As Shell 'rethinks'...

Rapid decline of oil and gas ‘would raise emissions’

Oil and gas protestors want oil and gas production to stop (pic: Terry Murden)

Accelerating the decline of Scotland’s oil and gas production will do more environmental damage and weaken the economy, according to a report commissioned by the Scottish Government.

The report warns that Scotland will need to “carefully manage” the transition to the low carbon sector in order to “minimise any negative impacts” on society and the economy.

Offshore Energies UK, which represents 400 companies involved in producing energy from gas, oil, wind and hydrogen, says the new analysis reaffirms the ongoing need for domestic production as Scotland transitions to lower carbon forms of energy.

The report is published as Shell’s new chief executive said he is considering ditching plans to reduce its oil output this decade, declaring that it is “not healthy” to cut production.

Europe’s biggest oil and gas group said two years ago that its oil output had peaked in 2019 and would decline by 1 to 2% each year until 2030 as it sold off assets.

But Wael Sawan says the company is now “reflecting on what is the right guidance to the market”, because it had made steeper cuts than were anticipated since the target was set.

Mr Sawan said that he was “of a firm view that the world will need oil and gas for a long time to come” and that “as such, cutting oil and gas production is not healthy”.

BP last month abandoned its pledge to cut its oil and gas output by 40% this decade, in favour of a 25% reduction, leading to a rally in its shares.

The Scottish Government commissioned Energy System and Just Transition report shows that Scotland gets 79% of its total energy from oil and gas. Across the UK, about 24 million homes (85% of the total) rely on gas boilers, 32 million vehicles run on petrol and diesel, and 42% of electricity comes from gas. 

Jenny Stanning, OEUK’s external relations director, said: “All three candidates to be the next First Minister of Scotland should read this report.

“This new independent analysis shows accelerating the decline of North Sea oil and gas production could increase Scotland’s emissions because we’d simply import more.

“It’s why we remain concerned about the Scottish Government’s draft plan, which suggested accelerating the decline of Scottish oil and gas production. 

“Increasing reliance on imports would be bad for Scottish jobs, the economy, and our climate goals, because as this report shows, imports tend to be associated with a higher carbon footprint.”

The report finds the industry isresponsible for a total GVA of £16bn to the North East, equivalent to 9% of total Scottish GDP in 2019. 

Offshore Energies says the Scottish economy would lose £11 billion per year under existing Scottish Government transition plans.

“Scotland will be poorer under these plans and we cannot allow this to happen. Our brilliant skilled people, world class expertise, and unrivalled capabilities mean we are well-placed to realise a successful offshore energy future for Scotland. 

“We have to get this right – 25,000 jobs, 98% of which are in the North East of Scotland, depend on this.

“We all know we need to expand sustainable energy production as fast as possible. Our industry is already working to deliver the UK and Scottish Governments’ climate goals through cutting emissions from the production of oil and gas while ramping up investment in renewables. 

“In the meantime, and as this report shows, we should continue to support domestic production of oil and gas to meet ongoing demand.  

“We are reviewing this paper in full with our members and look forward to responding to the consultation.

“We continue to make the case that the Scottish Government’s energy strategy must both acknowledge the continuing role of oil and gas in Scotland’s economy as well as our sector’s role in a rapid transition to a low-carbon future.”

See also: Yousaf’s plan for public stakes in energy sector

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