Veri Energy says UK’s ‘team of talented engineers is reducing’

Engineers leading efforts to develop a low-carbon future at the Sullom Voe oil terminal in Shetland are being driven away from the UK due to government “self-sabotage”.

“Our team of talented engineers is reducing,” said Veri Energy director Donna Sutherland, as she bemoaned the UK’s “very punitive fiscal regime” and blamed it for driving talented workers to other regions.

“One of the team members’ capability is fantastic; he delivered a project one billion pounds under budget and a year ahead of schedule. That’s the talent that exists in the north-east of Scotland in oil and gas.”

© Supplied by EnQuest

This comes amid warnings from trade unions, oil operators, suppliers, and academics that job losses are on the horizon if the country does not manage its energy transition effectively.

Sutherland added: “I think it’s been self-sabotage in the UK for the fact of the very punitive fiscal regime that exists, and unfortunately, we haven’t been able to create the resilience, we haven’t been able to bolster our engineering team because of the realities of the very challenged fiscal regime.”

She also claimed that “unless there’s a shift in fiscal policy” the UK will “continue to see the outflow of talent” as workers pick up jobs in other countries.

‘Real jobs’ being ‘needlessly lost’ as energy transition stalls

© Supplied by GMB Union

Veri Energy was set up in 2023 and is a wholly owned subsidiary of EnQuest. It focuses on delivering carbon storage projects off Shetland and has ambitions to produce hydrogen from the island’s Sullom Voe gas terminal.

It also received four carbon storage licences from the North Sea Transition Authority (NSTA) in May 2023 in the regulator’s first UK offshore carbon storage licensing round.

Concerns around job losses as energy transition projects slip are something that Claire Greer, GMB Scotland organiser in energy, also recently raised during a trip to Shetland.

Greer said: “The alarm bells are not only ringing in Sullom Voe but all across the sector, and while ministers talk about renewables jobs tomorrow, real jobs supporting real communities are being needlessly lost today”.

Policy vs engineering

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Sutherland argued that the UK’s “policy-led” approach to the energy transition is creating “drag” on projects and firms.

The Veri Energy boss called for a “more engineering-led approach” to alleviate issues in the supply chain.

“The reason is, the policy-led approach is very linear,” Sutherland explained.

“We’re anchoring to CCUS [carbon capture utilisation and storage] and we’re anchoring hydrogen, and of course, electrification.”

She pointed to the issues with grid connection, particularly in the UK as the country goes through with a “huge grid reforms process”. But “those who want to electrify are not able to”, she told delegates.

UK CCS funding ‘isn’t coming quick enough’

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Sutherland also said that funding “isn’t coming quick enough” for CCUS project. This is something that industry commentators in the north-east of Scotland have been saying for some time as demands are made for Track 2 funding to be delivered to carbon capture storage projects, Acorn in Aberdeenshire and the Viking scheme on the Humber.

This week, the trade bodies Offshore Energies UK (OEUK) and the Carbon Capture and Storage Association (CCSA) called for track 2 funding to be delivered to Acorn and its fellow project Viking, under the UK government’s upcoming spending review.

OEUK said the two projects have the potential to invest £25bn by 2035, potentially creating over 30,000 jobs.

However, it has been reported that chancellor Rachel Reeves is set to make a decision on Track 2 funding during this week’s government spending review.

High energy bills hinder hydrogen

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Low-carbon fuels also face difficulties due to “the very challenged power costs in Britain,” she explained, adding that “it’s really challenging to deliver low-carbon fuels at a price that’s competitive”.

“I think we need a more engineering-led approach to a whole system which would drive success, rather than a policy which is very stilted and very slow and that’s not providing investor confidence and projects are not progressing at the pace they should,” Sutherland continued.

Greer added: “The UK government must understand the potential scale and impact of those job losses and act with absolute urgency to bring reassurance and financial relief to a sector which, for our economy and energy security, will be needed for decades to come.

“We are shipping jobs, contracts and skills overseas for no good reason, and it cannot, must not continue.”

The UK’s suppliers take a hit

With projects falling behind, the UK’s supply chain stands to take a hit. Recently, Nexos managing director for offshore, Derek Mitchell, said firms are having to contend with high operational costs and the challenging pace of the energy transition.”

Sutherland also turned her attention to this, saying that her firm is looking to “avoid imports” on its low-carbon fuels programmes, like hydrogen production.

“We’ve partnered with 12 technology providers, both international and national, and that is really looking at how we can assess the use of national manufacturing technology to support our project,” she said.

“Also, with where our site is in Shetland, we’ve already got an established supply chain… but the reality is because projects are not moving at pace, they’re unsure about when they’ll be able to utilise the skills that exist from an oil and gas perspective and then transfer them into the more clean energy tech perspective.”

Sutherland added that “we really are trying to bring those supply chains with us” but due to the issues she had mentioned previously, projects are stalling.