job losses and projects being cancelled.
But the sector appears determined to bolster the UK’s “green economic recovery” from Covid.
Targets will be met partly through flaring reductions and equipment upgrades.
More capital intensive initiatives like carbon capture and storage will take longer to achieve scale, but should help the sector lower or offset its emissions by 90% by 2040.
Perhaps the most ambitious idea involves powering offshore platforms with low-carbon electricity from onshore grids or offshore wind farms.
Well over half of the industry’s carbon dioxide emissions come from offshore electricity generation supplied by gas turbines.
A number of major operators have been exploring offshore electrification, but OGUK said the “technology, resources and infrastructure” were not ready and would be too expensive to implement, without policy support.
The UK would have to develop an offshore electrical distribution network and slash the length of time need to obtain consents and licences for offshore renewables projects.
Power-from-shore has been achieved on newer installations off Norway.
OGUK and its members are discussing a range of options with government “in the context of the sector deal” to help “bridge gaps”.
OGUK chief executive Deirdre Michie said a deal could “unlock” the full potential of the industry to support a green recovery.
Ms Michie also said the industry needed a “fair, inclusive and sustainable” energy transition to support jobs and companies left reeling by Covid and the oil price crash.
UK Energy Minister Kwasi Kwarteng welcomed the new emissions targets and said a sector deal would help the industry’s sustainability drive.
The oil and gas industry has been trying to secure a deal from the UK Government for years.
An “outline” of revised proposals was presented to Mr Kwarteng on Thursday and formal talks are now up and running.
Paul Wheelhouse, energy minister for the Scottish Government, which on Friday pledged £62 million to help oil and gas firms support the transition to low carbon, said OGUK’s target was a “significant step” in Scotland’s push towards net-zero by 2045.
Jake Molloy, chairman of the Offshore Coordinating Group, a coalition of trade unions, said he was 100% behind using a sector deal to support the energy transition and protect jobs.
But Mr Molloy warned a lot of the work connected with the emissions reductions, such as hydrogen and carbon capture was “still some way off”.
He stressed action is needed “now” to make sure skilled workers are retained and can develop their careers.
Oil and Gas Authority chief executive Andy Samuel said: “In January the OGA challenged the UK oil and gas industry to commit to clear, measurable, production emission reduction targets. Industry has responded and engaged positively and we welcome this significant and ambitious commitment.
“It is now crucial industry keeps pace on efforts to reduce its own footprint and also puts a strong focus on achieving impactful emissions reductions in the near term.
“Therefore we will incorporate these targets into our data benchmarking to track and monitor performance and progress.”
Mel Evans, senior oil campaigner for Greenpeace UK, said: “OGUK’s pledge to cut operational emissions, and not the emissions resulting from the burning of fossil fuels, is a pitiful attempt to respond to the climate crisis.
“Using electricity to drill for yet more oil is a far cry from what real climate action looks like, and there’s no proof that carbon capture and storage will work at scale.
“Renewable energy is the way forward. We urgently need a green recovery from this pandemic, giving workers, supply chains and energy communities a route away from fossil fuels and towards renewables – boosting jobs growth and generating cheaper power for consumers.”
Steve Phimister, Shell’s upstream director for the UK and Ireland, said: “With this announcement, the industry’s set itself a clear and challenging goal to align with the UK’s Net Zero targets.
“It should galvanize efforts across the sector, and increase the speed of change in UK energy, while maintaining security of supply.
“Emissions from operations will be reduced while the industry, government and regulators work to develop bold projects like CCS (carbon capture and storage) and hydrogen that will help society decarbonise and reach net zero.”