According to the International Energy Agency, natural gas currently accounts for 23% of global primary energy demand and nearly a quarter of electricity generation.
In the UK alone, 23 million homes (that’s about 8 out of 10 households) rely on gas for heating, directly or indirectly through gas powered electricity generation, and it’s crucial for many industrial and manufacturing processes.
Gas is at the heart of Neptune Energy. Our portfolio already has one of the highest gas weightings in the global industry, with a gas-oil production split today of 72% to 28% and a firm commitment to maintain a gas-weighted position in the years ahead.
This month’s Security of Supply report from OGUK highlights the importance of the sector today in meeting domestic energy demand – with UKCS production providing the means to meet 63% of the country’s oil and gas requirements – and in not only supporting around 300,000 jobs but providing billions of pounds to the UK economy. On gas specifically, figures in the OGUK report provide a compelling case for its value; gas is the largest contributor to the UK’s electricity generation mix, accounting for 39% of electricity last year, just shy of double the 20% level met by wind, the second-greatest source.
Neptune UK alone supports 2,800 jobs in the UK including direct, indirect and induced employment, and for every Neptune employee, around 16 jobs are supported in the UK, predominantly via our spend on capital goods and services. We also support $438 million in Gross Value Added contributions to UK GDP; for every $1 GVA directly generated by Neptune, another $1.5 is supported elsewhere in the UK economy.
Our operated gas production facility in the Southern North Sea, Cygnus, is a significant contributor in the UK, meeting around 6% of UK domestic gas demand. Our teams are working tirelessly to assure safe production operations offshore and continue to supply the gas needed for everyone at home. Against the backdrop of the COVID-19 outbreak, we are working across industry with the support and facilitation of OGUK to ensure best practices are shared and adopted quickly to support safe operations and the safeguarding of our people
Looking to the decades ahead, gas continues to be key and has a pivotal part to play in achieving the 2050 net zero targets set by the UK government.
Gas is a cleaner source of energy, producing around 50% fewer CO2 emissions than coal-fired power and having a positive impact on air quality. The same OGUK report emphasises how gas provides the flexibility needed to address fluctuations in supply over and above the contribution of renewables such as wind, which is intermittent due to the variability of the weather, or meet peaks in demand.
The technical skills and capabilities developed over decades within our industry can ultimately also support emerging energy industries such as carbon capture and hydrogen, as well as more established areas like offshore wind.
So, even when a greater share of power generation is met by alternative sources, gas is a critical part of our UK energy mix both now and in a low carbon future , providing continuity of energy supply in support of the energy transition.
In reducing emissions, Neptune is playing a leading role; as set out in our Environment, Social and Governance strategy earlier this year, we have targeted a global carbon intensity level of 6kg CO2/boe by 2030 from our operated production, representing a 60% reduction from forecasted levels if no action was taken. That’s well below the industry average of 18kg CO2/boe. And we have one of the lowest methane intensities in the sector at 0.02% now, targeting net zero methane emissions by 2030.
At Neptune, we fundamentally believe our industry’s purpose is to make a positive contribution to society and its energy needs. Currently, we’re doing that along with our industry colleagues and peers in the face of unprecedented circumstances. The very grave situation involving COVID-19 and the challenging low commodity price environment creates enormous tension for the entire sector in the areas of safe operational continuity, supply chain reliability and viability, forward looking investment levels and skills retention to name but a few. Yet, the UK requirements for a sustained and secure supply of affordable energy has never been greater to meet both the demands of today and those in support of Net Zero 2050.
Neptune remains committed to being part of the energy transition solution and we believe gas has a strategic role to play both in the UK and globally – today and tomorrow.
Alexandra Thomas, UK Managing Director, Neptune Energy