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Oil producers test net zero plan with call for new fields

Kraken oil field

The report says producers will invest £21bn over five years

Oil and gas producers are testing the UK government’s resolve on reducing carbon emissions by demanding it approves up to 18 new projects in the North Sea.

OGUK, the industry body, argues that new fields are required to avoid leaving the UK dependent on imports.

The industry is promising to invest up to £21 billion on new fields and extending the life of existing reservoirs over the next five years.

This would unlock 2.7bn barrels of oil equivalent from the region, it said.

OGUK’s demands were laid out in its latest report which is published amid calls for new licences to be halted and production to be scaled back.

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Two months ahead of the COP26 climate summit politicians and environmental groups are demanding the UK Government block Siccar Point Energy’s Cambo oil project 125km north-west of the Shetland Islands.

OGUK said a failure to invest in new oil and gas fields to replace those in decline “would mean the UK could meet only a third of its future needs, leaving the nation more reliant on imports”.

Gas imports hit a record high in winter 2021 and “shows the reality” of cutting off domestic production, said the organisation.

It said production from UK waters can meet 95% of domestic oil demand and 54% of gas demand last year and UK ministers should pursue a “managed transition”.

OGUK chief executive Deirdre Michie said: “Such an approach will ensure that for as long as the UK continues to use oil and gas, as much as possible can be met by indigenous production.”

She added: “Oil and gas provided nearly three-quarters of the UK’s total energy last year, and we will continue to rely on them to heat our homes, keep our lights on and create many of our everyday essentials from medicines to mobile phones to road surfaces.

“About 85% of UK homes are still heated by gas but imported gas hit a record high last year.”

A total of 39 wells have been drilled so far this year, the majority of which have been development, with three exploration and two appraisal.

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OGUK said hydrocarbons would still be needed in 2050 in certain manufacturing processes, as well as to potentially support new industries such as the production of low-carbon hydrogen.

Ms Michie added: “We all know that change is needed so the question is how fast we make that change. This report shows the reality that cutting off the domestic production of oil and gas faster than we can reduce demand risks leaving us increasingly dependent on other countries that often generate higher emissions.

“Cutting back our greenhouse gas emissions will not be easy, but we will do it faster if we support the companies and people who have the skills to get us there. From energy workers to energy consumers, we all need a managed and fair transition which benefits everyone.

“While the UK continues to use oil and gas, we should make the most of the resources we produce here. The North Sea Transition Deal reduces the need for imported energy, makes us more responsible for our own emissions and supports UK companies and people who are already investing in cleaner energy.”

Mike Tholen, OGUK sustainability director, said: “Clearly, in the run up to COP26 and with the focus on decarbonisation, it’s right to look at the activities of our industry.

“We should be proud to tell the story of what Cambo can do to meet the energy needs of the UK and how we can provide those barrels in a low carbon way.

Deirdre Michie

Deirdre Michie: the question is how fast we make change

“We’re confident that it can deliver in a manner that actually supports the UK’s energy economy going forwards.”

The report was published as two members of the Scottish Green Party were formally appointed to the Scottish Government with a demand that hydrocarbon production is sharply reduced.

David Duguid, Conservative MP for Banff and Buchan, who recently met those behind the Cambo project, has previously said it should go ahead to help avert the need for the UK to increase imports of oil and gas. Yesterday he said: “This report highlights North Sea oil and gas still remains a central pillar of our daily lives, supporting 200,000 jobs across the UK.

“The Greens want to turn off the switch and completely shut down the sector which would be catastrophic for our region.”

Mark Ruskell, the Greens climate spokesman, said: “The conclusions of this report directly contradict what the UK Committee on Climate Change told MSPs in parliament on Tuesday.

“Lord Deben was clear that we need to look at global supplies and recognise that increasing extraction would add to that. It’s time the likes of David Duguid start listening to the UK Government’s own climate advisers instead of contradicting them.

“The UK Government is ignoring the science and listening only to the oil and gas industry.

“Far from ‘turning off the switch’, the cooperation deal between the Scottish Greens and Scottish Government will secure a transition fund for the North East and a massive expansion in renewable energy so that alternative jobs can be created.

“That’s how we secure a sustainable future and our survival.”

See also:

Sir Ian Wood: halting oil drilling would be ‘crazy’



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