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.

The leading representative body for the UK’s offshore oil and gas sector, OGUK, has highlighted its plan to ensure the sector can help deliver net zero emissions while providing the secure and affordable energy Scotland needs as it transitions to a low carbon future.

It comes in response to an interim report published by the Scottish Government-appointed Just Transition Commission. The commission welcomed the industry’s Roadmap 2035 – one of the first industrial responses to UK and Scottish Government net zero commitments – which sets out over 60 practical actions in five key areas needed to ensure a successful transition.

The report also called for greater engagement with the workforce, steps to ensure reducing emissions does not see high quality jobs leave the country and called for a joined-up approach to ensure all agencies working with stakeholders towards a shared goal.

Responding to the report, OGUK Chief Executive Deirdre Michie said:

“This report shares our industry’s focus on delivering a fair, inclusive and sustainable transition to a low carbon future. These findings confirm the need for continued partnership working with governments, regulators and our people to ensure that we can continue to support the UK’s diverse energy needs, the communities we work in as well as wider society.

“Our blueprint for net zero as outlined in Roadmap 2035 shows a changing industry in action with a credible plan for the future. Delivering the Roadmap means that the sector can contribute to supporting the energy transition as well as providing secure and affordable energy, ensuring hundreds of thousands of jobs and crucially developing the skills and expertise Scotland needs to find solutions to meet net zero ambitions.

“We’re in the early stages of our journey as an industry and a country and this reinforces that we are heading in the right direction. With the continued support of governments and regulators and a shared commitment to Roadmap 2035, we can deliver a successful transition for the people working in our industry and wider society – both now and in future.”

The leading representative body for the UK’s offshore oil and gas industry today outlined the details of its response to UK and Scottish Government net zero commitments in a keynote speech delivered by OGUK Chief Executive Deirdre Michie OBE.

Speaking to an audience of politicians, policymakers and campaign groups in Edinburgh, Deirdre Michie said:

Good afternoon everyone and thank you for coming today.

As we all know, our country and much of the world is currently engaged in an increasingly polarised debate about climate change,

It’s passionate, important and yes – urgent.

I’ve come to you today to say that the UK’s offshore oil and gas industry is not shying away from the climate conversation but embracing it,

More than this, I want to put forward our specific proposals for the transition to the lower carbon energy future we all want to see,

It was after all Abraham Lincoln who said the best way to predict the future is to create it,

So, I’m pleased you have all been able to join us and look forward to your thoughts and reflections,

Many of you will know that OGUK’s role is to inform, engage and champion the 400 plus members operating in the UK Continental Shelf – often referred to as the North Sea,

And while this term might be convenient it is actually incorrect as it ignores the East Irish Sea and the vast frontier region in the Atlantic Ocean west of Shetland,

It is a neat – if rather dull – illustration of the need for this technical and complex but critical industry to better inform the debate with facts and tangible examples,

Facts need to be the foundation of our understanding,

Because that is what will enable us to find solutions.

And before I go on, there should be no doubt: this industry isn’t talking about what is and isn’t climate change anymore.

The facts are that the climate is changing, and we must all change if we are to protect our planet for future generations,

It will require constructive, collective and coordinated action to decarbonise a largely fossil fuel-based society which has, in relatively few years, helped to dramatically improve the living standards, health outcomes and quality of life that many of us so freely enjoy today,

But we should also be clear that the need for change also comes at a time when global energy demand is forecast to grow by up to 30 percent by 2050.

And while all industries, businesses and people need to think about what they can each do,

Our industry needs to be generous in deploying our skills, infrastructure and expertise to help find those solutions.

And we are already stepping up to the challenge.

We are an industry capable of doing big things in remarkable ways,

A capability we can – and want to – apply to the climate change challenge.

Here in Scotland, and across the UK, this industry has and continues to sustain hundreds of thousands of jobs, currently over 270,000 as per our workforce report last year.

That’s about one in every 125 employed people in the UK, or 1 in 25 in Scotland.

We’ve contributed over £350bn in production taxes alone, and more from corporation tax and Pay As You Earn as well as billions of pounds in terms of capital spend and running costs invested over the years.

Importantly, this indigenous industry has supported an affordable and secure domestic supply of oil and gas, which remains fundamental to so many of the products and fuel that we need for our everyday lives.

While we continue to emerge from one of the toughest downturns in our history and are by no means out of the woods yet, with real pressures remaining on the supply chain, it is through this incredibly challenging time that we have demonstrated our ability to transform and adapt, delivering a reputation for efficiency and competitiveness,

Operating cost reductions are being sustained and expected to remain around $15-16 per barrel this year.

And we continue to deliver safely and efficiently the day job of exploring, developing, producing and decommissioning.

We are also in action in terms of responding to the challenges of climate change,

You only have to go to Orkney, Glasgow and here in Edinburgh and visit any of our members working in your community to know that this is a challenge we are taking seriously.

And I would encourage you to do this, and to see it first-hand, some of the great work that is going on.

Stepping up to reduce carbon emissions to net zero by 2050 in the UK and by 2045 in Scotland is also an opportunity for the UK’s oil and gas industry to shine in a competitive global market.

Sustaining jobs, contributing to public services through taxation, providing secure energy supply and diversifying as we help to find solutions.

The Scottish Government has made clear that it supports a sustainable, fair and inclusive transition,

And I know the UK Government is taking a similar approach,

These are important principles which say a lot about the kind of transition Scotland wants to see.

First – it means planning for a transition which ensures people in Scotland continue to enjoy affordable and low carbon energy,

Second – this transition will deliver opportunities for the people working in the industry today as it evolves in the coming decades,

Third – the transition must deliver sustainable and enduring change,

While I welcome calls to “do more” and at pace,

We now need to move the debate on from talking about the need to act, to demonstrating what we are doing to act,

We have a plan – Roadmap 2035 – which offers a blueprint for net zero,

It is one of the first industrial responses to the UK and Scottish governments net zero commitments.

It aims to enable a safe, sustainable and competitive oil and gas industry supporting the UK’s energy needs and its transition to a net zero future,

These aspects are not mutually exclusive but inextricably linked.

Developed through over 5000 engagements with a range of stakeholders, Roadmap 2035 has been welcomed by both governments and energy ministers.

It sets out 60 actions across five key areas,

And today I can confirm that OGUK has convened an industry-wide group of company leaders and young professionals to coordinate efforts, identify gaps and drive action in pursuit of what is a truly challenging task but also a transformational opportunity,

So, to the first group of actions – our support for net zero

We will do this by reducing emissions from the operational production of oil and gas,

And through supporting other heavy emitting sectors to achieve net zero through our skills, technologies and infrastructure,

But what does this mean?

Firstly – in terms of our own production emissions, we will be a net zero oil and gas basin by 2050,

Reducing emissions from 14 million tonnes – currently three percent of the UK’s total greenhouse gas emissions – to 0.5mt – in line with the Climate Change Committee outlook,

It will require significant investment, new technology and close working with the renewables sector in Scotland and across the UK

I’m pleased to announce that we are developing targets for emissions reduction, and we will soon publish a detailed action plan in support of this — this is an industry in action.

In December last year the OGA – our industry regulator – published the interim findings of the first phase of its Energy Integration Project,

Working with BEIS, the Crown Estate and Ofgem, this important report offers a good starting point as to how we begin to bring key carbon reduction concepts to life,

Reducing emissions on oil and gas installations by using low carbon electricity including directly from offshore wind farms to replace offshore power generation from gas and diesel,

It takes me on to our second net zero commitment.

We will support the development of CCUS and other low carbon tech at scale,

The Climate Change Committee estimates that up to 175m tonnes of C02 each year will need to be captured and stored in the UK by 2050.

And that’s even if the UK delivers against every cross-sectoral recommendation in their initial report,

Indeed – CCUS is required in all decarbonisation scenarios.

Globally, some 10,000 projects will be needed,

An industry forecast to be worth around £100bn each year by 2050,

This is not only a necessary technology to meet our climate goals, it is therefore also a potential opportunity for Scotland and a diversifying energy industry.

This sector stands ready to play its part.

Assisting in the development of the commercial business models that are needed to help deliver CCUS clusters, hydrogen opportunities and the decarbonisation of offshore platforms at scale,

We are putting forward our skills, capabilities, assets and knowledge,

And working with governments and regulators to clarify policies and regulations on CCUS and hydrogen,

including improving the understanding of what is required to repurpose existing oil and gas assets for use in the low carbon world,

The CCS charter signed between the Scottish Government and industry demonstrates our commitment,

We are looking to work with governments and regulators to progress the five CCUS projects across the UK which now need to move at pace into the next phase,

One of which is the North East’s £224m Acorn project.

Expected now to be operational by 2024,

And with the potential to store 16.2m tonnes of carbon per year,

It would be good progress, but still only a fraction of what is required.

And on hydrogen,

Much more will have to be done to explore the full opportunity of this potentially disruptive player in the clean energy mix,

Reports by Swansea and Keel Universities found up to 30 percent of the UK’s gas supply can be replaced with hydrogen without needing to modify people’s appliances,

With currently 75 percent of the UK’s heating demand in buildings being met by natural gas

It shows the scale of the opportunity,

And the analysis from the International Energy Agency showing that the cost of producing hydrogen from renewable electricity could fall 30% by 2030 as a result of declining costs of renewables and the scaling up of hydrogen production helps us to begin to see what a truly transitional and transformational approach could look like,

Blue hydrogen derived from gas will need to compete alongside green hydrogen made from renewables – but both will be needed if we are to match the energy needs I referenced earlier on,

So, combining with Carbon Capture and Storage, hydrogen from natural gas could cut emissions, alongside efforts to reduce the cost of producing hydrogen from clean energy,

You can see why it matters that we do this right,

The developing hydrogen economy could also bring far-reaching benefits across Scotland,

For example, in Orkney, where a consortium led by the OGTC alongside universities and oil companies are looking to create a test centre at Flotta oil terminal for trialling these different types of technologies for use on offshore platforms,

So today we urge the UK and Scottish governments to continue to think about the full system changes from the production of energy to its use in our homes and businesses,

To recognise that this industry can help provide solutions which unlock the inclusive, fair and sustainable transition we all want to see,

And we call for a comprehensive UK energy strategy from the UK Government, to be reflected in their imminent white paper.

The Committee on Climate Change report also recognised that by 2050, oil and gas will continue to form part of a diverse energy mix,

Albeit at lower levels, roughly about a third of what it is today,

That’s because the CCC forecast that oil and gas will still be needed by those sectors especially difficult to decarbonise,

Sectors such as heavy industry and aviation, and of course its continued use in many industrial and chemical processes,

Whether its pharmaceuticals, or in producing the composite materials which, used sustainably, will continue to be critical in our daily lives,

So, I also consider it’s important we deliver as much of this demand from domestic resources – a point I’ll come back to shortly.

Meeting net zero is only the first of five themes outlined in what you can see truly is a comprehensive roadmap,

With our 2nd theme of driving technology and innovation, we will spur a net zero technology revolution, adding some £10bn in economic value to the UK through technology and innovation,

Through work being championed by the OGTC, that has already launched a net zero solutions centre in support of this ambition,

And our 3rd theme, of developing people and skills,

By 2035 we will support some 130,000 jobs,

Compared to just over 150,000 direct and indirect jobs we support today,

This will actually require us to attract 40,000 new people, a quarter of whom will be in new roles, many of which don’t exist yet, to cater for technology developments as well as the expected natural attrition from the industry through retirement,

This is being driven by the industry skills body OPITO and their innovative work through the Energy Skills Alliance to support the development of a multi-skilled energy workforce that is flexible, dynamic and technologically enabled,

In growing the economy and exports, our 4th theme,

We’re looking to double exports from a diversifying energy sector to £20bn each year,

Working with governments to deepen our sector’s understanding of international markets and ensure our experience is utilised globally and in different sectors,

And those of you who joined the excellent cross-party group held with Scottish Renewables last week will have heard how diversification in the supply chain can open the door to more international opportunities,

The final theme is on meeting the UK’s need for energy and industrial products.

I spoke earlier about the requirement to meet as much of the UK’s energy needs from domestic resources, as per the CCC report and its focus on energy sovereignty,

And their forecast that during the transition and beyond, there remains a need for oil and gas.

Let’s be clear here – the premature shut down of this industry in the UK would do nothing to impact consumption,

Those needs would instead be met from increasing the amount of oil and gas imported from across the world,

But it would also mean we realise none of the benefits this indigenous industry brings in jobs, taxation and security of supply,

Nor would it enable control over environmental governance and standards.

So, what might seem an easy and quick fix, is instead simply shifting the problem to other countries.

Which is sometimes referred to as carbon offshoring,

This isn’t fair, inclusive or sustainable, it’s actually irresponsible.

It’s an example of a transition which helps get to the same destination, but at an unnecessary cost,

Leading to unintended consequences because the changes aren’t inclusive or supported by an effective, integrated and affordable energy system,

This is not the path we need to go down, and it’s why today we are coming to you with our plan,

Building on their contribution to this great industry, we can take Aberdeen, Glasgow, Shetland, Edinburgh and everywhere in between on the journey,

We can equip people with the skills and remove barriers so that they can enjoy rewarding energy careers for decades to come,

Meaning that by 2045 in Scotland –  we will have delivered a truly fair, inclusive and sustainable transition to a low carbon future where our transformed and thriving industry is part of the solution,

It’s an exciting proposition.

One which will underpin our calls for a transformational sector deal which we will look to announce later this year,

Which is why today my ask of you all is to consider the Roadmap,

To hear out the facts and then make your call as to the role of this industry going forward.

As we look to the future, I have no doubt that it will be our shared understanding, informed by facts,

And an inclusive approach, that will enable our delivery of the net zero challenge,

Yes, we need vigorous debate, but the so-called cancel culture Obama spoke about,

The culture which says the people in our industry don’t have the right to a voice,

Undermines the fundamental principles of the inclusive, fair and sustainable transition we all want to see.

We are here and we want to help,

And we want to be a positive force in this transition,

As Jonathan Foer notes in his excellent book ‘We are the Weather’,

Collective action is the best way to save our home and way of life.

So, let’s work together, because we can.

Thank you.

Commenting on protests outside oil and gas offices in Aberdeen today, OGUK Stakeholder & Communications Director Gareth Wynn said:

“Climate change will be solved by practical actions not conspiracy theories and stunts. It’s disappointing that this group is choosing to disrupt the normal working day of people in this industry, causing alarm rather than engage in meaningful discussion with key decision makers.

“This industry, through our Roadmap 2035, is committed to delivering an inclusive, fair and sustainable transition to a low carbon and diverse energy mix. Again, we welcome those who are willing to take part in meaningful and solutions-focused discussions. Our industry is packed full of people with the engineering and environmental knowledge and skills to play a key part in reducing emissions and we are already taking action.”

The leading representative body for the UK offshore oil and gas industry has kicked off the new year with ambitious plans to champion the sector as part of a diverse energy mix.

Two new directors will join OGUK’s leadership team under the continued direction of Chief Executive Officer Deirdre Michie OBE.

Katy Heidenreich

Katy Heidenreich

Trevor Stapleton is announced as OGUK’s new Health, Safety and Environment (HSE) director while Katy Heidenreich is confirmed as Operations director, both commencing their new roles on 3 February 2020.

The two new directors join a reshaped leadership team to support industry in its delivery of Roadmap 2035: a blueprint for net zero.

Matt Abraham will take on a more focused brief as Supply Chain and Exports director, directing his extensive experience in contractor companies to help grow exports and support a resilient, competitive and diverse supply chain. Meanwhile. Mike Tholen will become OGUK’s Sustainability director, using his own deep experience in the industry to help drive  action to deliver a net zero basin,  from the operational production of oil and gas and assisting the UK in reducing its total GHG emissions through to adoption of technologies including Carbon Capture Usage and Storage.

Graham Elgie continues as OGUK’s Finance and Corporate Services director and Gareth Wynn as OGUK’s Stakeholder and Communications director.

Commenting, OGUK Chief Executive Deirdre Michie said:

“2020 is synonymous with perfect vision and we are wasting no time in getting to work delivering industry’s ambitious plans for the future outlined in Roadmap 2035: a blueprint for net zero.

“I’m delighted to announce these changes to our leadership team which will enable us to even better support companies and to help drive  action as we work to inform, engage and advocate the importance of this industry as part of a diverse energy mix.

Trevor Stapleton

Trevor Stapleton

“We have a challenging but exciting year ahead of us as we work to support all our members that operate in or provide services to the UK offshore energy industry. With continued volatility in oil markets our focus remains on enabling a safe and competitive industry that delivers to its full potential within the energy transition, ensuring the North Sea remains an internationally attractive place to do business.

“Katy and Trevor each bring an incredible amount of experience and are highly regarded by their peers. Their strategic insight will be critical as we gear up to deliver our blueprint for net zero, demonstrating the practical steps companies are taking to reduce emissions, meet UK energy needs and develop our people and skills for the future.

“This industry has a positive role to play in providing solutions to the UK’s net zero challenge and we are already in action with our Roadmap. Leading from the front, OGUK is proud to champion our dynamic and diverse industry and we look forward to continuing to work with all of our stakeholders in the year ahead.”

The leading representative body for the UK’s offshore oil and gas industry has underlined its commitment to developing the technical solutions required to help meet the UK and Scotland’s net zero ambitions. It comes as two key reports on plans to reduce emissions are published today.

Industry regulator the Oil and Gas Authority (OGA) today published the interim findings of its Energy Integration report detailing how the sector is working to reduce emissions from the operational production of oil and gas through platform electrification. The report also outlines how the sector can support the decarbonisation of other heavy industries through carbon capture, usage and storage, and hydrogen.

The Climate Change Committee today also published its 2019 progress report to the Scottish Parliament which recommends both the UK and Scottish governments work more closely together to make the best use of devolved and reserved policy levers in key areas where responsibilities are split. This includes the future of heating, electric vehicles and low-carbon infrastructure.

Commenting, OGUK Upstream Policy Director Mike Tholen said:

“Today we have two big reports which both recognise the contribution the oil and gas industry can make to the UK and Scotland’s net zero ambitions.

“Partnership working between industries, governments and regulators will be critical to the scale of our success. As we look to a new year, OGUK will continue to seek support for industry’s Roadmap to 2035: a blueprint for net zero.

“Enabling a safe and competitive industry that realises its full potential in the energy transition can only be good news for the jobs, communities and climate aspirations we support.

“From reducing emissions from the operational production of oil and gas through electrifying offshore platforms, to helping other heavy emitting sectors to decarbonise by developing carbon capture, usage and storage technologies at scale, our industry has the skills, capabilities and infrastructure to play a key role in developing solutions.”

Read about Roadmap 2035 and our Energy Transition Outlook report

A comprehensive report into the changing energy landscape has called for urgent action to progress low carbon technologies critical to the UK and Scottish Government’s net zero ambitions.

It says government and industry must work together to progress to the next stage five key projects across the UK which look to capture, transport and store carbon dioxide from heavy emitting industrial processes including power plants. It also calls for joint action to increase the potential for low carbon hydrogen to be used as a fuel to heat homes and power cars.

The policy recommendations are published today by the leading representative body for the oil and gas sector, OGUK, in its second Energy Transition Outlook Report. The document considers the changing energy landscape in the UK and outlines progress achieved by the UK’s oil and gas sector over the past year to provide industry and economy-wide solutions towards reducing emissions.

However, the report authors warn that the sector will need to earn its position in the changing energy world, with rapid action required to ensure the sector transforms over the next 30 years while continuing to meet as much of the UK’s oil and gas needs from domestic resources.

The report findings show:

  • The UK’s oil and gas industry is in a unique position to lead in the development of Carbon Capture Usage and Storage, with 5 projects situated across the country currently being explored
  • UK energy sector investment will need to double in order to achieve a decarbonised economy

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

“Our Energy Transition Outlook report shows the changing energy landscape in the UK and the opportunities and challenges it presents all industries, businesses and people, our own included.

“With the launch of Roadmap 2035: a blueprint for net zero, we were one of the first industrial sectors to set out credible plans to support the UK and Scottish Government net zero emissions. Yet the oil and gas sector will have to earn its position in this new energy world, cutting its own emissions and working with governments and regulators to progress the five CCUS projects which now need to move forward into the next phase and developing hydrogen.

“As our report shows, there is lots of work to be done in a huge market which is only getting bigger as global demand for energy continues to grow. The Climate Change Committee report published at the beginning of this year noted CCUS was critical to our net zero ambitions. Our challenge, working with others including the OGTC’s Net Zero Solutions Centre, is to realise CCUS and other low carbon technologies as an opportunity for British businesses.”

 

 

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The UK’s decommissioning sector’s growing competitiveness is revealed in the 2019 Decommissioning Insight report launched by OGUK today at the Offshore Decommissioning Conference held jointly with Decom North Sea. Now in its tenth year of publication, the report forecasts the UK’s decommissioning activity and expenditure over the next decade,  revealing that while activity on the UK Continental Shelf (UKCS) is expected to increase, expenditure will remain consistent at around £1.5 billion per annum, demonstrating the sector’s improving efficiency performance.

The report findings show:

  • Decommissioning now represents just under 10 per cent of the oil and gas industry’s overall expenditure
  • Pace of decommissioning expenditure remains steady at around £1.5 billion per year
  • Over the next decade, forecast expenditure for UKCS decommissioning remains constant at £15.2 billion
  • M&A activity in some areas of the North Sea is extending the life of offshore assets and moving decommissioning activity to the future
  • Within the next ten years $85 (£67) billion will be spent decommissioning oil and gas assets in the global market
  • To date, nine per cent of all the platforms installed on the UKCS have been decommissioned

Operators across the sector contribute data for OGUK’s Decommissioning Insight, which plays a fundamental role in providing market intelligence that highlights predicted activity and cost trends.

Commenting on the report, OGUK’s decommissioning manager Joe Leask said:

“With a firm grip on cost management, environmental and safety standards, our tenth annual Decommissioning Insight shows a healthy sector well-positioned to realise some £15bn of opportunities over the next decade.

“Our report underlines the significant intellectual capital anchored here in the UK. Ensuring this is shared is key to maintaining the competitiveness of the sector, enabling this homegrown industry to capture the lion’s share of an emerging global market some four times greater.

“We’re already seeing exciting new companies emerging as specialists in decommissioning, either offering full-scope solutions or focusing on specialising in areas including offshore well decommissioning and onshore dismantling and disposal. These innovative business models offer industry real choices whether operators carry out decommissioning themselves or pass the scope to those companies offering increasingly competitive solutions,

“Decommissioning is not the end of our industry; it offers a new beginning. Four years ago, industry stepped up to the challenge to cut decommissioning costs by 35 percent and we are well on the way to achieving that. We must apply the same collective determination and pioneering capabilities to deliver the net zero carbon challenge. This includes the re-use of old facilities for carbon capture and storage, presenting new opportunities to generate new value from old assets and help deliver the net zero future that industry has made to commitment to deliver.”

Download your copy of the Decommissioning Insight Report:

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.”

Find the latest updates on here

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.

Just Transition Commission report underlines need for fair, inclusive and sustainable transition

The leading representative body for the UK’s offshore oil and gas sector, OGUK, has highlighted its plan to ensure the sector can help deliver net zero emissions while providing the secure and affordable energy Scotland needs as it transitions to a low carbon future.

It comes in response to an interim report published by the Scottish Government-appointed Just Transition Commission. The commission welcomed the industry’s Roadmap 2035 – one of the first industrial responses to UK and Scottish Government net zero commitments – which sets out over 60 practical actions in five key areas needed to ensure a successful transition.

The report also called for greater engagement with the workforce, steps to ensure reducing emissions does not see high quality jobs leave the country and called for a joined-up approach to ensure all agencies working with stakeholders towards a shared goal.

Responding to the report, OGUK Chief Executive Deirdre Michie said:

“This report shares our industry’s focus on delivering a fair, inclusive and sustainable transition to a low carbon future. These findings confirm the need for continued partnership working with governments, regulators and our people to ensure that we can continue to support the UK’s diverse energy needs, the communities we work in as well as wider society.

“Our blueprint for net zero as outlined in Roadmap 2035 shows a changing industry in action with a credible plan for the future. Delivering the Roadmap means that the sector can contribute to supporting the energy transition as well as providing secure and affordable energy, ensuring hundreds of thousands of jobs and crucially developing the skills and expertise Scotland needs to find solutions to meet net zero ambitions.

“We’re in the early stages of our journey as an industry and a country and this reinforces that we are heading in the right direction. With the continued support of governments and regulators and a shared commitment to Roadmap 2035, we can deliver a successful transition for the people working in our industry and wider society – both now and in future.”

UK oil and gas industry outlines transition plans

The leading representative body for the UK’s offshore oil and gas industry today outlined the details of its response to UK and Scottish Government net zero commitments in a keynote speech delivered by OGUK Chief Executive Deirdre Michie OBE.

Speaking to an audience of politicians, policymakers and campaign groups in Edinburgh, Deirdre Michie said:

Good afternoon everyone and thank you for coming today.

As we all know, our country and much of the world is currently engaged in an increasingly polarised debate about climate change,

It’s passionate, important and yes – urgent.

I’ve come to you today to say that the UK’s offshore oil and gas industry is not shying away from the climate conversation but embracing it,

More than this, I want to put forward our specific proposals for the transition to the lower carbon energy future we all want to see,

It was after all Abraham Lincoln who said the best way to predict the future is to create it,

So, I’m pleased you have all been able to join us and look forward to your thoughts and reflections,

Many of you will know that OGUK’s role is to inform, engage and champion the 400 plus members operating in the UK Continental Shelf – often referred to as the North Sea,

And while this term might be convenient it is actually incorrect as it ignores the East Irish Sea and the vast frontier region in the Atlantic Ocean west of Shetland,

It is a neat – if rather dull – illustration of the need for this technical and complex but critical industry to better inform the debate with facts and tangible examples,

Facts need to be the foundation of our understanding,

Because that is what will enable us to find solutions.

And before I go on, there should be no doubt: this industry isn’t talking about what is and isn’t climate change anymore.

The facts are that the climate is changing, and we must all change if we are to protect our planet for future generations,

It will require constructive, collective and coordinated action to decarbonise a largely fossil fuel-based society which has, in relatively few years, helped to dramatically improve the living standards, health outcomes and quality of life that many of us so freely enjoy today,

But we should also be clear that the need for change also comes at a time when global energy demand is forecast to grow by up to 30 percent by 2050.

And while all industries, businesses and people need to think about what they can each do,

Our industry needs to be generous in deploying our skills, infrastructure and expertise to help find those solutions.

And we are already stepping up to the challenge.

We are an industry capable of doing big things in remarkable ways,

A capability we can – and want to – apply to the climate change challenge.

Here in Scotland, and across the UK, this industry has and continues to sustain hundreds of thousands of jobs, currently over 270,000 as per our workforce report last year.

That’s about one in every 125 employed people in the UK, or 1 in 25 in Scotland.

We’ve contributed over £350bn in production taxes alone, and more from corporation tax and Pay As You Earn as well as billions of pounds in terms of capital spend and running costs invested over the years.

Importantly, this indigenous industry has supported an affordable and secure domestic supply of oil and gas, which remains fundamental to so many of the products and fuel that we need for our everyday lives.

While we continue to emerge from one of the toughest downturns in our history and are by no means out of the woods yet, with real pressures remaining on the supply chain, it is through this incredibly challenging time that we have demonstrated our ability to transform and adapt, delivering a reputation for efficiency and competitiveness,

Operating cost reductions are being sustained and expected to remain around $15-16 per barrel this year.

And we continue to deliver safely and efficiently the day job of exploring, developing, producing and decommissioning.

We are also in action in terms of responding to the challenges of climate change,

You only have to go to Orkney, Glasgow and here in Edinburgh and visit any of our members working in your community to know that this is a challenge we are taking seriously.

And I would encourage you to do this, and to see it first-hand, some of the great work that is going on.

Stepping up to reduce carbon emissions to net zero by 2050 in the UK and by 2045 in Scotland is also an opportunity for the UK’s oil and gas industry to shine in a competitive global market.

Sustaining jobs, contributing to public services through taxation, providing secure energy supply and diversifying as we help to find solutions.

The Scottish Government has made clear that it supports a sustainable, fair and inclusive transition,

And I know the UK Government is taking a similar approach,

These are important principles which say a lot about the kind of transition Scotland wants to see.

First – it means planning for a transition which ensures people in Scotland continue to enjoy affordable and low carbon energy,

Second – this transition will deliver opportunities for the people working in the industry today as it evolves in the coming decades,

Third – the transition must deliver sustainable and enduring change,

While I welcome calls to “do more” and at pace,

We now need to move the debate on from talking about the need to act, to demonstrating what we are doing to act,

We have a plan – Roadmap 2035 – which offers a blueprint for net zero,

It is one of the first industrial responses to the UK and Scottish governments net zero commitments.

It aims to enable a safe, sustainable and competitive oil and gas industry supporting the UK’s energy needs and its transition to a net zero future,

These aspects are not mutually exclusive but inextricably linked.

Developed through over 5000 engagements with a range of stakeholders, Roadmap 2035 has been welcomed by both governments and energy ministers.

It sets out 60 actions across five key areas,

And today I can confirm that OGUK has convened an industry-wide group of company leaders and young professionals to coordinate efforts, identify gaps and drive action in pursuit of what is a truly challenging task but also a transformational opportunity,

So, to the first group of actions – our support for net zero

We will do this by reducing emissions from the operational production of oil and gas,

And through supporting other heavy emitting sectors to achieve net zero through our skills, technologies and infrastructure,

But what does this mean?

Firstly – in terms of our own production emissions, we will be a net zero oil and gas basin by 2050,

Reducing emissions from 14 million tonnes – currently three percent of the UK’s total greenhouse gas emissions – to 0.5mt – in line with the Climate Change Committee outlook,

It will require significant investment, new technology and close working with the renewables sector in Scotland and across the UK

I’m pleased to announce that we are developing targets for emissions reduction, and we will soon publish a detailed action plan in support of this — this is an industry in action.

In December last year the OGA – our industry regulator – published the interim findings of the first phase of its Energy Integration Project,

Working with BEIS, the Crown Estate and Ofgem, this important report offers a good starting point as to how we begin to bring key carbon reduction concepts to life,

Reducing emissions on oil and gas installations by using low carbon electricity including directly from offshore wind farms to replace offshore power generation from gas and diesel,

It takes me on to our second net zero commitment.

We will support the development of CCUS and other low carbon tech at scale,

The Climate Change Committee estimates that up to 175m tonnes of C02 each year will need to be captured and stored in the UK by 2050.

And that’s even if the UK delivers against every cross-sectoral recommendation in their initial report,

Indeed – CCUS is required in all decarbonisation scenarios.

Globally, some 10,000 projects will be needed,

An industry forecast to be worth around £100bn each year by 2050,

This is not only a necessary technology to meet our climate goals, it is therefore also a potential opportunity for Scotland and a diversifying energy industry.

This sector stands ready to play its part.

Assisting in the development of the commercial business models that are needed to help deliver CCUS clusters, hydrogen opportunities and the decarbonisation of offshore platforms at scale,

We are putting forward our skills, capabilities, assets and knowledge,

And working with governments and regulators to clarify policies and regulations on CCUS and hydrogen,

including improving the understanding of what is required to repurpose existing oil and gas assets for use in the low carbon world,

The CCS charter signed between the Scottish Government and industry demonstrates our commitment,

We are looking to work with governments and regulators to progress the five CCUS projects across the UK which now need to move at pace into the next phase,

One of which is the North East’s £224m Acorn project.

Expected now to be operational by 2024,

And with the potential to store 16.2m tonnes of carbon per year,

It would be good progress, but still only a fraction of what is required.

And on hydrogen,

Much more will have to be done to explore the full opportunity of this potentially disruptive player in the clean energy mix,

Reports by Swansea and Keel Universities found up to 30 percent of the UK’s gas supply can be replaced with hydrogen without needing to modify people’s appliances,

With currently 75 percent of the UK’s heating demand in buildings being met by natural gas

It shows the scale of the opportunity,

And the analysis from the International Energy Agency showing that the cost of producing hydrogen from renewable electricity could fall 30% by 2030 as a result of declining costs of renewables and the scaling up of hydrogen production helps us to begin to see what a truly transitional and transformational approach could look like,

Blue hydrogen derived from gas will need to compete alongside green hydrogen made from renewables – but both will be needed if we are to match the energy needs I referenced earlier on,

So, combining with Carbon Capture and Storage, hydrogen from natural gas could cut emissions, alongside efforts to reduce the cost of producing hydrogen from clean energy,

You can see why it matters that we do this right,

The developing hydrogen economy could also bring far-reaching benefits across Scotland,

For example, in Orkney, where a consortium led by the OGTC alongside universities and oil companies are looking to create a test centre at Flotta oil terminal for trialling these different types of technologies for use on offshore platforms,

So today we urge the UK and Scottish governments to continue to think about the full system changes from the production of energy to its use in our homes and businesses,

To recognise that this industry can help provide solutions which unlock the inclusive, fair and sustainable transition we all want to see,

And we call for a comprehensive UK energy strategy from the UK Government, to be reflected in their imminent white paper.

The Committee on Climate Change report also recognised that by 2050, oil and gas will continue to form part of a diverse energy mix,

Albeit at lower levels, roughly about a third of what it is today,

That’s because the CCC forecast that oil and gas will still be needed by those sectors especially difficult to decarbonise,

Sectors such as heavy industry and aviation, and of course its continued use in many industrial and chemical processes,

Whether its pharmaceuticals, or in producing the composite materials which, used sustainably, will continue to be critical in our daily lives,

So, I also consider it’s important we deliver as much of this demand from domestic resources – a point I’ll come back to shortly.

Meeting net zero is only the first of five themes outlined in what you can see truly is a comprehensive roadmap,

With our 2nd theme of driving technology and innovation, we will spur a net zero technology revolution, adding some £10bn in economic value to the UK through technology and innovation,

Through work being championed by the OGTC, that has already launched a net zero solutions centre in support of this ambition,

And our 3rd theme, of developing people and skills,

By 2035 we will support some 130,000 jobs,

Compared to just over 150,000 direct and indirect jobs we support today,

This will actually require us to attract 40,000 new people, a quarter of whom will be in new roles, many of which don’t exist yet, to cater for technology developments as well as the expected natural attrition from the industry through retirement,

This is being driven by the industry skills body OPITO and their innovative work through the Energy Skills Alliance to support the development of a multi-skilled energy workforce that is flexible, dynamic and technologically enabled,

In growing the economy and exports, our 4th theme,

We’re looking to double exports from a diversifying energy sector to £20bn each year,

Working with governments to deepen our sector’s understanding of international markets and ensure our experience is utilised globally and in different sectors,

And those of you who joined the excellent cross-party group held with Scottish Renewables last week will have heard how diversification in the supply chain can open the door to more international opportunities,

The final theme is on meeting the UK’s need for energy and industrial products.

I spoke earlier about the requirement to meet as much of the UK’s energy needs from domestic resources, as per the CCC report and its focus on energy sovereignty,

And their forecast that during the transition and beyond, there remains a need for oil and gas.

Let’s be clear here – the premature shut down of this industry in the UK would do nothing to impact consumption,

Those needs would instead be met from increasing the amount of oil and gas imported from across the world,

But it would also mean we realise none of the benefits this indigenous industry brings in jobs, taxation and security of supply,

Nor would it enable control over environmental governance and standards.

So, what might seem an easy and quick fix, is instead simply shifting the problem to other countries.

Which is sometimes referred to as carbon offshoring,

This isn’t fair, inclusive or sustainable, it’s actually irresponsible.

It’s an example of a transition which helps get to the same destination, but at an unnecessary cost,

Leading to unintended consequences because the changes aren’t inclusive or supported by an effective, integrated and affordable energy system,

This is not the path we need to go down, and it’s why today we are coming to you with our plan,

Building on their contribution to this great industry, we can take Aberdeen, Glasgow, Shetland, Edinburgh and everywhere in between on the journey,

We can equip people with the skills and remove barriers so that they can enjoy rewarding energy careers for decades to come,

Meaning that by 2045 in Scotland –  we will have delivered a truly fair, inclusive and sustainable transition to a low carbon future where our transformed and thriving industry is part of the solution,

It’s an exciting proposition.

One which will underpin our calls for a transformational sector deal which we will look to announce later this year,

Which is why today my ask of you all is to consider the Roadmap,

To hear out the facts and then make your call as to the role of this industry going forward.

As we look to the future, I have no doubt that it will be our shared understanding, informed by facts,

And an inclusive approach, that will enable our delivery of the net zero challenge,

Yes, we need vigorous debate, but the so-called cancel culture Obama spoke about,

The culture which says the people in our industry don’t have the right to a voice,

Undermines the fundamental principles of the inclusive, fair and sustainable transition we all want to see.

We are here and we want to help,

And we want to be a positive force in this transition,

As Jonathan Foer notes in his excellent book ‘We are the Weather’,

Collective action is the best way to save our home and way of life.

So, let’s work together, because we can.

Thank you.

Climate change will be solved by solutions not stunts

Commenting on protests outside oil and gas offices in Aberdeen today, OGUK Stakeholder & Communications Director Gareth Wynn said:

“Climate change will be solved by practical actions not conspiracy theories and stunts. It’s disappointing that this group is choosing to disrupt the normal working day of people in this industry, causing alarm rather than engage in meaningful discussion with key decision makers.

“This industry, through our Roadmap 2035, is committed to delivering an inclusive, fair and sustainable transition to a low carbon and diverse energy mix. Again, we welcome those who are willing to take part in meaningful and solutions-focused discussions. Our industry is packed full of people with the engineering and environmental knowledge and skills to play a key part in reducing emissions and we are already taking action.”

Reshaped OGUK announced as industry gears up to deliver net zero blueprint

The leading representative body for the UK offshore oil and gas industry has kicked off the new year with ambitious plans to champion the sector as part of a diverse energy mix.

Two new directors will join OGUK’s leadership team under the continued direction of Chief Executive Officer Deirdre Michie OBE.

Katy Heidenreich

Katy Heidenreich

Trevor Stapleton is announced as OGUK’s new Health, Safety and Environment (HSE) director while Katy Heidenreich is confirmed as Operations director, both commencing their new roles on 3 February 2020.

The two new directors join a reshaped leadership team to support industry in its delivery of Roadmap 2035: a blueprint for net zero.

Matt Abraham will take on a more focused brief as Supply Chain and Exports director, directing his extensive experience in contractor companies to help grow exports and support a resilient, competitive and diverse supply chain. Meanwhile. Mike Tholen will become OGUK’s Sustainability director, using his own deep experience in the industry to help drive  action to deliver a net zero basin,  from the operational production of oil and gas and assisting the UK in reducing its total GHG emissions through to adoption of technologies including Carbon Capture Usage and Storage.

Graham Elgie continues as OGUK’s Finance and Corporate Services director and Gareth Wynn as OGUK’s Stakeholder and Communications director.

Commenting, OGUK Chief Executive Deirdre Michie said:

“2020 is synonymous with perfect vision and we are wasting no time in getting to work delivering industry’s ambitious plans for the future outlined in Roadmap 2035: a blueprint for net zero.

“I’m delighted to announce these changes to our leadership team which will enable us to even better support companies and to help drive  action as we work to inform, engage and advocate the importance of this industry as part of a diverse energy mix.

Trevor Stapleton

Trevor Stapleton

“We have a challenging but exciting year ahead of us as we work to support all our members that operate in or provide services to the UK offshore energy industry. With continued volatility in oil markets our focus remains on enabling a safe and competitive industry that delivers to its full potential within the energy transition, ensuring the North Sea remains an internationally attractive place to do business.

“Katy and Trevor each bring an incredible amount of experience and are highly regarded by their peers. Their strategic insight will be critical as we gear up to deliver our blueprint for net zero, demonstrating the practical steps companies are taking to reduce emissions, meet UK energy needs and develop our people and skills for the future.

“This industry has a positive role to play in providing solutions to the UK’s net zero challenge and we are already in action with our Roadmap. Leading from the front, OGUK is proud to champion our dynamic and diverse industry and we look forward to continuing to work with all of our stakeholders in the year ahead.”

Partnership working critical to UK net zero ambitions

The leading representative body for the UK’s offshore oil and gas industry has underlined its commitment to developing the technical solutions required to help meet the UK and Scotland’s net zero ambitions. It comes as two key reports on plans to reduce emissions are published today.

Industry regulator the Oil and Gas Authority (OGA) today published the interim findings of its Energy Integration report detailing how the sector is working to reduce emissions from the operational production of oil and gas through platform electrification. The report also outlines how the sector can support the decarbonisation of other heavy industries through carbon capture, usage and storage, and hydrogen.

The Climate Change Committee today also published its 2019 progress report to the Scottish Parliament which recommends both the UK and Scottish governments work more closely together to make the best use of devolved and reserved policy levers in key areas where responsibilities are split. This includes the future of heating, electric vehicles and low-carbon infrastructure.

Commenting, OGUK Upstream Policy Director Mike Tholen said:

“Today we have two big reports which both recognise the contribution the oil and gas industry can make to the UK and Scotland’s net zero ambitions.

“Partnership working between industries, governments and regulators will be critical to the scale of our success. As we look to a new year, OGUK will continue to seek support for industry’s Roadmap to 2035: a blueprint for net zero.

“Enabling a safe and competitive industry that realises its full potential in the energy transition can only be good news for the jobs, communities and climate aspirations we support.

“From reducing emissions from the operational production of oil and gas through electrifying offshore platforms, to helping other heavy emitting sectors to decarbonise by developing carbon capture, usage and storage technologies at scale, our industry has the skills, capabilities and infrastructure to play a key role in developing solutions.”

Read about Roadmap 2035 and our Energy Transition Outlook report

Industry report calls for urgent action to progress UK carbon capture and storage

A comprehensive report into the changing energy landscape has called for urgent action to progress low carbon technologies critical to the UK and Scottish Government’s net zero ambitions.

It says government and industry must work together to progress to the next stage five key projects across the UK which look to capture, transport and store carbon dioxide from heavy emitting industrial processes including power plants. It also calls for joint action to increase the potential for low carbon hydrogen to be used as a fuel to heat homes and power cars.

The policy recommendations are published today by the leading representative body for the oil and gas sector, OGUK, in its second Energy Transition Outlook Report. The document considers the changing energy landscape in the UK and outlines progress achieved by the UK’s oil and gas sector over the past year to provide industry and economy-wide solutions towards reducing emissions.

However, the report authors warn that the sector will need to earn its position in the changing energy world, with rapid action required to ensure the sector transforms over the next 30 years while continuing to meet as much of the UK’s oil and gas needs from domestic resources.

The report findings show:

  • The UK’s oil and gas industry is in a unique position to lead in the development of Carbon Capture Usage and Storage, with 5 projects situated across the country currently being explored
  • UK energy sector investment will need to double in order to achieve a decarbonised economy

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

“Our Energy Transition Outlook report shows the changing energy landscape in the UK and the opportunities and challenges it presents all industries, businesses and people, our own included.

“With the launch of Roadmap 2035: a blueprint for net zero, we were one of the first industrial sectors to set out credible plans to support the UK and Scottish Government net zero emissions. Yet the oil and gas sector will have to earn its position in this new energy world, cutting its own emissions and working with governments and regulators to progress the five CCUS projects which now need to move forward into the next phase and developing hydrogen.

“As our report shows, there is lots of work to be done in a huge market which is only getting bigger as global demand for energy continues to grow. The Climate Change Committee report published at the beginning of this year noted CCUS was critical to our net zero ambitions. Our challenge, working with others including the OGTC’s Net Zero Solutions Centre, is to realise CCUS and other low carbon technologies as an opportunity for British businesses.”

 

 

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Report shows rise in UK’s decommissioning competitiveness

The UK’s decommissioning sector’s growing competitiveness is revealed in the 2019 Decommissioning Insight report launched by OGUK today at the Offshore Decommissioning Conference held jointly with Decom North Sea. Now in its tenth year of publication, the report forecasts the UK’s decommissioning activity and expenditure over the next decade,  revealing that while activity on the UK Continental Shelf (UKCS) is expected to increase, expenditure will remain consistent at around £1.5 billion per annum, demonstrating the sector’s improving efficiency performance.

The report findings show:

  • Decommissioning now represents just under 10 per cent of the oil and gas industry’s overall expenditure
  • Pace of decommissioning expenditure remains steady at around £1.5 billion per year
  • Over the next decade, forecast expenditure for UKCS decommissioning remains constant at £15.2 billion
  • M&A activity in some areas of the North Sea is extending the life of offshore assets and moving decommissioning activity to the future
  • Within the next ten years $85 (£67) billion will be spent decommissioning oil and gas assets in the global market
  • To date, nine per cent of all the platforms installed on the UKCS have been decommissioned

Operators across the sector contribute data for OGUK’s Decommissioning Insight, which plays a fundamental role in providing market intelligence that highlights predicted activity and cost trends.

Commenting on the report, OGUK’s decommissioning manager Joe Leask said:

“With a firm grip on cost management, environmental and safety standards, our tenth annual Decommissioning Insight shows a healthy sector well-positioned to realise some £15bn of opportunities over the next decade.

“Our report underlines the significant intellectual capital anchored here in the UK. Ensuring this is shared is key to maintaining the competitiveness of the sector, enabling this homegrown industry to capture the lion’s share of an emerging global market some four times greater.

“We’re already seeing exciting new companies emerging as specialists in decommissioning, either offering full-scope solutions or focusing on specialising in areas including offshore well decommissioning and onshore dismantling and disposal. These innovative business models offer industry real choices whether operators carry out decommissioning themselves or pass the scope to those companies offering increasingly competitive solutions,

“Decommissioning is not the end of our industry; it offers a new beginning. Four years ago, industry stepped up to the challenge to cut decommissioning costs by 35 percent and we are well on the way to achieving that. We must apply the same collective determination and pioneering capabilities to deliver the net zero carbon challenge. This includes the re-use of old facilities for carbon capture and storage, presenting new opportunities to generate new value from old assets and help deliver the net zero future that industry has made to commitment to deliver.”

Download your copy of the Decommissioning Insight Report: