The UK is set to lead the way in demonstrating how oil and gas producing countries can successfully and fairly transition towards a net zero future, OGUK Chief Executive Deirdre Michie OBE has said in a message to members today.

In an end of year message to over 400 member organisations based across  the UK, Deirdre Michie said the stage is now set for 2021 to bring about truly transformational change for the sector to support the country’s net zero ambitions.

Last week the sector’s regulator, the Oil and Gas Authority (OGA), published its revised strategy, which will look to support companies to reduce emissions and encourage progress on carbon capture and storage and hydrogen.

This revision comes shortly after the UK government published its Energy White Paper, the Scottish Government set out its Climate Change plan and the Committee on Climate Change published its advice to government on the sixth carbon budget.

OGUK also reinforced its concerns about the current challenges facing the sector and its supply chain as they continue to grapple with the coronavirus pandemic and ongoing volatility in commodity markets set against the backdrop of a potential no deal scenario at the end of the EU transition period at the end of the year.

OGUK Chief Executive Deirdre Michie OBE said:

Despite the significant challenges we have all faced operationally, economically and personally this year, we have much to proud of. We end the year with industry, government and regulator support for our sector as an enabler to a net zero future.

“In a year where our operations faced sustained challenges, we committed to a detailed emissions reduction pathway and maintained a laser focus on delivering the actions outlined Roadmap 2035. Our people and key workers worked throughout the pandemic to provide the affordable and secure energy and products needed by millions of households across the country.

“Yet, as we are all too aware, the impact of the pandemic and volatile commodity prices has come at a significant cost to many companies, with many jobs affected.

“The stage is now set for a truly transformational period for the people and companies working in our industry. 2021 will be another testing year for us all, including the energy communities and  jobs we need to continue to support. With alignment on our future and the urgent need to stimulate our sector’s recovery in support of this, it must therefore be a year in which we build on these positive developments and help translate strategy into action.

“A North Sea Transition Deal is a unique opportunity to show global leadership and demonstrate how an oil and gas producing country like the UK can successfully transition towards a low carbon future. OGUK is grateful to the many members who have supported the development of this deal  and look forward to progressing this with government early in 2021.

“While we know we don’t have all the answers, it is increasingly accepted that our essential expertise can support the development of hydrogen and carbon capture and storage. The inclusive approach between industry, governments, regulators and the communities we support will remain central to delivering a sustainable and socially accepted transition towards meeting our net zero ambitions.

“The development of a stable and supportive regulatory regime, which aligns with government ambitions is important and industry looks forward to working with the OGA to develop the underpinning guidance to its strategy proposals. We welcome recognition that the UK’s indigenous resources will be important as the country looks to reduce its reliance on imported energy and retain accountability for associated emissions.

“ So against the backdrop of a really tough year for so many, there are some positives that provide solid foundations to build upon, in terms of our contribution to the economy, jobs, energy communities and net zero ambitions. As we a look ahead to a year in which the UK will host the G7 presidency and COP26, it is this commitment to leadership and developing solutions, which will cement our position as a positive partner in the country’s energy future.”

The leading representative body for the UK offshore oil and gas industry has today (Monday 14 December) responded to the UK Government’s Energy White Paper, in which the government reaffirms the value of the sector both now and in the future, and the need for the North Sea Transition Deal.

Commenting on the paper, OGUK Chief Executive Deirdre Michie OBE said:

“We welcome the publication of the Secretary of State for Business, Energy and Industrial Strategy’s Energy White Paper, in which the government recognises the positive contribution our industry can make in the transition to net-zero, both now and in the future. It sets out ambitious and challenging expectations of the UK offshore oil and gas industry, and we are committed to continue working collaboratively with governments and regulators as we deliver these.

“Today’s report not only highlights the critical role our industry plays in maintaining energy security in the UK, but also commits again to a transformational North Sea Transition Deal, which will be a key lever to moving the sector at pace towards a low-carbon future.

“It’s encouraging to see that today’s report also recognises the value of the UK oil and gas industry workforce, especially after such a challenging year. We know that if we are to unlock the challenge of net-zero, the talent, expertise and skills found within our workforce will be vital.

“As an industry, we remain committed to delivering our net-zero goals, as detailed in our Roadmap 2035. We will continue to work with the Government at pace to secure this vital sector deal in the first half of 2021, safeguarding jobs and supporting our energy communities in the journey to net-zero.”

 

The leading representative body for the UK offshore oil and gas industry has today (Saturday 12 December) commented on the Prime Minister’s announcement that the UK will end direct government support for the oil and gas projects overseas.

Commenting on the announcement,  OGUK’s chief executive Deirdre Michie said:

“The UK is taking a global leading role in how to tackle emissions at home, and we recognise we should do the same abroad. Our industry and its world class supply chain built on the back of pioneering work done over decades in the North Sea, have a key role to play in delivering the Prime Minister’s ten-point plan.

“We are also in advanced discussion with the government on a North Sea Transition Deal that can provide a model for how an industry can transform in a fair way which creates jobs, boosts the economy, and delivers on the essential policy goal of net zero emissions. In the coming years, with support from the Government, our homegrown energy supply chain has the potential to benefit hugely from exporting the expertise it is developing in carbon capture, in hydrogen and in decarbonising operations.

“We need to be careful to maintain our supply chain’s competitiveness that has built up over decades of North Sea experience, through a period of rapid change. If we are successful, the UK’s domestic leadership can reach around the world, with our industry at the heart of it. However, given the current fragility of our supply chain, this all needs to move quickly if we are to protect and sustain it as world class.”

 

Every year on the first Saturday in November the UK Oil & Gas Chaplaincy conducts a Service of Remembrance to allow families, friends and the offshore community to pause and remember all who have died while working offshore in the UK’s Oil and Gas Industry.
The names of those who have died in the last year are added to the Book of Remembrance and their families are invited to light a candle in their memory. Sadly they are unable to hold the commemoration this year, however will hold a a video service this weekend of the candle lighting and to observe a minute’s silence.
All with links to the offshore industry are invited to pause and remember. It means a great deal to all who have lost someone to know that they are remembered.
The broadcast will be shared on UK Oil & Gas Chaplaincy’s Facebook page on Saturday 7 November, 11am. 

The leading representative body for the UK’s offshore oil and gas industry has welcomed Prime Minister Boris Johnson’s wind power plan today as a positive shot to the arm for its struggling supply chain.

The plan will include £160 million of funding made available to upgrade ports and infrastructure in critical energy communities including Teesside and Humber, Scotland and Wales.

Speaking in response to the proposals, OGUK said developing skills and supply chain capabilities will be critical if the UK is to reach its climate ambitions. In early 2020, around 75 percent of OGUK member companies reported at least some of their revenue is generated from non-oil and gas related work, with 30 per cent noting that more than 25 per cent is comes from diversified activity.  

Electricity demand currently accounts for 17 percent of total energy demand, meaning the decarbonisation of transport, industrial needs and heating remains critical if the UK is to meet its climate change targets. OGUK today reinforced the importance of the North Sea Transition Deal to deliver the low carbon solutions needed to drive a true green industrial revolution.

OGUK Chief Executive Deirdre Michie said:

“Today’s announcement is a great shot in the arm for our supply chain, which we know is already on the road in its diversification journey but needs substantive support.

“If we are to have the best chance at success, the green energy revolution must go hand in hand with a skills and supply chain evolution.  With the essential expertise to power the green recovery and help the UK meet its climate ambitions, the UK’s changing offshore oil and gas industry is committed to making a positive contribution.

“Through a North Sea Transition Deal we can help do some of the heavy lifting for the huge parts of our economy which won’t be able to meet climate targets through electricity alone. It’s why today we encourage the Prime Minister to maintain this momentum and unlock wider low carbon opportunities including carbon capture usage and storage, and hydrogen.

“With a fair and managed transition, this sector can continue to provide affordable energy to millions of households and families, support jobs in energy communities across the UK and create exciting new jobs of the future.”

The leading representative body for the UK’s offshore oil and gas industry has today repeated calls to campaign groups to meaningfully engage with the sector to ensure a fair and positive transition for energy communities.

The call comes after a report by published Friends of the Earth Scotland, Greenpeace and Platform failed to note the progress that is being made to support workers to move between renewables, oil and gas, and nuclear.

OGUK today said it intends to respond to the report and offered its full support in helping reach the heart of energy communities across the UK.

OGUK Chief Executive Deirdre Michie said:

“While this report confirms how much people working in our industry care about securing a fair transition, we’re also not aware of any approach from the report authors for feedback from the wider workforce and the industry on their findings. We look forward to contributing to this consultation and offer our support to help them reach the heart of energy communities from Aberdeen to Norwich and beyond.

“There has been some really exciting and positive developments taking place in the oil and gas industry in recent years, with over 5,000 conversations with workers, public bodies and trade unions from across the UK shaping Roadmap 2035: industry’s blueprint for net zero, throughout 2019.

“We’re already seeing some of the actions from the Roadmap come through with new training certificates being launched this week to support the requirements of a net zero economy.

“At a time when all industries are navigating unprecedented financial pressures, it is disheartening that some campaign groups are painting a misleading picture to suit a particular agenda, when in fact we could be much more effective if we work together to embrace the net zero opportunity. A huge proportion of companies in our industry have been supporting projects across the full energy spectrum including in renewables for years.

“This won’t help deliver what our energy communities badly need, which is a joined-up, fair and inclusive transition which harnesses the essential expertise in our country’s oil and gas industry. This means we can accelerate the transition without becoming even more reliant on imports for the gas and oil we still need during this time.

“We need to work together and listen to everyone in our industry as we make our positive vision for the future into a reality. This vision is already securing investment in the kinds of projects we need to meet our climate ambitions. The Dolphyn project announced this week is a great example and shows how our changing industry continues to benefit energy communities, bringing in new investment and creating exciting new roles for the future.

“With a strong domestic energy industry which continues to provide affordable energy for millions across the UK, we can continue to support jobs and make a crucial contribution to the UK economy while positioning ourselves as leaders in a lower carbon energy future.”

Exciting news that Aberdeen has been selected as the home for the world’s first offshore floating hydrogen facility to produce hydrogen from wind power confirms the benefits of the oil and gas industry’s expertise, sector leaders said today.

The leading representative body for the sector OGUK today welcomed news that developer Environmental Resources Management (ERM) will deliver its Dolphyn project off the coast of Aberdeen, aiming to deliver a prototype in 2024.

OGUK sustainability director Mike Tholen said:

“In tough times it’s encouraging to see a growing buzz around our changing industry, which has the essential expertise to help the UK meet its climate ambitions by 2050 and power the green recovery.

“The Dolphyn project is a great example of how this change is benefitting energy communities, bringing in new investment and creating exciting new roles for the future.

“This is supported by a domestic energy industry which continues to provide affordable energy for millions across the UK, supports jobs and makes a crucial contribution to the UK economy. We are now seeing the energy transition take place in real time, and continued partnership working remains essential if communities, industries and our people are to make the most of this opportunity.”

The leading representative for the UK’s offshore oil and gas industry has today initially welcomed the winter economy plans announced by the Chancellor, noting it will seek further information on the details of the proposals in the coming days.

Plans announced by the Chancellor today include wage top-ups targeted at small and medium businesses to replace the furlough scheme when it ends. Companies will also be given more time to repay funds accessed through the government’s coronavirus loan schemes.

A report by OGUK earlier this year warned up to 30,000 jobs could be lost in the sector as it faces a triple whammy of low oil and gas prices alongside the operational impact of the coronavirus pandemic. The body today encouraged governments to keep a focus on the prize of a green recovery, where the essential expertise of the oil and gas industry could mean fresh opportunities for the fragile supply chain.

Deirdre Michie

OGUK Chief Executive Deirdre Michie said:

“Throughout the pandemic our industry has never stopped working, providing affordable energy to millions across the UK. Today’s announcement will be helpful to our sector and the thousands of people it employs across the country.

“We welcome the principle of support provided by the Chancellor today and will be pressing for more detail regarding eligibility for our supply chain, which remains in a fragile condition.

“To increase activity levels in the industry we need to be able to get more people working without compromising on the health and safety of our people. We continue to have conversations with government about the best way to do this so that we can quickly accelerate maintenance programmes and other activity as soon as possible.

“Facing a winter of uncertainty, focus must also remain on the prize of securing a green recovery which puts the essential expertise of our industry to work in building the solutions we need to meet our climate ambitions.

“Through a green recovery, a North Sea Transition Deal and continued support for our industry, we can help keep costs low for households and families, retain jobs and create new roles for the future.”

The leading representative body for the UK’s offshore oil and gas industry has hailed the grit and resilience of the thousands of people working for the critical sector as it opened nominations for its annual awards.

Throughout the coronavirus pandemic, key workers both on and offshore continued to safely operate installations around the UK Continental Shelf, supporting the UK’s security of energy supply.  While seeking to deal with the economic fall-out of the  low oil and gas prices brought about by the pandemic, the industry continued with its work on Roadmap 2035, making  major commitments to halve emissions from the production of oil and gas in the next decade as well as progressing its plans to support carbon cutting solutions including carbon capture usage and storage and hydrogen.

Industry body OGUK will hold its annual awards, sponsored by Shell,  on 10 December this year, with hopes that its virtual format will make it more accessible not only to the industry workforce, but to family, friends and anyone with an interest in how the sector is shaping up as part of a low carbon future.

Commenting as nominations open, OGUK chief executive Deirdre Michie said:

“This has been extraordinary year in which our industry, only just beginning to recover from the last downturn, finds itself facing more dark days ahead. Yet, in spite of the personal and professional challenges the coronavirus pandemic brought on all industries, companies and people, our key workers ensured our critical industry never stopped operating.

“This is the North Sea spirit and grit we are known for, working in tough circumstances to provide affordable energy to millions across the UK. It is this same resilience which should give confidence that our changing industry is and will continue to step forward by cutting its emissions and in using its skills and expertise to develop the solutions needed to meet our country’s climate ambitions. We remain on track to deliver our ambitious plan to realise the full potential of our sector through the energy transition, Roadmap 2035.

“With a new virtual format, OGUK’s annual awards are an opportunity to tell our positive story to more people than ever before. Whether it’s family, friends, or you  want to know more about how our industry is changing andabout the people who make this sector the amazing industry that it is, we hope everyone will enjoy taking part in acknowledging and celebrating inspirational and impressive contributions.”

Nominations close on 2 October and companies are being encouraged to champion talent and innovation, with nine awards up for grabs this year.

Shell UK upstream vice president Steve Phimister said:

“2020 has thrown down challenge after challenge for the sector. But our people have stepped up and met it, maintaining the critical energy supplies that the UK relies on, as well as starting to address the all-important subject of Energy Transition. We can all be proud of our huge efforts right across the industry, and I look forward to seeing our most important asset – our people – celebrated at these awards.”

Ends

Notes to Editors:

  1. Categories include:
Individual Awards

 

  • Award for Apprentice of the Year
  • Award for Graduate of the Year
  • Award for Mentor of the Year
Company Awards

 

  • Award for Excellence in Decommissioning
  • Award for Energy Transition
  • Award for Diversity and Inclusion
  • Award for Workforce Engagement
  • Award for Business Innovation
    – SME and Large Enterprise
  1. Further information about OGUK’s Annual Awards can be found here:

 

Issued by the Communications Team, OGUK.  Contact Communications Manager Natalie Coupar, 07531407007 / [email protected],uk

OGUK is the leading representative organisation for the UK offshore oil and gas industry. Its membership comprises oil and gas producers and contractor companies.

The leading representative body for the UK’s offshore oil and gas industry has embraced a UK government review into future licensing rounds as an opportunity to shine a light on how the sector is changing to support the country’s climate ambitions while still ensuring it contributes to the UK’s ongoing security of energy supply.

Speaking in response to the announced review, OGUK Chief Executive Deirdre Michie OBE called for a constructive and open discussion about how the UK will continue to meet its energy needs while delivering consumer affordability and jobs, optimising indigenous energy sources in a way that ensures the UK doesn’t offshore its emissions to other countries.
The industry is currently working with the UK Government on a North Sea Transition Deal which will look to harness the full potential of the sector in developing cleaner energy solutions including carbon capture usage and storage and hydrogen.

The announcement comes as the UK oil and gas industry marks a year since it published its response to climate commitments, Roadmap 2035, which identified over sixty actions required to support a fair and managed transition to a lower carbon future.

Commenting, OGUK Chief Executive Deirdre Michie OBE said:

“The UK offshore oil and gas industry has the essential expertise to help the UK meet its climate ambitions by 2050 while at the same time providing affordable energy for households and families, supporting jobs, and creating exciting energy jobs of the future.

“This review is an opportunity to shine a light on how our industry is changing. With commitments to halve emissions in the next decade and committed investment in exciting low carbon solutions, the changing UK oil and gas industry is stepping up to the climate change challenge.

“Throughout the coronavirus pandemic we have not stopped working, and our people have continued to work in difficult circumstances to meet as much of the UK’s oil and gas needs from domestic resources. The reality is that oil and gas will continue to be part of a diverse energy mix for years to come.

“We now need a constructive and open conversation about how our oil and gas producing country can transition fairly to a lower carbon future. Working with governments, regulators and through sensible debate, we can protect jobs and affordability while being ultimately accountable for the emissions associated with the oil and gas we use.”


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Commenting on the Just Transition Commission Advice for a Green Recovery report, OGUK Chief Executive Deirdre Michie said:

“We have a once in a lifetime opportunity to show how we as an oil and gas producing country can successfully build a more diverse and lower carbon energy mix in a way that embraces the skills and talents of our people and our indigenous industries.

“The Just Transition Commission report is timely and welcome in that it picks up on a number of areas that we as an industry are already driving forward in support of the Scottish Government’s climate ambitions. As noted in the report, the footprint of this industry is felt not only in the North East, but across Scotland and the wider UK.

“Roadmap 2035, developed through inclusive engagement across our industry and led by organisations including the OGTC, the Oil and Gas Authority and industry skills body Opito, is a dynamic and comprehensive plan reflecting many areas that need to be and are being addressed.

“It provides a means by which we come together to ensure we meet as much oil and gas demand from domestic resources as possible while at the same time building on the skills and experience of our sector to help deliver the energy transition using homegrown enterprises. In this way we can all work together to protect jobs, continue to provide affordable energy to consumers and unlock thriving energy communities both now, and in future.”

Ends

The UK’s offshore oil and gas industry has today welcomed the Chancellor’s announcement of support for employers, including the Job Retention Bonus and moves to support more traineeships and jobs for young people.

The leading representative body for the sector OGUK said that the UK faces a once-in-a-lifetime opportunity to deliver moves to a lower carbon and more diverse energy mix, reinforcing the importance of the sector deal currently being discussed with the UK Government.

OGUK Chief Executive Deirdre Michie said:

“The Chancellor’s announcement provides welcome support for companies in the UK’s offshore oil and gas industry affected by the immediate impact of the coronavirus pandemic. The continued volatility facing our sector however underlines the need for long-term and targeted support. In devastating circumstances the UK now faces a once-in-a-lifetime opportunity to realise an energy transition which delivers affordable energy, supports jobs and enables our industry to put our skills to work to help cut emissions.

“Industry’s Roadmap 2035 offers a sensible blueprint which keeps net zero firmly on the agenda while also supporting energy communities to embrace new opportunities including carbon capture and hydrogen.

“Today’s funding for Direct Air Capture of CO2  is a welcome step in the right direction as part of the wider development and roll-out of Carbon Capture and Storage, and we look forward to continuing our work with government to realise the full potential of our sector in delivering the UK’s energy future.”

 

The leading representative for the UK’s offshore oil and gas industry has welcomed the Committee on Climate Change report to parliament today, calling for energy communities like the North East of Scotland and the East of England to be put at the heart of plans to transition to a lower carbon future.

OGUK recently set out industry commitments to halve operational emissions in the next decade, with a target of 90 percent reductions by 2040. The sector was one of the first to respond to the Committee on Climate Change report in May last year which called for governments to reach net zero emissions by 2050 in the UK and 2045 in Scotland, with its Roadmap 2035: a blueprint for net zero.

With formal talks now underway on a transformational sector deal, the industry body today said a green recovery is an opportunity to accelerate critical solutions including carbon capture usage and storage, and hydrogen, while the sector should continue to meet as much of the UK’s oil and gas needs from domestic resources.

OGUK Chief Executive Deirdre Michie said:

“The Committee on Climate Change report offers a measured and thoughtful view on how we can stimulate a truly fair transition towards a lower carbon future.

“We can’t afford for communities like the North East of Scotland or the East of England to be left behind. We urgently need a green recovery which enables our industry to meet as much of the UK’s oil and gas demand from domestic resources while developing the critical solutions which will help reduce emissions in other industries and wider society. This is the fair, sustainable and inclusive transition which will allow the UK to meet its climate ambitions in a way which supports jobs, skills and energy communities.”

The leading representative body for the UK’s offshore oil and gas industry has repeated its calls to accelerate moves to net zero as part of efforts to support the sector’s recovery.

Speaking in response to advice issued to governments by the Committee on Climate Change today, and confirmation by Prime Minister Boris Johnson that the UK Government is working with OGUK on a sector deal, the body’s chief executive today said the sector remains committed to a three-stage framework published earlier this month.

The framework sets out specific steps to support the sector during the immediate coronavirus pandemic, to aide its recovery to meet as much of the UK’s oil and gas needs from domestic resources, and ultimately to deploy the sector’s skills, capabilities and infrastructure to develop the critical net zero infrastructure of the future.

Commenting, OGUK Chief Executive Deirdre Michie said:

“The UK’s offshore oil and gas industry is under enormous pressure and we’re already seeing the direct impact of this on companies, jobs and the communities we work in up and down the country.

“This is an industry which can play a critical role in the UK’s transition to net zero, but it is not a given. Utilising our skilled people, capabilities and infrastructure means we can meet as much of the UK’s oil and gas needs from domestic resources while also stepping up to support the delivery of key low carbon technologies including CCUS at scale.

“We’ve welcomed the support from both the UK and the Scottish Government and can confirm we are working on a sector deal proposal. We need to keep working together with governments, regulators and indeed anyone interested in a fair, inclusive, and sustainable transition to deliver what is needed for the sector and the country.”

The leading representative body for the UK’s offshore oil and gas industry has warned that up to 30,000 jobs could be lost in the sector as it called for the transition to net zero to be put at the heart of recovery plans.

The stark warning comes as companies in the sector report an increasingly grim outlook as they deal with the fallout from the coronavirus pandemic and a 20 year low in oil prices and a 14 year low for gas.

The industry is expected to see a dramatic reduction in revenue, sparking concerns about the ability of some companies to survive a downturn that is likely to be even more severe than the one in 2015 which the sector is just emerging from.

The figures are published in a report issued today by OGUK following a survey of its membership.

The Business Outlook: Activity and Supply Chain report, calls for urgent action to protect energy security, jobs, and energy regions. OGUK has asked governments and regulators to support a three-stage framework to support the sector in dealing with the immediate crisis while positioning it to play a key role in the UK’s transition to a net zero future.

The report notes:

  • The average oil price for March was $22.5/barrel, a 65% decrease compared to January 2020. This trend has continued in April with Brent price falling to its’ lowest point for 20 years to $16/bbl on April 22nd.
  • For the first time, WTI became negative in the US following an over-capacity and lack of local storage. (WTI is a crucial regional benchmark for North America).
  • There is now a stark contrast in sentiment compared to the beginning of the year with all E&P companies and 93% of supply chain firms reporting a worse or significantly worse outlook for 2020.
  • OGUK anticipate that CAPEX could fall to between £3.5-4 billion, the lowest investment since 2000 and amongst the lowest levels of investment since the early 1970s. OGUK also anticipates that OPEX will be reduced by 10-20%, compared to expectations at the start of the year, to around £6-7billion
  • OGUK also warns that drilling activity this year could be down by 50% on 2019 levels – pushing activity levels to record lows.
  • The position of many areas of the supply chain is increasingly fragile. Revenues and margins across the supply chain are expected to fall by 20-30 per cent, on top of reductions seen during the last downturn. The impact on businesses will vary depending on their position in the industry, with some areas of the supply chain expected to see greater reductions.
  • Although there is still a significant degree of uncertainty in estimates affecting the next 12-18 months, based on company feedback, OGUK currently anticipates that the level of direct and indirect jobs supported by the industry could contract by up to 30,000 during this period.
  • The survey feedback also indicates that as part of their response to the crisis more than three-quarters of supply chain companies plan to increase their non-oil and gas work this year.
  • Around 30% of respondents to the recent business survey identified that they were successful in securing funding through government COVID-19 financial packages, with over 40% sounding out the different options as this report went to release.
  • The three-stage framework proposed by OGUK covers: immediate needs, industry recovery and accelerating to a net zero future. It includes recommendations to improve current COVID-19 financial packages, retaining a sector leading and progressive regulatory, fiscal and policy framework, as well as the development of a sector deal which will support the supply chain and accelerate the UK towards a net zero future.

Commenting on the report, OGUK Chief Executive Deirdre Michie said:  

“Like so many industries, our members have been profoundly impacted by COVID-19.

“With historic low oil and gas prices coming so soon after one of the most severe downturns our sector has experienced, these findings confirm an especially bleak outlook for the UK’s oil and gas industry. If the UK is to maintain its supply of domestic energy, protect jobs and build the critical infrastructure it needs to transition to a net zero future, ours is an industry worth fighting for.

“It’s why OGUK is today outlining a three-stage framework with a range of measures for governments and regulators to support industry now, stimulate a recovery and accelerate the transition to a net zero future.”

The leading representative body for the UK’s offshore oil and gas sector has warned the latest oil price developments could fundamentally undermine the ability of the industry to recover and serve the energy transition.

It comes as US crude oil prices continued to drop this evening while the international benchmark Brent crude traded at just over $25 a barrel. While WTI is a localised trading market in the US, OGUK this evening warned it remains concerned about the continued low prices of Brent crude.

OGUK Chief Executive Deirdre Michie said:

“While we have anticipated continued pressures on oil markets, there’s no getting away from the fact that this situation is a body blow for an industry already creaking under the strains of the impact of COVID-19 and sustained low commodity prices.

“The dynamics of this US market are different from those directly driving UK produced Brent, but we will not escape the impact. Ours is not just a trading market; every penny lost spells more uncertainty over jobs, our contribution to public services and to the just transition we all want to see. OGUK will be pressing the case for a COVID-19 resilience package to governments in the coming days which will focus on protecting the supply chain, jobs and our ability to continue to reposition ourselves for the future.”

 

The UK offshore oil and gas industry which plays a vital role in the security of energy supply for the nation has been severely hit by the triple impact of COVID-19, the oil price crash and the lowest gas prices in the last ten years.

With many businesses facing a fight for survival, industry body OGUK, that represents over 400 companies has welcomed the UK Government’s announcement of help for both workers and companies.

Deirdre Michie, Chief Executive of OGUK said:

“Many of the companies in our industry, especially in the supply chain, are still financially fragile after the previous oil price crash, so the triple whammy we now face is particularly dangerous. In that context the strong response from the UK Government and their clear determination to support both workers and companies is very welcome. It is now crucial to ensure companies can easily and rapidly access this money as for many businesses and individuals cash flow is now vital.”

Companies in the UK offshore oil and gas industry contributes around 50% of UK gas which is used for a large proportion of our electricity production and which heats the vast majority of our homes. They also produce a major proportion of the oil that fuels our cars and is used in the manufacture of a huge proportion of the items we use in our daily lives from contact lenses and toothbrushes to the lightweight cases on our mobile phones. Companies in the UK industry are also backing the UK drive to net zero emissions and have also been working on technology to help us get there.

OGUK has today welcomed the UK Government’s announcement that oil and gas workers are included on a list of key workers whose children will be prioritised for education provision.

Commenting, OGUK Chief Executive Deirdre Michie said:

“As an industry we are committed to doing everything possible we can to help the country and our businesses and our people through this devastating crisis and we appreciate the announcement today on access to education. We’re working closely with government to resolve any challenges we face to maintaining safe operations for our people and ultimately ensuring we can continue to provide the UK with secure and affordable energy.”

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The combination of the global economic impact of the continued spread of the coronavirus, the most dramatic fall in oil price in almost 30 years and a halving of gas prices is driving an increasingly fragile outlook for the UK’s offshore oil and gas sector. Severe pressures are already building across the sector’s supply chain, with the pressures expected to significantly undermine the industry’s businesses, jobs and contribution to the economy.

The stark warning was made today by the leading representative body for the sector OGUK, in the first in a series of Business Outlook reports which will shine a light on the issues facing the sector in a challenging and dynamic business environment.

The Business Outlook: Markets and Investment report shows OGUK now expects drilling levels to fall back to the lows experienced in 2016, down more than a third on previous forecasts. The report also warns of a possible 20-30 percent decrease in capital investment for 2020 as well as the potential that the operators in the sector will experience negative cash flow this year.

While the industry was only beginning to emerge from one of the most prolonged and severe downturns in its’ history, OGUK said the supply chain had remained under significant pressure, with tight margins and relatively low activity levels.

OGUK today called for government support to ensure the sector can continue to provide security of supply in the face of these extraordinary difficulties. The body also said it was working with industry, regulators and government to understand how it can protect supply chain companies, and jobs.

OGUK Chief Executive Deirdre Michie said:

“Businesses and industries across the UK are facing extraordinary pressures but coming so soon after one of the worst downturns in our history, this report shows that this sector is now in a paper-thin position.

“The offshore oil and gas sector is part of the UK’s critical infrastructure, providing the secure and affordable energy the country needs and is  a key contributor to the economy in terms of supporting hundreds of thousands of skilled jobs, businesses and our wider economic contribution.

“Action is needed now to ensure the sector doesn’t lose the skills, experience and infrastructure it needs to meet the UK’s energy needs of today as well as help deliver its net zero ambitions in future.  We appreciate the Chancellors recent statement and OGUK is requesting urgent meetings with ministers to consider a COVID-19 Sectoral Resilience Package which would help to give some reassurance to the regions, businesses and jobs this industry supports.

“We’re already working with our members to understand the challenges businesses are facing in these unique and extremely worrying times.”

OGUK Market Intelligence Manager Ross Dornan said of the report:

“The first week of March saw the most dramatic fall in oil price in almost 30 years and it remains uncertain as to how the market is going to evolve in the coming months as the coronavirus impact increases each day.

“Alongside this, the gas price has more than halved in the last 12 months, and we face a situation where E&P production revenues are set to be almost 50 percent lower than they were  two years ago despite the same level of output.

“The UKCS has seen significant improvement in its competitiveness, efficiency and productivity in recent years. These improvements will help performance, however in this harsh environment we expect companies to take significant steps to preserve cash flow and ensure business continuity. This will have a very negative impact on the supply chain, which has not yet seen much recovery from the previous downturn and doesn’t have the capacity to absorb much more pain.

“Companies are increasingly diversifying into other energy sectors and across industries more generally, but many cannot diversify or are too early in their journey to provide adequate protection/buffer. At this time innovative thinking, partnerships and meaningful collaboration will be required to help as many as possible to weather the storm.”

OGUK Health, Safety and Environment Director Trevor Stapleton said:

“OGUK continues to work with our members to share official advice on coronavirus (COVID-19) from the relevant bodies to ensure the health of the people in our industry.

“This sector is experienced in managing risks associated with complex safety and health matters, with robust processes and arrangements in place to ensure effective prevention measures and response for both onshore and offshore operations. The challenges of managing health in a remote environment are understood and industry has long-established medical facilities and personnel onboard, supported by a topsides doctor onshore.

“In addition to following official advice and in support of members, OGUK has over the past weeks facilitated industry discussion with the appropriate agencies on how best to understand, manage and respond to the challenges this novel virus poses, ensuring information is shared. This includes our regulator, the HSE, and the relevant public health bodies.

“As with confirmed cases onshore, in the event of a confirmed case offshore, the affected operator will work with the relevant agencies to risk assess the specifics of the situation and ascertain the appropriate response. OGUK continues to work with all our members and stakeholders to share information.”

General Update:

Following the WHO confirmation yesterday that COVID-19 is a pandemic, the UK government is expected to move into the next stage of response shortly.

This may mean significant changes to the way we work and socialise, and most importantly the way we individually act to minimise the spread of infection.

All members are encouraged to stay up to date with and continue to follow government advice on responding to COVID-19 and to communicate with their workforce and supply chain on how that advice is being implemented in their operations.

There is wide-ranging advice on many topics available from Public Health England and Health Protection Scotland on how best to minimise transmission of the virus within the workplace. This advice is revised and new guidance produced continuously as more is learned about the virus.

Regularly updated guidance and resources can be found on the following web pages:

https://www.gov.uk/government/collections/coronavirus-covid-19-list-of-guidance

https://www.hps.scot.nhs.uk/a-to-z-of-topics/covid-19/

UK agencies are co-ordinating to ensure that advice is consistent across the country.

OGUK Pandemic Steering Group

OGUK has convened an industry Pandemic Steering Group, which is made up from representatives from across the sector and is tasked with identifying and addressing the particular challenges faced by those working to maintain offshore operations at industry-level and ensuring communication with relevant stakeholders and government agencies.  The group is tasked with focusing only on those issues which require cross-industry action and co-ordination.

The PSG is meeting regularly and updates are being shared with our technical groups. It is not tasked with providing updates and advice on operational response. Member companies are implementing their individual pandemic response and business continuity plans to ensure that industry can respond effectively.

OGUK will share industry-specific advice as it becomes available and enable sharing of lessons learned as members gain experience in dealing with the specifics of this pandemic.

Industry Travel Policy for Offshore Installations

Given the challenges of managing any confirmed case of COVID-19 on an offshore installation, industry policy is to have restrictions on workers travelling to offshore installations. Industry policy is that personnel will not be permitted to travel offshore if:

  • They have travelled from or transited through affected countries in the last 14 days, or since dates defined on the UK government’s list of affected areas.

This includes both Category 1 and Category 2 areas (up to date lists can be found here).

  • If they have been in close contact with a confirmed case of COVID-19 in the last 14 days.
  • If they have experienced symptoms of cough, fever and shortness of breath.

Oil and gas industry travel restrictions apply to fixed and mobile offshore installations. It is not intended to apply to vessels involved in the offshore oil and gas industry.

Revised regulator strategy confirms alignment on industry future

The UK is set to lead the way in demonstrating how oil and gas producing countries can successfully and fairly transition towards a net zero future, OGUK Chief Executive Deirdre Michie OBE has said in a message to members today.

In an end of year message to over 400 member organisations based across  the UK, Deirdre Michie said the stage is now set for 2021 to bring about truly transformational change for the sector to support the country’s net zero ambitions.

Last week the sector’s regulator, the Oil and Gas Authority (OGA), published its revised strategy, which will look to support companies to reduce emissions and encourage progress on carbon capture and storage and hydrogen.

This revision comes shortly after the UK government published its Energy White Paper, the Scottish Government set out its Climate Change plan and the Committee on Climate Change published its advice to government on the sixth carbon budget.

OGUK also reinforced its concerns about the current challenges facing the sector and its supply chain as they continue to grapple with the coronavirus pandemic and ongoing volatility in commodity markets set against the backdrop of a potential no deal scenario at the end of the EU transition period at the end of the year.

OGUK Chief Executive Deirdre Michie OBE said:

Despite the significant challenges we have all faced operationally, economically and personally this year, we have much to proud of. We end the year with industry, government and regulator support for our sector as an enabler to a net zero future.

“In a year where our operations faced sustained challenges, we committed to a detailed emissions reduction pathway and maintained a laser focus on delivering the actions outlined Roadmap 2035. Our people and key workers worked throughout the pandemic to provide the affordable and secure energy and products needed by millions of households across the country.

“Yet, as we are all too aware, the impact of the pandemic and volatile commodity prices has come at a significant cost to many companies, with many jobs affected.

“The stage is now set for a truly transformational period for the people and companies working in our industry. 2021 will be another testing year for us all, including the energy communities and  jobs we need to continue to support. With alignment on our future and the urgent need to stimulate our sector’s recovery in support of this, it must therefore be a year in which we build on these positive developments and help translate strategy into action.

“A North Sea Transition Deal is a unique opportunity to show global leadership and demonstrate how an oil and gas producing country like the UK can successfully transition towards a low carbon future. OGUK is grateful to the many members who have supported the development of this deal  and look forward to progressing this with government early in 2021.

“While we know we don’t have all the answers, it is increasingly accepted that our essential expertise can support the development of hydrogen and carbon capture and storage. The inclusive approach between industry, governments, regulators and the communities we support will remain central to delivering a sustainable and socially accepted transition towards meeting our net zero ambitions.

“The development of a stable and supportive regulatory regime, which aligns with government ambitions is important and industry looks forward to working with the OGA to develop the underpinning guidance to its strategy proposals. We welcome recognition that the UK’s indigenous resources will be important as the country looks to reduce its reliance on imported energy and retain accountability for associated emissions.

“ So against the backdrop of a really tough year for so many, there are some positives that provide solid foundations to build upon, in terms of our contribution to the economy, jobs, energy communities and net zero ambitions. As we a look ahead to a year in which the UK will host the G7 presidency and COP26, it is this commitment to leadership and developing solutions, which will cement our position as a positive partner in the country’s energy future.”

OGUK response to the Government’s Energy White Paper

The leading representative body for the UK offshore oil and gas industry has today (Monday 14 December) responded to the UK Government’s Energy White Paper, in which the government reaffirms the value of the sector both now and in the future, and the need for the North Sea Transition Deal.

Commenting on the paper, OGUK Chief Executive Deirdre Michie OBE said:

“We welcome the publication of the Secretary of State for Business, Energy and Industrial Strategy’s Energy White Paper, in which the government recognises the positive contribution our industry can make in the transition to net-zero, both now and in the future. It sets out ambitious and challenging expectations of the UK offshore oil and gas industry, and we are committed to continue working collaboratively with governments and regulators as we deliver these.

“Today’s report not only highlights the critical role our industry plays in maintaining energy security in the UK, but also commits again to a transformational North Sea Transition Deal, which will be a key lever to moving the sector at pace towards a low-carbon future.

“It’s encouraging to see that today’s report also recognises the value of the UK oil and gas industry workforce, especially after such a challenging year. We know that if we are to unlock the challenge of net-zero, the talent, expertise and skills found within our workforce will be vital.

“As an industry, we remain committed to delivering our net-zero goals, as detailed in our Roadmap 2035. We will continue to work with the Government at pace to secure this vital sector deal in the first half of 2021, safeguarding jobs and supporting our energy communities in the journey to net-zero.”

 

OGUK response to UK Government plans to end funding for overseas oil and gas projects

The leading representative body for the UK offshore oil and gas industry has today (Saturday 12 December) commented on the Prime Minister’s announcement that the UK will end direct government support for the oil and gas projects overseas.

Commenting on the announcement,  OGUK’s chief executive Deirdre Michie said:

“The UK is taking a global leading role in how to tackle emissions at home, and we recognise we should do the same abroad. Our industry and its world class supply chain built on the back of pioneering work done over decades in the North Sea, have a key role to play in delivering the Prime Minister’s ten-point plan.

“We are also in advanced discussion with the government on a North Sea Transition Deal that can provide a model for how an industry can transform in a fair way which creates jobs, boosts the economy, and delivers on the essential policy goal of net zero emissions. In the coming years, with support from the Government, our homegrown energy supply chain has the potential to benefit hugely from exporting the expertise it is developing in carbon capture, in hydrogen and in decarbonising operations.

“We need to be careful to maintain our supply chain’s competitiveness that has built up over decades of North Sea experience, through a period of rapid change. If we are successful, the UK’s domestic leadership can reach around the world, with our industry at the heart of it. However, given the current fragility of our supply chain, this all needs to move quickly if we are to protect and sustain it as world class.”

 

Virtual Remembrance

Every year on the first Saturday in November the UK Oil & Gas Chaplaincy conducts a Service of Remembrance to allow families, friends and the offshore community to pause and remember all who have died while working offshore in the UK’s Oil and Gas Industry.
The names of those who have died in the last year are added to the Book of Remembrance and their families are invited to light a candle in their memory. Sadly they are unable to hold the commemoration this year, however will hold a a video service this weekend of the candle lighting and to observe a minute’s silence.
All with links to the offshore industry are invited to pause and remember. It means a great deal to all who have lost someone to know that they are remembered.
The broadcast will be shared on UK Oil & Gas Chaplaincy’s Facebook page on Saturday 7 November, 11am. 

Energy revolution must go hand in hand with skills and supply chain evolution

The leading representative body for the UK’s offshore oil and gas industry has welcomed Prime Minister Boris Johnson’s wind power plan today as a positive shot to the arm for its struggling supply chain.

The plan will include £160 million of funding made available to upgrade ports and infrastructure in critical energy communities including Teesside and Humber, Scotland and Wales.

Speaking in response to the proposals, OGUK said developing skills and supply chain capabilities will be critical if the UK is to reach its climate ambitions. In early 2020, around 75 percent of OGUK member companies reported at least some of their revenue is generated from non-oil and gas related work, with 30 per cent noting that more than 25 per cent is comes from diversified activity.  

Electricity demand currently accounts for 17 percent of total energy demand, meaning the decarbonisation of transport, industrial needs and heating remains critical if the UK is to meet its climate change targets. OGUK today reinforced the importance of the North Sea Transition Deal to deliver the low carbon solutions needed to drive a true green industrial revolution.

OGUK Chief Executive Deirdre Michie said:

“Today’s announcement is a great shot in the arm for our supply chain, which we know is already on the road in its diversification journey but needs substantive support.

“If we are to have the best chance at success, the green energy revolution must go hand in hand with a skills and supply chain evolution.  With the essential expertise to power the green recovery and help the UK meet its climate ambitions, the UK’s changing offshore oil and gas industry is committed to making a positive contribution.

“Through a North Sea Transition Deal we can help do some of the heavy lifting for the huge parts of our economy which won’t be able to meet climate targets through electricity alone. It’s why today we encourage the Prime Minister to maintain this momentum and unlock wider low carbon opportunities including carbon capture usage and storage, and hydrogen.

“With a fair and managed transition, this sector can continue to provide affordable energy to millions of households and families, support jobs in energy communities across the UK and create exciting new jobs of the future.”

Industry urges campaign groups to meaningfully engage with sector

The leading representative body for the UK’s offshore oil and gas industry has today repeated calls to campaign groups to meaningfully engage with the sector to ensure a fair and positive transition for energy communities.

The call comes after a report by published Friends of the Earth Scotland, Greenpeace and Platform failed to note the progress that is being made to support workers to move between renewables, oil and gas, and nuclear.

OGUK today said it intends to respond to the report and offered its full support in helping reach the heart of energy communities across the UK.

OGUK Chief Executive Deirdre Michie said:

“While this report confirms how much people working in our industry care about securing a fair transition, we’re also not aware of any approach from the report authors for feedback from the wider workforce and the industry on their findings. We look forward to contributing to this consultation and offer our support to help them reach the heart of energy communities from Aberdeen to Norwich and beyond.

“There has been some really exciting and positive developments taking place in the oil and gas industry in recent years, with over 5,000 conversations with workers, public bodies and trade unions from across the UK shaping Roadmap 2035: industry’s blueprint for net zero, throughout 2019.

“We’re already seeing some of the actions from the Roadmap come through with new training certificates being launched this week to support the requirements of a net zero economy.

“At a time when all industries are navigating unprecedented financial pressures, it is disheartening that some campaign groups are painting a misleading picture to suit a particular agenda, when in fact we could be much more effective if we work together to embrace the net zero opportunity. A huge proportion of companies in our industry have been supporting projects across the full energy spectrum including in renewables for years.

“This won’t help deliver what our energy communities badly need, which is a joined-up, fair and inclusive transition which harnesses the essential expertise in our country’s oil and gas industry. This means we can accelerate the transition without becoming even more reliant on imports for the gas and oil we still need during this time.

“We need to work together and listen to everyone in our industry as we make our positive vision for the future into a reality. This vision is already securing investment in the kinds of projects we need to meet our climate ambitions. The Dolphyn project announced this week is a great example and shows how our changing industry continues to benefit energy communities, bringing in new investment and creating exciting new roles for the future.

“With a strong domestic energy industry which continues to provide affordable energy for millions across the UK, we can continue to support jobs and make a crucial contribution to the UK economy while positioning ourselves as leaders in a lower carbon energy future.”

Hydrogen project adds to growing buzz around industry’s essential expertise

Exciting news that Aberdeen has been selected as the home for the world’s first offshore floating hydrogen facility to produce hydrogen from wind power confirms the benefits of the oil and gas industry’s expertise, sector leaders said today.

The leading representative body for the sector OGUK today welcomed news that developer Environmental Resources Management (ERM) will deliver its Dolphyn project off the coast of Aberdeen, aiming to deliver a prototype in 2024.

OGUK sustainability director Mike Tholen said:

“In tough times it’s encouraging to see a growing buzz around our changing industry, which has the essential expertise to help the UK meet its climate ambitions by 2050 and power the green recovery.

“The Dolphyn project is a great example of how this change is benefitting energy communities, bringing in new investment and creating exciting new roles for the future.

“This is supported by a domestic energy industry which continues to provide affordable energy for millions across the UK, supports jobs and makes a crucial contribution to the UK economy. We are now seeing the energy transition take place in real time, and continued partnership working remains essential if communities, industries and our people are to make the most of this opportunity.”

Job support scheme provides certainty but focus on green recovery must continue

The leading representative for the UK’s offshore oil and gas industry has today initially welcomed the winter economy plans announced by the Chancellor, noting it will seek further information on the details of the proposals in the coming days.

Plans announced by the Chancellor today include wage top-ups targeted at small and medium businesses to replace the furlough scheme when it ends. Companies will also be given more time to repay funds accessed through the government’s coronavirus loan schemes.

A report by OGUK earlier this year warned up to 30,000 jobs could be lost in the sector as it faces a triple whammy of low oil and gas prices alongside the operational impact of the coronavirus pandemic. The body today encouraged governments to keep a focus on the prize of a green recovery, where the essential expertise of the oil and gas industry could mean fresh opportunities for the fragile supply chain.

Deirdre Michie

OGUK Chief Executive Deirdre Michie said:

“Throughout the pandemic our industry has never stopped working, providing affordable energy to millions across the UK. Today’s announcement will be helpful to our sector and the thousands of people it employs across the country.

“We welcome the principle of support provided by the Chancellor today and will be pressing for more detail regarding eligibility for our supply chain, which remains in a fragile condition.

“To increase activity levels in the industry we need to be able to get more people working without compromising on the health and safety of our people. We continue to have conversations with government about the best way to do this so that we can quickly accelerate maintenance programmes and other activity as soon as possible.

“Facing a winter of uncertainty, focus must also remain on the prize of securing a green recovery which puts the essential expertise of our industry to work in building the solutions we need to meet our climate ambitions.

“Through a green recovery, a North Sea Transition Deal and continued support for our industry, we can help keep costs low for households and families, retain jobs and create new roles for the future.”

Nominations opportunity to highlight true North Sea spirit

The leading representative body for the UK’s offshore oil and gas industry has hailed the grit and resilience of the thousands of people working for the critical sector as it opened nominations for its annual awards.

Throughout the coronavirus pandemic, key workers both on and offshore continued to safely operate installations around the UK Continental Shelf, supporting the UK’s security of energy supply.  While seeking to deal with the economic fall-out of the  low oil and gas prices brought about by the pandemic, the industry continued with its work on Roadmap 2035, making  major commitments to halve emissions from the production of oil and gas in the next decade as well as progressing its plans to support carbon cutting solutions including carbon capture usage and storage and hydrogen.

Industry body OGUK will hold its annual awards, sponsored by Shell,  on 10 December this year, with hopes that its virtual format will make it more accessible not only to the industry workforce, but to family, friends and anyone with an interest in how the sector is shaping up as part of a low carbon future.

Commenting as nominations open, OGUK chief executive Deirdre Michie said:

“This has been extraordinary year in which our industry, only just beginning to recover from the last downturn, finds itself facing more dark days ahead. Yet, in spite of the personal and professional challenges the coronavirus pandemic brought on all industries, companies and people, our key workers ensured our critical industry never stopped operating.

“This is the North Sea spirit and grit we are known for, working in tough circumstances to provide affordable energy to millions across the UK. It is this same resilience which should give confidence that our changing industry is and will continue to step forward by cutting its emissions and in using its skills and expertise to develop the solutions needed to meet our country’s climate ambitions. We remain on track to deliver our ambitious plan to realise the full potential of our sector through the energy transition, Roadmap 2035.

“With a new virtual format, OGUK’s annual awards are an opportunity to tell our positive story to more people than ever before. Whether it’s family, friends, or you  want to know more about how our industry is changing andabout the people who make this sector the amazing industry that it is, we hope everyone will enjoy taking part in acknowledging and celebrating inspirational and impressive contributions.”

Nominations close on 2 October and companies are being encouraged to champion talent and innovation, with nine awards up for grabs this year.

Shell UK upstream vice president Steve Phimister said:

“2020 has thrown down challenge after challenge for the sector. But our people have stepped up and met it, maintaining the critical energy supplies that the UK relies on, as well as starting to address the all-important subject of Energy Transition. We can all be proud of our huge efforts right across the industry, and I look forward to seeing our most important asset – our people – celebrated at these awards.”

Ends

Notes to Editors:

  1. Categories include:
Individual Awards

 

  • Award for Apprentice of the Year
  • Award for Graduate of the Year
  • Award for Mentor of the Year
Company Awards

 

  • Award for Excellence in Decommissioning
  • Award for Energy Transition
  • Award for Diversity and Inclusion
  • Award for Workforce Engagement
  • Award for Business Innovation
    – SME and Large Enterprise
  1. Further information about OGUK’s Annual Awards can be found here:

 

Issued by the Communications Team, OGUK.  Contact Communications Manager Natalie Coupar, 07531407007 / [email protected],uk

OGUK is the leading representative organisation for the UK offshore oil and gas industry. Its membership comprises oil and gas producers and contractor companies.

Government licensing review is opportunity to shine a light on changing industry

The leading representative body for the UK’s offshore oil and gas industry has embraced a UK government review into future licensing rounds as an opportunity to shine a light on how the sector is changing to support the country’s climate ambitions while still ensuring it contributes to the UK’s ongoing security of energy supply.

Speaking in response to the announced review, OGUK Chief Executive Deirdre Michie OBE called for a constructive and open discussion about how the UK will continue to meet its energy needs while delivering consumer affordability and jobs, optimising indigenous energy sources in a way that ensures the UK doesn’t offshore its emissions to other countries.
The industry is currently working with the UK Government on a North Sea Transition Deal which will look to harness the full potential of the sector in developing cleaner energy solutions including carbon capture usage and storage and hydrogen.

The announcement comes as the UK oil and gas industry marks a year since it published its response to climate commitments, Roadmap 2035, which identified over sixty actions required to support a fair and managed transition to a lower carbon future.

Commenting, OGUK Chief Executive Deirdre Michie OBE said:

“The UK offshore oil and gas industry has the essential expertise to help the UK meet its climate ambitions by 2050 while at the same time providing affordable energy for households and families, supporting jobs, and creating exciting energy jobs of the future.

“This review is an opportunity to shine a light on how our industry is changing. With commitments to halve emissions in the next decade and committed investment in exciting low carbon solutions, the changing UK oil and gas industry is stepping up to the climate change challenge.

“Throughout the coronavirus pandemic we have not stopped working, and our people have continued to work in difficult circumstances to meet as much of the UK’s oil and gas needs from domestic resources. The reality is that oil and gas will continue to be part of a diverse energy mix for years to come.

“We now need a constructive and open conversation about how our oil and gas producing country can transition fairly to a lower carbon future. Working with governments, regulators and through sensible debate, we can protect jobs and affordability while being ultimately accountable for the emissions associated with the oil and gas we use.”


Do you know where your energy comes from? Take the quiz and find out more 

Green Recovery report underlines once in a lifetime opportunity to drive transition

Commenting on the Just Transition Commission Advice for a Green Recovery report, OGUK Chief Executive Deirdre Michie said:

“We have a once in a lifetime opportunity to show how we as an oil and gas producing country can successfully build a more diverse and lower carbon energy mix in a way that embraces the skills and talents of our people and our indigenous industries.

“The Just Transition Commission report is timely and welcome in that it picks up on a number of areas that we as an industry are already driving forward in support of the Scottish Government’s climate ambitions. As noted in the report, the footprint of this industry is felt not only in the North East, but across Scotland and the wider UK.

“Roadmap 2035, developed through inclusive engagement across our industry and led by organisations including the OGTC, the Oil and Gas Authority and industry skills body Opito, is a dynamic and comprehensive plan reflecting many areas that need to be and are being addressed.

“It provides a means by which we come together to ensure we meet as much oil and gas demand from domestic resources as possible while at the same time building on the skills and experience of our sector to help deliver the energy transition using homegrown enterprises. In this way we can all work together to protect jobs, continue to provide affordable energy to consumers and unlock thriving energy communities both now, and in future.”

Ends

Oil and gas industry welcomes job support and underlines need to remain focused on delivering successful transition

The UK’s offshore oil and gas industry has today welcomed the Chancellor’s announcement of support for employers, including the Job Retention Bonus and moves to support more traineeships and jobs for young people.

The leading representative body for the sector OGUK said that the UK faces a once-in-a-lifetime opportunity to deliver moves to a lower carbon and more diverse energy mix, reinforcing the importance of the sector deal currently being discussed with the UK Government.

OGUK Chief Executive Deirdre Michie said:

“The Chancellor’s announcement provides welcome support for companies in the UK’s offshore oil and gas industry affected by the immediate impact of the coronavirus pandemic. The continued volatility facing our sector however underlines the need for long-term and targeted support. In devastating circumstances the UK now faces a once-in-a-lifetime opportunity to realise an energy transition which delivers affordable energy, supports jobs and enables our industry to put our skills to work to help cut emissions.

“Industry’s Roadmap 2035 offers a sensible blueprint which keeps net zero firmly on the agenda while also supporting energy communities to embrace new opportunities including carbon capture and hydrogen.

“Today’s funding for Direct Air Capture of CO2  is a welcome step in the right direction as part of the wider development and roll-out of Carbon Capture and Storage, and we look forward to continuing our work with government to realise the full potential of our sector in delivering the UK’s energy future.”

 

Don’t leave energy communities behind in green recovery plans

The leading representative for the UK’s offshore oil and gas industry has welcomed the Committee on Climate Change report to parliament today, calling for energy communities like the North East of Scotland and the East of England to be put at the heart of plans to transition to a lower carbon future.

OGUK recently set out industry commitments to halve operational emissions in the next decade, with a target of 90 percent reductions by 2040. The sector was one of the first to respond to the Committee on Climate Change report in May last year which called for governments to reach net zero emissions by 2050 in the UK and 2045 in Scotland, with its Roadmap 2035: a blueprint for net zero.

With formal talks now underway on a transformational sector deal, the industry body today said a green recovery is an opportunity to accelerate critical solutions including carbon capture usage and storage, and hydrogen, while the sector should continue to meet as much of the UK’s oil and gas needs from domestic resources.

OGUK Chief Executive Deirdre Michie said:

“The Committee on Climate Change report offers a measured and thoughtful view on how we can stimulate a truly fair transition towards a lower carbon future.

“We can’t afford for communities like the North East of Scotland or the East of England to be left behind. We urgently need a green recovery which enables our industry to meet as much of the UK’s oil and gas demand from domestic resources while developing the critical solutions which will help reduce emissions in other industries and wider society. This is the fair, sustainable and inclusive transition which will allow the UK to meet its climate ambitions in a way which supports jobs, skills and energy communities.”

Industry restates call to support recovery framework as it warns net zero role is not a given

The leading representative body for the UK’s offshore oil and gas industry has repeated its calls to accelerate moves to net zero as part of efforts to support the sector’s recovery.

Speaking in response to advice issued to governments by the Committee on Climate Change today, and confirmation by Prime Minister Boris Johnson that the UK Government is working with OGUK on a sector deal, the body’s chief executive today said the sector remains committed to a three-stage framework published earlier this month.

The framework sets out specific steps to support the sector during the immediate coronavirus pandemic, to aide its recovery to meet as much of the UK’s oil and gas needs from domestic resources, and ultimately to deploy the sector’s skills, capabilities and infrastructure to develop the critical net zero infrastructure of the future.

Commenting, OGUK Chief Executive Deirdre Michie said:

“The UK’s offshore oil and gas industry is under enormous pressure and we’re already seeing the direct impact of this on companies, jobs and the communities we work in up and down the country.

“This is an industry which can play a critical role in the UK’s transition to net zero, but it is not a given. Utilising our skilled people, capabilities and infrastructure means we can meet as much of the UK’s oil and gas needs from domestic resources while also stepping up to support the delivery of key low carbon technologies including CCUS at scale.

“We’ve welcomed the support from both the UK and the Scottish Government and can confirm we are working on a sector deal proposal. We need to keep working together with governments, regulators and indeed anyone interested in a fair, inclusive, and sustainable transition to deliver what is needed for the sector and the country.”

Call for three-stage framework to help head off thousands of job losses in oil and gas industry

The leading representative body for the UK’s offshore oil and gas industry has warned that up to 30,000 jobs could be lost in the sector as it called for the transition to net zero to be put at the heart of recovery plans.

The stark warning comes as companies in the sector report an increasingly grim outlook as they deal with the fallout from the coronavirus pandemic and a 20 year low in oil prices and a 14 year low for gas.

The industry is expected to see a dramatic reduction in revenue, sparking concerns about the ability of some companies to survive a downturn that is likely to be even more severe than the one in 2015 which the sector is just emerging from.

The figures are published in a report issued today by OGUK following a survey of its membership.

The Business Outlook: Activity and Supply Chain report, calls for urgent action to protect energy security, jobs, and energy regions. OGUK has asked governments and regulators to support a three-stage framework to support the sector in dealing with the immediate crisis while positioning it to play a key role in the UK’s transition to a net zero future.

The report notes:

  • The average oil price for March was $22.5/barrel, a 65% decrease compared to January 2020. This trend has continued in April with Brent price falling to its’ lowest point for 20 years to $16/bbl on April 22nd.
  • For the first time, WTI became negative in the US following an over-capacity and lack of local storage. (WTI is a crucial regional benchmark for North America).
  • There is now a stark contrast in sentiment compared to the beginning of the year with all E&P companies and 93% of supply chain firms reporting a worse or significantly worse outlook for 2020.
  • OGUK anticipate that CAPEX could fall to between £3.5-4 billion, the lowest investment since 2000 and amongst the lowest levels of investment since the early 1970s. OGUK also anticipates that OPEX will be reduced by 10-20%, compared to expectations at the start of the year, to around £6-7billion
  • OGUK also warns that drilling activity this year could be down by 50% on 2019 levels – pushing activity levels to record lows.
  • The position of many areas of the supply chain is increasingly fragile. Revenues and margins across the supply chain are expected to fall by 20-30 per cent, on top of reductions seen during the last downturn. The impact on businesses will vary depending on their position in the industry, with some areas of the supply chain expected to see greater reductions.
  • Although there is still a significant degree of uncertainty in estimates affecting the next 12-18 months, based on company feedback, OGUK currently anticipates that the level of direct and indirect jobs supported by the industry could contract by up to 30,000 during this period.
  • The survey feedback also indicates that as part of their response to the crisis more than three-quarters of supply chain companies plan to increase their non-oil and gas work this year.
  • Around 30% of respondents to the recent business survey identified that they were successful in securing funding through government COVID-19 financial packages, with over 40% sounding out the different options as this report went to release.
  • The three-stage framework proposed by OGUK covers: immediate needs, industry recovery and accelerating to a net zero future. It includes recommendations to improve current COVID-19 financial packages, retaining a sector leading and progressive regulatory, fiscal and policy framework, as well as the development of a sector deal which will support the supply chain and accelerate the UK towards a net zero future.

Commenting on the report, OGUK Chief Executive Deirdre Michie said:  

“Like so many industries, our members have been profoundly impacted by COVID-19.

“With historic low oil and gas prices coming so soon after one of the most severe downturns our sector has experienced, these findings confirm an especially bleak outlook for the UK’s oil and gas industry. If the UK is to maintain its supply of domestic energy, protect jobs and build the critical infrastructure it needs to transition to a net zero future, ours is an industry worth fighting for.

“It’s why OGUK is today outlining a three-stage framework with a range of measures for governments and regulators to support industry now, stimulate a recovery and accelerate the transition to a net zero future.”

Oil price drop is body blow for industry already creaking under COVID-19 pressure

The leading representative body for the UK’s offshore oil and gas sector has warned the latest oil price developments could fundamentally undermine the ability of the industry to recover and serve the energy transition.

It comes as US crude oil prices continued to drop this evening while the international benchmark Brent crude traded at just over $25 a barrel. While WTI is a localised trading market in the US, OGUK this evening warned it remains concerned about the continued low prices of Brent crude.

OGUK Chief Executive Deirdre Michie said:

“While we have anticipated continued pressures on oil markets, there’s no getting away from the fact that this situation is a body blow for an industry already creaking under the strains of the impact of COVID-19 and sustained low commodity prices.

“The dynamics of this US market are different from those directly driving UK produced Brent, but we will not escape the impact. Ours is not just a trading market; every penny lost spells more uncertainty over jobs, our contribution to public services and to the just transition we all want to see. OGUK will be pressing the case for a COVID-19 resilience package to governments in the coming days which will focus on protecting the supply chain, jobs and our ability to continue to reposition ourselves for the future.”

 

OGUK welcomes Government action to support workers and companies in face of triple impact on industry

The UK offshore oil and gas industry which plays a vital role in the security of energy supply for the nation has been severely hit by the triple impact of COVID-19, the oil price crash and the lowest gas prices in the last ten years.

With many businesses facing a fight for survival, industry body OGUK, that represents over 400 companies has welcomed the UK Government’s announcement of help for both workers and companies.

Deirdre Michie, Chief Executive of OGUK said:

“Many of the companies in our industry, especially in the supply chain, are still financially fragile after the previous oil price crash, so the triple whammy we now face is particularly dangerous. In that context the strong response from the UK Government and their clear determination to support both workers and companies is very welcome. It is now crucial to ensure companies can easily and rapidly access this money as for many businesses and individuals cash flow is now vital.”

Companies in the UK offshore oil and gas industry contributes around 50% of UK gas which is used for a large proportion of our electricity production and which heats the vast majority of our homes. They also produce a major proportion of the oil that fuels our cars and is used in the manufacture of a huge proportion of the items we use in our daily lives from contact lenses and toothbrushes to the lightweight cases on our mobile phones. Companies in the UK industry are also backing the UK drive to net zero emissions and have also been working on technology to help us get there.

Industry welcomes inclusion on key workers list

OGUK has today welcomed the UK Government’s announcement that oil and gas workers are included on a list of key workers whose children will be prioritised for education provision.

Commenting, OGUK Chief Executive Deirdre Michie said:

“As an industry we are committed to doing everything possible we can to help the country and our businesses and our people through this devastating crisis and we appreciate the announcement today on access to education. We’re working closely with government to resolve any challenges we face to maintaining safe operations for our people and ultimately ensuring we can continue to provide the UK with secure and affordable energy.”

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OGUK warns industry position is paper thin in face of oil price and coronavirus pressures

The combination of the global economic impact of the continued spread of the coronavirus, the most dramatic fall in oil price in almost 30 years and a halving of gas prices is driving an increasingly fragile outlook for the UK’s offshore oil and gas sector. Severe pressures are already building across the sector’s supply chain, with the pressures expected to significantly undermine the industry’s businesses, jobs and contribution to the economy.

The stark warning was made today by the leading representative body for the sector OGUK, in the first in a series of Business Outlook reports which will shine a light on the issues facing the sector in a challenging and dynamic business environment.

The Business Outlook: Markets and Investment report shows OGUK now expects drilling levels to fall back to the lows experienced in 2016, down more than a third on previous forecasts. The report also warns of a possible 20-30 percent decrease in capital investment for 2020 as well as the potential that the operators in the sector will experience negative cash flow this year.

While the industry was only beginning to emerge from one of the most prolonged and severe downturns in its’ history, OGUK said the supply chain had remained under significant pressure, with tight margins and relatively low activity levels.

OGUK today called for government support to ensure the sector can continue to provide security of supply in the face of these extraordinary difficulties. The body also said it was working with industry, regulators and government to understand how it can protect supply chain companies, and jobs.

OGUK Chief Executive Deirdre Michie said:

“Businesses and industries across the UK are facing extraordinary pressures but coming so soon after one of the worst downturns in our history, this report shows that this sector is now in a paper-thin position.

“The offshore oil and gas sector is part of the UK’s critical infrastructure, providing the secure and affordable energy the country needs and is  a key contributor to the economy in terms of supporting hundreds of thousands of skilled jobs, businesses and our wider economic contribution.

“Action is needed now to ensure the sector doesn’t lose the skills, experience and infrastructure it needs to meet the UK’s energy needs of today as well as help deliver its net zero ambitions in future.  We appreciate the Chancellors recent statement and OGUK is requesting urgent meetings with ministers to consider a COVID-19 Sectoral Resilience Package which would help to give some reassurance to the regions, businesses and jobs this industry supports.

“We’re already working with our members to understand the challenges businesses are facing in these unique and extremely worrying times.”

OGUK Market Intelligence Manager Ross Dornan said of the report:

“The first week of March saw the most dramatic fall in oil price in almost 30 years and it remains uncertain as to how the market is going to evolve in the coming months as the coronavirus impact increases each day.

“Alongside this, the gas price has more than halved in the last 12 months, and we face a situation where E&P production revenues are set to be almost 50 percent lower than they were  two years ago despite the same level of output.

“The UKCS has seen significant improvement in its competitiveness, efficiency and productivity in recent years. These improvements will help performance, however in this harsh environment we expect companies to take significant steps to preserve cash flow and ensure business continuity. This will have a very negative impact on the supply chain, which has not yet seen much recovery from the previous downturn and doesn’t have the capacity to absorb much more pain.

“Companies are increasingly diversifying into other energy sectors and across industries more generally, but many cannot diversify or are too early in their journey to provide adequate protection/buffer. At this time innovative thinking, partnerships and meaningful collaboration will be required to help as many as possible to weather the storm.”

COVID-19 Update

OGUK Health, Safety and Environment Director Trevor Stapleton said:

“OGUK continues to work with our members to share official advice on coronavirus (COVID-19) from the relevant bodies to ensure the health of the people in our industry.

“This sector is experienced in managing risks associated with complex safety and health matters, with robust processes and arrangements in place to ensure effective prevention measures and response for both onshore and offshore operations. The challenges of managing health in a remote environment are understood and industry has long-established medical facilities and personnel onboard, supported by a topsides doctor onshore.

“In addition to following official advice and in support of members, OGUK has over the past weeks facilitated industry discussion with the appropriate agencies on how best to understand, manage and respond to the challenges this novel virus poses, ensuring information is shared. This includes our regulator, the HSE, and the relevant public health bodies.

“As with confirmed cases onshore, in the event of a confirmed case offshore, the affected operator will work with the relevant agencies to risk assess the specifics of the situation and ascertain the appropriate response. OGUK continues to work with all our members and stakeholders to share information.”

General Update:

Following the WHO confirmation yesterday that COVID-19 is a pandemic, the UK government is expected to move into the next stage of response shortly.

This may mean significant changes to the way we work and socialise, and most importantly the way we individually act to minimise the spread of infection.

All members are encouraged to stay up to date with and continue to follow government advice on responding to COVID-19 and to communicate with their workforce and supply chain on how that advice is being implemented in their operations.

There is wide-ranging advice on many topics available from Public Health England and Health Protection Scotland on how best to minimise transmission of the virus within the workplace. This advice is revised and new guidance produced continuously as more is learned about the virus.

Regularly updated guidance and resources can be found on the following web pages:

https://www.gov.uk/government/collections/coronavirus-covid-19-list-of-guidance

https://www.hps.scot.nhs.uk/a-to-z-of-topics/covid-19/

UK agencies are co-ordinating to ensure that advice is consistent across the country.

OGUK Pandemic Steering Group

OGUK has convened an industry Pandemic Steering Group, which is made up from representatives from across the sector and is tasked with identifying and addressing the particular challenges faced by those working to maintain offshore operations at industry-level and ensuring communication with relevant stakeholders and government agencies.  The group is tasked with focusing only on those issues which require cross-industry action and co-ordination.

The PSG is meeting regularly and updates are being shared with our technical groups. It is not tasked with providing updates and advice on operational response. Member companies are implementing their individual pandemic response and business continuity plans to ensure that industry can respond effectively.

OGUK will share industry-specific advice as it becomes available and enable sharing of lessons learned as members gain experience in dealing with the specifics of this pandemic.

Industry Travel Policy for Offshore Installations

Given the challenges of managing any confirmed case of COVID-19 on an offshore installation, industry policy is to have restrictions on workers travelling to offshore installations. Industry policy is that personnel will not be permitted to travel offshore if:

  • They have travelled from or transited through affected countries in the last 14 days, or since dates defined on the UK government’s list of affected areas.

This includes both Category 1 and Category 2 areas (up to date lists can be found here).

  • If they have been in close contact with a confirmed case of COVID-19 in the last 14 days.
  • If they have experienced symptoms of cough, fever and shortness of breath.

Oil and gas industry travel restrictions apply to fixed and mobile offshore installations. It is not intended to apply to vessels involved in the offshore oil and gas industry.