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:

A fledgling industry star who unlocked £20 million of additional value for her company and a business that is using pioneering 3D printing to champion improved safety and environmental performance were among those to be crowned winners last night at the OGUK Awards 2019, sponsored by Shell U.K. Limited.

Over 550 guests gathered at the P&J Live to recognise the standout out achievements of businesses and high-performing individuals from across the industry. 30 finalists were in contention for ten awards, including excellence in decommissioning, business innovation and energy transition, a new award for 2019.

OGUK Graduate of the Year Erin Ingram, Apprentice of the Year Ashley Thomas and Mentor of the Year Teresa Waddington 

Praising the winners, Deirdre Michie, Chief Executive of OGUK, said:

“OGUK’s annual awards ceremony is a highly regarded event within the UK oil and gas industry calendar and this was one of the most competitive years yet.

“The success of our industry is down to the talent, ingenuity and skill of our people and that’s what these awards celebrate. A huge congratulations to our winners and a sincere thank you to all our finalists, whose dedication and expertise help us continually raise the bar on industry excellence.”

Steve Phimister vice president of event sponsor Shell’s UK upstream business said:

“It has been hugely rewarding to celebrate the talents and achievements of all the people who help the UK oil and gas industry make such a vital contribution to today’s energy sector. These are also the people who will play a key role in shaping the future success of the industry, as the UK navigates the energy transition.”

The winners across the ten categories are as follows:

OGUK Apprentice of the Year (sponsored by OPITO)

Ashley Thomas, BP

OGUK Graduate of the Year (sponsored by ECITB)

Erin Ingram, TAQA

OGUK Mentor of the Year Award 2018

Teresa Waddington, Shell U.K. Limited

Workforce Engagement

PD&MS GROUP

OGUK Business Innovation Award (SME)

WFS Technologies Limited

Business Innovation – Large Enterprise

TOTAL E&P UK

Diversity and Inclusion (sponsored by Spirit Energy)

CNR International (UK) Ltd

MER UK (sponsored by the Oil & Gas Authority)

Neptune Energy – BP – Japex UK E&P Ltd

Excellence in Decommissioning

Repsol Sinopec Resources UK

Energy Transition (sponsored by Fairfield Decom Limited)

BP

The chief executive of the leading representative body for the UK’s offshore oil and gas industry has today urged Aberdeen to grab the £1trillion of business opportunities presented by moves to net zero.

Speaking at the State of the Cities Conference today in Aberdeen, OGUK Chief Executive Deirdre Michie said

“Indeed, as the excellent Climate Change Committee report showed, there will still be demand for oil and gas in the UK by 2050, at just under half of what it is today,

“And meeting as much of this from domestic resources is therefore crucial.

“At the same time our industry and this city can support the development and commercialisation of low carbon technologies including CCUS and hydrogen – identified as vital to a net zero outcome by the CCC.

“To put the size of that prize in context, oil and gas companies currently support CCUS schemes at only 18 sites across the world,

“But we know that 10,000 will be required globally by 2070.

“It’s an exciting proposition because as we look to become a smart net zero energy industry we will need a smart net zero energy Aberdeen and shire to help us do this.

“Aberdeen as Europe’s oil capital has served us all well and we are hugely appreciative of the support from the north east,

“The opportunity is now as the industry shifts its focus, for Aberdeen to also position itself not just as Europe’s net zero city but as the world’s net zero energy capital.”

Ends

 The full speech is below:

Good afternoon ladies and gentlemen and thank you to you DJ for your kind introduction and Aberdeen City Council for inviting me to speak today,

Can I add my congratulations to Hanan, Dougie and Graeme on their insightful and thoughtful and helpful report,

And to the city council for the progress made – the overview that Councillor Laing gave this morning is very impressive and as I said to Angela Scott – examples like the TECA are real triumphs for the city and her team.

I’ve really enjoyed the insightful sessions so far and it’s an honour to follow you Sir Howard,

I absolutely support that a joined up – collaborative public private approach is key and so today I’d like to talk about areas where, working together, we can realise a successful future for this region and for our industry.

These are:

1 – Attracting and retaining talented people here,

2 – Improving our international competitiveness,

And 3- enhancing our global reputation,

Aberdeen city and shire are considered by many to be the engine room of the UK’s offshore oil and gas industry,

We have a truly special relationship that has been built up over the last 50 years or so,

Our histories are intertwined as will be our futures and so

Looking ahead to the energy transition and delivery of the net zero ambitions, I believe there is a huge opportunity for us to go after together.  

We are an international industry and an international city and so staying competitive and attracting investment is key,

And it’s great that our 2019 Economic Report, shows, that as a sector, we’ve significantly improved efficiency and are fitter and more competitive than we have been for years.

As a result, investment is returning, and activity is picking up.

We have increased production by 20 percent over the last 4 years –as Hanan said an extraordinary achievement for a mature industry like ours and a reinforcement of our resilience and ability to keep on reinventing ourselves.

Utilising technology, introducing smarter and more efficient ways of working have helped to improve our competitiveness as we continue to emerge from one of the most challenging downturns in our history,

And while significant pressures remain on the supply chain here in the north east, staying competitive, working co-operatively with a fair sharing of risks and reward, need to be the cornerstones to unlocking more activity across the whole sector

The economic impact of getting this right for the local and UK economy is considerable –

Production of oil and gas accounted for 1.2 percent of UK GDP – equal to around £24bn

The industry continues to invest around £15bn per annum across the oil and gas lifecycle and has over the years contributed more than £350bn in production taxes alone.

And looking ahead, the OBR forecasts that production tax payments by this industry will amount to more than £8.5bn over the next five years,

When it comes to employment – so important for the north east – this sector supports 270,000 jobs across the UK,

The economic impact is clearly a positive one – but we recognise that with the challenges of climate change – we have to be better at communicating the positive contribution that this industry makes – and needs to continue to make if we are to ensure a fair and managed transition to a net zero future.

And just as we’ve heard today how Aberdeen is a city with a firm eye on the future,

You should be in no doubt that we are also an industry in action,

Because we too are part of a society which wants change, and we are confident that as the UK’s offshore oil and gas industry  – we can play a key role in being part of the solution – helping to drive change that can contribute to a net zero economy  which can then be exported to the rest of  the world.

We are moving forward positively and constructively, and we must continue to do so and at pace.

And so, what are we doing as an industry to be part of what will be a challenging but exciting, refocused energy future?

Well this year we published Roadmap 2035: A Blueprint to Net Zero,

It is one of the first major industrial responses to government commitments to deliver net zero carbon emissions by 2045 in Scotland and 2050 in the UK.

It sets out five key themes requiring tripartite action of industry, BOTH governments and regulators to ensure delivery. Support from them is crucial to our industry and to this city.

One – Helping meet the UK’s needs for energy and industrial products

Two – Driving technology and innovation and the launch of OGTC’s – that came out of the city deal and its Net Zero Solutions Centre is a great example of the kind of action that is needed and is happening

Three -Growing the economy and exports,

Four – developing our people, our skills and a collaborative culture

 And Five – Supporting net zero, because the UK needs our oil and gas products as part of an increasingly diversified energy system if it is going to deliver its net zero ambitions,

 The roadmap was developed out of over 2,500 conversations that continue today with people from across the sector and our stakeholders – many of whom are in this room today,

Indeed, as the excellent Climate Change Committee report showed, there will still be demand for oil and gas in the UK by 2050, at just under half of what it is today,

And meeting as much of this from domestic resources is therefore crucial.

At the same time our industry and this city can support the development and commercialisation of low carbon technologies including CCUS and hydrogen – identified as vital to a net zero outcome by the CCC.

To put the size of that prize in context – oil and gas companies currently support CCUS schemes at only 18 sites across the world,

But we know that 10,000 will be required globally by 2070

It’s an exciting proposition because as we look to become a smart net zero energy industry – we will need a smart net zero energy Aberdeen and shire to help us do this.

Aberdeen as Europe’s oil capital has served us all well and we are hugely appreciative of the support from the north east,

The opportunity is now as the industry shifts its focus, for Aberdeen to also position itself not just as Europe’s net zero city but as the world’s net zero energy capital,

So why is place important to the energy transition?

Surely every city could be and indeed should be a net zero energy city?

But the granite city like our industry has the skills, the experience and the ability to reinvent itself, as it has in the past, from ship building to fishing to the early oil industry founded on whale oil!

Building on our expertise as a global oil and gas hub, and with the right support,

Aberdeen’s future potential as an energy city is limitless,

We’re already seeing the real benefits that this expertise can bring,

We have the European Offshore Wind Deployment Centre directly visible from the coast (when there’s no har..!) and we have , Hywind – the world’s first floating offshore wind development, as well as RGU’s Energy Transition Institute – taking insights and learnings to countries like Mexico, and Columbia to name but a few.

Many of our companies operating in Aberdeen are already leading the way –and we should be especially proud of our supply chain companies like Wood and Global Energy Group which have expanded their footprint over the years into other parts of the energy sector,

And while yes, every economy should have a diverse ecosystem of businesses and industries to ensure it is sustainable,

We should also embrace the enormous value this industry has added and can continue to add as we look to the future. It’s a USP to be treasured.

Place is important and it’s why we are so pleased to see the progress being made here in recent  years in relation to  infrastructure -like, the Harbour –  AWPR  and the fibre network as well as  amenities like TECA, the art gallery and Music hall that are so key  to  establishing  this city as a great place to work and live and so helping us to secure the talent we need.

But more than this, projects like the hydrogen bus project and Hydrogen Aberdeen – reinforce the ambition and drive which will ensure Aberdeen can enjoy more success.

Aberdeen has, as we are all saying – a golden opportunity to claim the mantle of being a global net zero energy capital,

Grasping a healthy portion of the £1 trillion spend the UK Government estimates will be required to meet the challenging targets.

So, my ask of you today is to help champion Roadmap 2035,

In Developing a diverse energy workforce with transferable skills, that’s renowned globally for finding solutions to some of the world’s most challenging problems,

Helping to bring to life CCUS, hydrogen and low carbon technologies by encouraging innovation and establishing Aberdeen as a global hub for low carbon technologies.

And in so doing, realising Aberdeen’s full potential in the transition,

So, looking to the future, I’m confident we have the ingredients for success and that there should be no limits to our ambitions.

It’s an exciting time for this industry and I know you will agree, an exciting time for Aberdeen and the shire.

Thank you. I’d now like to hand over to Chris Murray, director of core cities UK.

The increasing importance of digitalisation was put under the spotlight today at a breakfast briefing event, sponsored by Deloitte, held by the leading representative body for the UK’s offshore oil and gas industry, OGUK.

An audience of over 150 industry professionals heard about the benefits that could be realised in safety, efficiency and financial through the digital transformation of the North Sea sector.

Keynote speaker Marc O’Connor, Consulting Leader – Energy, Resources & Industrials, Deloitte, who said that digitalisation provided real opportunities for people to be released from routine type jobs, freeing them up to focus on value-added tasks that will provide the innovation solutions of the future.

Reflecting on the speech, expert panellists Alan Muirhead, Director of Projects & Engineering, Neptune Energy UK, Stephen Sheal, External Relationship Director, Oil & Gas Technology Centre and  Jared Owen, Director – Digital & Entrepreneurship, Opportunity North East, discussed how industry can ensure it has the skills and expertise needed to help deliver Roadmap 2035.

Speaking after the event, panel chair OGUK Stakeholder and Communications Director Gareth Wynn said:

“Digitalisation isn’t just the future, it’s the here and now. Today’s event showed that while this industry has a firm grasp on the opportunities digital transformation could bring, we must continue to collaborate and share good practice.

“From setting up an agile culture which removes barriers to decision making, to ensuring colleagues have fit-for-purpose skills and technologies, there are changes both big and small that this industry could make which could have a real impact on the safety, efficiency and competitiveness of our sector.

“This is an industry shaping up for the future and the delivery of Roadmap 2035 – our blueprint to a net zero future. It’s clear from today’s event that how we choose to embrace digitalisation could make or break our ability to be part of the low carbon economy we all want to see.”

Marc O’Connor, Consulting Leader – Energy, Resources & Industrials at Deloitte said: “Deloitte has extensive experience of digital transformation, and while the journey can be complex, we know that a successful outcome can be characterised very clearly and simply. When integrated and used effectively, digital has the potential to add value throughout a project’s lifecycle and those who invest with a data from day one approach can realise significant benefits.

“It was great to share our perspective on digital capital projects at this morning’s OGUK breakfast meeting. As well as covering real-world examples of how digital initiatives are being used on capital projects, I discussed a way forward for how businesses can navigate their own digital transformation journey and outlined the various opportunities that exist for operators and suppliers working in the UK’s oil and gas sector.”

The next generation of the UK’s oil and gas industry are being called upon to make their voices heard on key issues including the energy transition and climate change at a new event being held in Aberdeen on Thursday 24 October.  

Leading representative body for the sector OGUK today announced a second industry insight event aimed at graduates, young professionals and those starting out their career. It follows the success of an intern event in July attended by over 100 young people with placements in operator, service and supply chain companies.

The event sponsored by Spirit Energy will provide attendees with the opportunity to shape the future of their industry through direct involvement in Roadmap 2035: industry’s blueprint for a net zero future.

The audience will take part in an interactive workshop looking at the five key themes from Roadmap 2035 before hearing from a diverse panel chaired by OGUK Supply Chain Director Matt Abraham.

  • Sophie Guy-Pearson, Lead Business Advisor, OGUK
  • Guiseppe Tizzano, OGUK Mentor of the Year 2018, BP
  • Trevor Thomson, Director, Technical Function, Spirit Energy
  • Ryan Fernando, OGUK Apprentice of the Year 2018, Aker Solutions

Commenting on the event, OGUK Supply Chain Director Matt Abraham said:

“The people joining our industry today are among the most important voices in shaping the industry of tomorrow. The world of work is changing at a time when our industry is also looking to the future through the energy transition.

“Understanding how we can meet the ambitions outlined in Roadmap 2035 will require fresh thinking and OGUK is passionate about ensuring the voice of the next generation is not only heard but acted upon. This event is a great opportunity for people starting out their careers to drive the future of the sector and make a valuable contribution on our journey to becoming a net zero basin.”

Get your tickets for OGUK Insights for Young Professionals 

 

Commenting on reports that Greenpeace has ended its protest in the North Sea, OGUK Stakeholder and Communications Director Gareth Wynn said:

Gareth Wynn – Stakeholder and Communications Director

“There are no winners as a result of this stunt, which both put safety at risk and failed to produce any solutions to how we can achieve the net zero future we all want to see. The arguments from Greenpeace are fundamentally flawed and sadly fail to recognise the reality that prematurely shutting down the North Sea will only increase the UK’s reliance on imports from across the world.

“We live in a world with ever-growing demand for energy which at the same time needs an ever-reducing carbon footprint. Our industry is committed to help find practical solutions to one of the biggest challenges we will face. It’s time for deeds not words and we’d encourage anyone with a serious interest to work with us.”

READ NEXT: OGUK Energy Transition Outlook 2018

A key industry report detailing the cost of decommissioning on the UK Continental Shelf and the progress being made by industry, government and regulators to reduce costs by more than 30 per cent will be unveiled at OGUK’s upcoming business breakfast in London.

The annual UKCS Decommissioning Cost Estimate Report, published by industry regulator the Oil & Gas Authority (OGA), will give a deeper insight into the landscape of the sector as well as highlight the opportunities and challenges currently facing the market.

Sponsored by White & Case LLP, the event will be held on Tuesday, July 2, at 5 Old Broad Street, London.

Commenting, Joe Leask, Decommissioning Manager at OGUK, said:

“We’re delighted to host the launch of this vital piece of research from the OGA and I look forward to hearing more about the progress industry has made in achieving the 35 per cent cost reduction target.

“The UK is a first mover in the decommissioning of complex, deep-water oil and gas assets and the industry must seize future opportunities in the global decommissioning market.

“This includes the development and deployment of CCUS (carbon capture, usage and storage), building on the re-use of offshore infrastructure, industry geological expertise, and utilising the skills and knowledge of our supply chain.”

 

The leading representative body for the UK’s offshore oil and gas industry has today reinforced the role the industry can play in supporting the UK to meet its climate change ambitions.

Speaking in response to the Prime Minister’s commitment to deliver net zero emissions by 2050, OGUK Chief Executive Deirdre Michie set out the role industry can play to enable the energy systems of the future and to help the development of technology that can mitigate carbon from other heavy emitting industries.

Commenting, Deirdre Michie said:Deirdre Michie

“Achieving net zero is a huge challenge that will affect all industries, businesses and people. Our sector needs to be involved in this agenda, work to realise the opportunities it presents and be an essential partner in supporting the UK to achieve its climate change ambitions.

“We can help design the diverse energy system we need for the future, and through our knowledge and experience can be a central part of developing some of the technology needed to mitigate carbon from other heavy emitting industries through for example, Carbon Capture Usage and Storage.

“We have already welcomed the Climate Change Committee report and are engaging with our members on the practical steps we need to take to in relation to continuing to manage and reduce the emissions from our own activities, to play our part in achieving net zero.

“With world-leading engineering skills, infrastructure and energy expertise, our industry stands ready to work with sectors across the UK economy to enable the UK to achieve its climate change goals.”

Speaking to over 400 delegates at the OGUK Industry Conference in Aberdeen this morning, OGUK Chief Executive Deirdre Michie said:

Ladies & gentlemen, good morning and welcome, to OGUK’s conference and exhibition for 2019: An Industry in Transition

I’m very pleased that so many of you have joined us here for what I hope will be an interesting and insightful 36 hours, where we consider the progress industry is making as it continues to emerge from one of the most challenging downturns, while positioning itself for a sustainable future that supports a lower carbon economy.

Four years ago, when I addressed this conference for the first time, before the possibility of Brexit or Trump had registered with anyone, none of us had any idea of the challenge and change that was to test us all at every level,

And that would take this industry to the point from which many thought it couldn’t return.

But the sector’s “come back” is very much in progress,

Thanks to the resilience, courage and can-do attitude that has typified its success over the years and will be key to its sustainability going forward.

To help us consider all of this and more, I’m delighted to be joined in this opening session by Sam Laidlaw of Neptune Energy, Torgrim Reitan of Equinor and Jean-Luc Guiziou of Total,

Sam, Torgrim and Jean-Luc are three excellent leaders of companies epitomising this industry’s transition whether it’s because they are attracted to the competitiveness of the basin or are embracing and taking the lead in the energy transition,

Their thought-provoking views will lay the foundations for the focused and interactive programme that we have ahead of us with compelling and insightful industry leaders speaking and chairing our sessions throughout our time together.

I’d also like to thank Jean Luc and Total as our principal sponsor, for supporting us once again as well as of course all our other sponsors

Your backing for this key industry event is very much appreciated.

Ladies and gentlemen, ensuring we sustain our licence to operate while we transition to a lower carbon economy are key challenges for us.

I believe that there are three tests that we need to satisfy if we want to protect our licence to operate as well as simply do the right thing as responsible UK and global citizens.

One- Are we ensuring safe operations for our people and our organisations?

Two – Are our business models geared towards sustainability through thick and thin?

And three – do we proactively meet the expectations of the society we work in and for?

Indeed, as we look back over the last 4 years – the pace of change has been extraordinary and as we look ahead we need to stay focused on the things we can influence, deliver or change.

Because as Benjamin Disraeli said – when you are finished changing – you are finished -and this industry certainly is not.

  So, when thinking about the society we live in and its expectations, another quote comes to mind,

(“Until you start focusing on what needs to be done rather than what is politically possible, there is no hope. We can’t solve a crisis without treating it as a crisis. We need to keep the fossil fuels in the ground, and we need to focus on equity. And if solutions within the system are so impossible to find, maybe we should change the system itself.”)

These are the words of Greta Thunberg – an impressive young woman we can all take inspiration from.

A woman who wants to change the world.

I would like to reassure Greta- we are listening, because we want the world to be a better place too.

And while we believe that our industry’s global contribution has improved the lives of billions of people, we are clear that climate change is a real and present danger that we must deal with together.

When Greta says, “If solutions within the system are so impossible to find, maybe we should change the system itself.”

I would like to suggest that as the UK’s offshore oil and gas industry has so many talented people, engineers, data scientists, remote vehicle operators, technologists and more

We can find and deliver the solutions needed while at the same time positioning ourselves to be at the heart of an energy system that also needs to change.

Whether it is by the sector working to reduce its operational emissions as well as supporting the advancement of low carbon and abatement technologies.

Indeed, along with our sector delivering from exploration through to decommissioning, it’s already unlocking the energy transition with some operators extending their portfolios into other energies – Equinor –Total, Shell and BP.

And of course, the downstream and utilities sectors are doing a lot of work in this too.

This is why we welcomed the Climate Change committee report last month

Where it recommended that the UK set a net zero target for GHG by 2050 and by 2045 for Scotland.

This report provides a balanced and thoughtful blueprint towards a lower carbon future and I would commend it to those of you who haven’t read it yet.

Its recommendations are rooted in practical and societal choices that we need to embrace as an industry and as individuals if we are truly to make a leading and constructive contribution to the future of our industry, our economy and our society generally.

The climate change committee also recognised that the indigenous offshore oil and gas industry needs to be a key part of a diverse energy mix going forward and is therefore not in competition with renewables.

Official figures show that production from our offshore industry will be needed to meet two thirds of the UK’s oil and gas energy needs, while the gap between what we produce and what we need to heat our homes and fuel our cars is made up from imports, shipped from across the world often with a bigger carbon footprint,

It’s why the Climate Change Committee report talked about “energy sovereignty” and the need to make up that demand from domestic resources while we transition to a lower carbon future.

And our supply chain is already very much in action, using its transferable skills and expertise to service the needs of alternative energy companies from Global Energy to Wood to Aker Solutions.

So, while we continue to advocate with facts and evidence I appreciate that it can sound like corporate speak that doesn’t have the emotion or the urgency that society and we, as part of society, are all feeling.

This is why Vision 2035, and Our Vision, Our Future campaign is set in the context of energy transition and not in isolation

It’s about our industry supporting an accelerating energy transition through our people, expertise and infrastructure, while meeting as much of our country’s oil and gas needs from home produced resources,

Where our world-class supply chain, anchored in the UK and with its international reach, adds value across the energy sector at home and abroad, developing technologies which help to decarbonise the economy

Delivering a diverse energy mix which can help us meet the UK’s dual challenge of satisfying ongoing supply demands with a lower carbon footprint

Powering your iPhone- heating your shower – providing the screens for your computers or TVs or the glue to stick yourself to doors- unless you used a plant-based glue of course!

Indeed, anyone and everyone who wants to change the world for the better can work with us to help ensure a fair and just and managed transition and at a pace that will also be required.

And so today I can confirm that later this year we’ll publish the road map which will set out how we can successfully deliver the vision and our industry’s sustainable future, to ensure it continues to contribute to the country  in terms of hundreds of thousands of jobs, security of energy supply, billions of pounds in taxes and investment levels, for decades to come.

So, if I have one ask of you today ladies and gentlemen, it is that you get behind our campaign – Our Vision Our Future and support our industry in delivering a sustainable lower carbon future.

So, if this is where we are heading, where are we now?

Well as we continue to emerge from the downturn our businesses are adapting to the new reality where an ongoing volatile commodity price,

Back down to between $60 and $70 with an outlook that remains in the $50 to $60 range means retaining a tight focus on budgets and looking for innovative ways of working that unlock opportunities across the basin.

It means sustaining and deepening the competitiveness that this industry has achieved through its own focus and endeavours as well as working well with both governments, regulators and the OGA to ensure a cohesive and comprehensive approach that is delivering results.

Production is up 20 percent over the last 5 years – costs are being contained at an average of $15 per barrel and production efficiency is up to 75% from the low 60s.

Our fiscal regime continues to be one of the most globally competitive and capital is being attracted back into the basin,

Over £3.2bn for 13 projects in 2018 with the same anticipated this year too.

The deals that are continuing to be done, Delek and Chryasor’s being such recent examples of companies considering this to be a great place in which to do business

The momentum around exploration is building,

Although drilling continues to be at an all-time low.

Many E&P operators are cash flow positive for the first time in years – rebalancing their books and yes paying off debt and giving back to shareholders but also increasing their activity too.

Parts of the supply chain are starting to see the benefits but not all.

With margins remaining under pressure the sustainability of some areas of our supply chain is challenged and so some operators do have a choice.

And that is to ensure a better share and more balance in terms of the risk and return now or find yourselves and industry as a whole or paying for it sooner rather than later.

The supplier principles that we drew up earlier this year can be a key enabler to companies throughout the supply chain, addressing some of the issues that continue to challenge our industry in a constructive and mature way.

We will be encouraging our members to embrace them, and I urge everyone to get behind them and use them- what do you have to lose?

No one wants to see a return to boom and bust,

And this is where innovative projects and ways of working including the use of new technologies can unlock activity in a sustainable way and this industry has some great and increasing examples of this happening today.

And as we focus on our sustainability there will of course continue to be an important role for our politicians and regulators in ensuring a competitive and sustainable business environment,

Yes, indeed Brexit – no speech is complete these days without some sort of reference no matter how brief or colourful!

Our message to political parties of all persuasions remains the same – when it comes to Brexit, like every other industry, we need clarity and predictability, we need it sooner rather than later and we consider, that a deal outcome is in the best interests of this industry and the UK economy and society as a whole.

And so, ladies and gentlemen, those are two of our three tests – a sustainable industry, meeting the expectations of society, but what about safety?

 When it comes to safe operations OGUK’s most recent HS report shows a continuing improvement in people and process safety with record low numbers of reportable incidents 67% lower than 2001.

Concerted action to reduce hydrocarbon releases together with the HSE key programme initiatives has resulted in a continued decrease but the number of major releases while very small, appear to have plateaued.

Any release is one too many and the HSE rightly continue to challenge the industry and we are committed to working with them on this key area through process safety, audit and sustainable learning.

I’m pleased to announce today that we will host an HS and E conference in November and I hope you can join us

I’m sure you will agree that last year’s successful Safety30 was also a very poignant reminder of why we must be constantly vigilant about the safety of our operations and our people.

Reflecting on the three tests I’ve outlined today,

Are we upholding safe operations for our people and our businesses? Yes, but we cannot and will not take this for granted.

Are our business models geared towards sustainability through thick and thin? Yes, indeed firmer foundations are in place – but there is always more to be done.

Are we proactively meeting the expectations of the society we live and work in?

No not really. We do need to step up and show leadership and this is why we need your active support for our vision our future campaign and the actual delivery of Vision 2035,

And so, ladies and gentlemen, we have much to be proud of and nothing to be complacent about given the journey we are on and our commitment to seeing it through

Wisdom is of course about knowing the right path to take, and Integrity is about following it.

And when it comes to safety, sustainability and our society we should be proud about what we can offer and humble in how we deliver it,

Thank you for listening to me – and now it gives me great pleasure to introduce our first speaker of the morning

Sam Laidlaw is a well kent face to this industry and his impressive bio is in the conference app that I would encourage you to download to get all information about the conference  from the agenda to the delegate list to asking questions of your speakers and details of how to do this are in the programme.

Ends

Ministers from the UK and Scottish Governments and a leading strategist on sustainability and climate change are revealed as the final trio of speakers to join an impressive line-up for OGUK’s 2019 Industry Conference taking place this week from 4-5 June.

Scottish Government Cabinet Secretary Michael Matheson MSP will give a speech to delegates on the morning of the first day of conference. Lord Duncan, Parliamentary Under Secretary of State for Scotland and Parliamentary Under Secretary of State for Northern Ireland, will give a speech on the morning of the second day, Wednesday 5 June.

Dr Gabrielle Walker, a keynote speaker, author and advisor on sustainability and climate change, will bring conference to a close with her reflections on the changing industry.

The full conference agenda can be found here.

Speaking ahead of the two-day industry event, OGUK Chief Executive Deirdre Michie said:

“I’m delighted to reveal an impressive trio of speakers which concludes the line-up for our OGUK Industry conference 2019. With the theme of an industry in transition, delegates will have a valuable opportunity to hear insights from key speakers on the big issues affecting the sector.

“Cabinet Secretary for Transport, Infrastructure and Connectivity Michael Matheson has significant knowledge and experience from the forefront of Scottish politics.

“Lord Duncan brings a wealth of experience from his time in Europe and maintains impressive knowledge and links across many countries. His insight will be invaluable, particularly his environmental credentials, as we look to the big issues for our industry and our country.

“I’m also delighted to have Dr Gabrielle Walker bring conference to a close with her reflections on the energy transition.”

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:

Success for future industry leader and innovative technology venture at annual awards

A fledgling industry star who unlocked £20 million of additional value for her company and a business that is using pioneering 3D printing to champion improved safety and environmental performance were among those to be crowned winners last night at the OGUK Awards 2019, sponsored by Shell U.K. Limited.

Over 550 guests gathered at the P&J Live to recognise the standout out achievements of businesses and high-performing individuals from across the industry. 30 finalists were in contention for ten awards, including excellence in decommissioning, business innovation and energy transition, a new award for 2019.

OGUK Graduate of the Year Erin Ingram, Apprentice of the Year Ashley Thomas and Mentor of the Year Teresa Waddington 

Praising the winners, Deirdre Michie, Chief Executive of OGUK, said:

“OGUK’s annual awards ceremony is a highly regarded event within the UK oil and gas industry calendar and this was one of the most competitive years yet.

“The success of our industry is down to the talent, ingenuity and skill of our people and that’s what these awards celebrate. A huge congratulations to our winners and a sincere thank you to all our finalists, whose dedication and expertise help us continually raise the bar on industry excellence.”

Steve Phimister vice president of event sponsor Shell’s UK upstream business said:

“It has been hugely rewarding to celebrate the talents and achievements of all the people who help the UK oil and gas industry make such a vital contribution to today’s energy sector. These are also the people who will play a key role in shaping the future success of the industry, as the UK navigates the energy transition.”

The winners across the ten categories are as follows:

OGUK Apprentice of the Year (sponsored by OPITO)

Ashley Thomas, BP

OGUK Graduate of the Year (sponsored by ECITB)

Erin Ingram, TAQA

OGUK Mentor of the Year Award 2018

Teresa Waddington, Shell U.K. Limited

Workforce Engagement

PD&MS GROUP

OGUK Business Innovation Award (SME)

WFS Technologies Limited

Business Innovation – Large Enterprise

TOTAL E&P UK

Diversity and Inclusion (sponsored by Spirit Energy)

CNR International (UK) Ltd

MER UK (sponsored by the Oil & Gas Authority)

Neptune Energy – BP – Japex UK E&P Ltd

Excellence in Decommissioning

Repsol Sinopec Resources UK

Energy Transition (sponsored by Fairfield Decom Limited)

BP

Aberdeen can position itself as global net zero energy capital

The chief executive of the leading representative body for the UK’s offshore oil and gas industry has today urged Aberdeen to grab the £1trillion of business opportunities presented by moves to net zero.

Speaking at the State of the Cities Conference today in Aberdeen, OGUK Chief Executive Deirdre Michie said

“Indeed, as the excellent Climate Change Committee report showed, there will still be demand for oil and gas in the UK by 2050, at just under half of what it is today,

“And meeting as much of this from domestic resources is therefore crucial.

“At the same time our industry and this city can support the development and commercialisation of low carbon technologies including CCUS and hydrogen – identified as vital to a net zero outcome by the CCC.

“To put the size of that prize in context, oil and gas companies currently support CCUS schemes at only 18 sites across the world,

“But we know that 10,000 will be required globally by 2070.

“It’s an exciting proposition because as we look to become a smart net zero energy industry we will need a smart net zero energy Aberdeen and shire to help us do this.

“Aberdeen as Europe’s oil capital has served us all well and we are hugely appreciative of the support from the north east,

“The opportunity is now as the industry shifts its focus, for Aberdeen to also position itself not just as Europe’s net zero city but as the world’s net zero energy capital.”

Ends

 The full speech is below:

Good afternoon ladies and gentlemen and thank you to you DJ for your kind introduction and Aberdeen City Council for inviting me to speak today,

Can I add my congratulations to Hanan, Dougie and Graeme on their insightful and thoughtful and helpful report,

And to the city council for the progress made – the overview that Councillor Laing gave this morning is very impressive and as I said to Angela Scott – examples like the TECA are real triumphs for the city and her team.

I’ve really enjoyed the insightful sessions so far and it’s an honour to follow you Sir Howard,

I absolutely support that a joined up – collaborative public private approach is key and so today I’d like to talk about areas where, working together, we can realise a successful future for this region and for our industry.

These are:

1 – Attracting and retaining talented people here,

2 – Improving our international competitiveness,

And 3- enhancing our global reputation,

Aberdeen city and shire are considered by many to be the engine room of the UK’s offshore oil and gas industry,

We have a truly special relationship that has been built up over the last 50 years or so,

Our histories are intertwined as will be our futures and so

Looking ahead to the energy transition and delivery of the net zero ambitions, I believe there is a huge opportunity for us to go after together.  

We are an international industry and an international city and so staying competitive and attracting investment is key,

And it’s great that our 2019 Economic Report, shows, that as a sector, we’ve significantly improved efficiency and are fitter and more competitive than we have been for years.

As a result, investment is returning, and activity is picking up.

We have increased production by 20 percent over the last 4 years –as Hanan said an extraordinary achievement for a mature industry like ours and a reinforcement of our resilience and ability to keep on reinventing ourselves.

Utilising technology, introducing smarter and more efficient ways of working have helped to improve our competitiveness as we continue to emerge from one of the most challenging downturns in our history,

And while significant pressures remain on the supply chain here in the north east, staying competitive, working co-operatively with a fair sharing of risks and reward, need to be the cornerstones to unlocking more activity across the whole sector

The economic impact of getting this right for the local and UK economy is considerable –

Production of oil and gas accounted for 1.2 percent of UK GDP – equal to around £24bn

The industry continues to invest around £15bn per annum across the oil and gas lifecycle and has over the years contributed more than £350bn in production taxes alone.

And looking ahead, the OBR forecasts that production tax payments by this industry will amount to more than £8.5bn over the next five years,

When it comes to employment – so important for the north east – this sector supports 270,000 jobs across the UK,

The economic impact is clearly a positive one – but we recognise that with the challenges of climate change – we have to be better at communicating the positive contribution that this industry makes – and needs to continue to make if we are to ensure a fair and managed transition to a net zero future.

And just as we’ve heard today how Aberdeen is a city with a firm eye on the future,

You should be in no doubt that we are also an industry in action,

Because we too are part of a society which wants change, and we are confident that as the UK’s offshore oil and gas industry  – we can play a key role in being part of the solution – helping to drive change that can contribute to a net zero economy  which can then be exported to the rest of  the world.

We are moving forward positively and constructively, and we must continue to do so and at pace.

And so, what are we doing as an industry to be part of what will be a challenging but exciting, refocused energy future?

Well this year we published Roadmap 2035: A Blueprint to Net Zero,

It is one of the first major industrial responses to government commitments to deliver net zero carbon emissions by 2045 in Scotland and 2050 in the UK.

It sets out five key themes requiring tripartite action of industry, BOTH governments and regulators to ensure delivery. Support from them is crucial to our industry and to this city.

One – Helping meet the UK’s needs for energy and industrial products

Two – Driving technology and innovation and the launch of OGTC’s – that came out of the city deal and its Net Zero Solutions Centre is a great example of the kind of action that is needed and is happening

Three -Growing the economy and exports,

Four – developing our people, our skills and a collaborative culture

 And Five – Supporting net zero, because the UK needs our oil and gas products as part of an increasingly diversified energy system if it is going to deliver its net zero ambitions,

 The roadmap was developed out of over 2,500 conversations that continue today with people from across the sector and our stakeholders – many of whom are in this room today,

Indeed, as the excellent Climate Change Committee report showed, there will still be demand for oil and gas in the UK by 2050, at just under half of what it is today,

And meeting as much of this from domestic resources is therefore crucial.

At the same time our industry and this city can support the development and commercialisation of low carbon technologies including CCUS and hydrogen – identified as vital to a net zero outcome by the CCC.

To put the size of that prize in context – oil and gas companies currently support CCUS schemes at only 18 sites across the world,

But we know that 10,000 will be required globally by 2070

It’s an exciting proposition because as we look to become a smart net zero energy industry – we will need a smart net zero energy Aberdeen and shire to help us do this.

Aberdeen as Europe’s oil capital has served us all well and we are hugely appreciative of the support from the north east,

The opportunity is now as the industry shifts its focus, for Aberdeen to also position itself not just as Europe’s net zero city but as the world’s net zero energy capital,

So why is place important to the energy transition?

Surely every city could be and indeed should be a net zero energy city?

But the granite city like our industry has the skills, the experience and the ability to reinvent itself, as it has in the past, from ship building to fishing to the early oil industry founded on whale oil!

Building on our expertise as a global oil and gas hub, and with the right support,

Aberdeen’s future potential as an energy city is limitless,

We’re already seeing the real benefits that this expertise can bring,

We have the European Offshore Wind Deployment Centre directly visible from the coast (when there’s no har..!) and we have , Hywind – the world’s first floating offshore wind development, as well as RGU’s Energy Transition Institute – taking insights and learnings to countries like Mexico, and Columbia to name but a few.

Many of our companies operating in Aberdeen are already leading the way –and we should be especially proud of our supply chain companies like Wood and Global Energy Group which have expanded their footprint over the years into other parts of the energy sector,

And while yes, every economy should have a diverse ecosystem of businesses and industries to ensure it is sustainable,

We should also embrace the enormous value this industry has added and can continue to add as we look to the future. It’s a USP to be treasured.

Place is important and it’s why we are so pleased to see the progress being made here in recent  years in relation to  infrastructure -like, the Harbour –  AWPR  and the fibre network as well as  amenities like TECA, the art gallery and Music hall that are so key  to  establishing  this city as a great place to work and live and so helping us to secure the talent we need.

But more than this, projects like the hydrogen bus project and Hydrogen Aberdeen – reinforce the ambition and drive which will ensure Aberdeen can enjoy more success.

Aberdeen has, as we are all saying – a golden opportunity to claim the mantle of being a global net zero energy capital,

Grasping a healthy portion of the £1 trillion spend the UK Government estimates will be required to meet the challenging targets.

So, my ask of you today is to help champion Roadmap 2035,

In Developing a diverse energy workforce with transferable skills, that’s renowned globally for finding solutions to some of the world’s most challenging problems,

Helping to bring to life CCUS, hydrogen and low carbon technologies by encouraging innovation and establishing Aberdeen as a global hub for low carbon technologies.

And in so doing, realising Aberdeen’s full potential in the transition,

So, looking to the future, I’m confident we have the ingredients for success and that there should be no limits to our ambitions.

It’s an exciting time for this industry and I know you will agree, an exciting time for Aberdeen and the shire.

Thank you. I’d now like to hand over to Chris Murray, director of core cities UK.

Industry grasps digital opportunities

The increasing importance of digitalisation was put under the spotlight today at a breakfast briefing event, sponsored by Deloitte, held by the leading representative body for the UK’s offshore oil and gas industry, OGUK.

An audience of over 150 industry professionals heard about the benefits that could be realised in safety, efficiency and financial through the digital transformation of the North Sea sector.

Keynote speaker Marc O’Connor, Consulting Leader – Energy, Resources & Industrials, Deloitte, who said that digitalisation provided real opportunities for people to be released from routine type jobs, freeing them up to focus on value-added tasks that will provide the innovation solutions of the future.

Reflecting on the speech, expert panellists Alan Muirhead, Director of Projects & Engineering, Neptune Energy UK, Stephen Sheal, External Relationship Director, Oil & Gas Technology Centre and  Jared Owen, Director – Digital & Entrepreneurship, Opportunity North East, discussed how industry can ensure it has the skills and expertise needed to help deliver Roadmap 2035.

Speaking after the event, panel chair OGUK Stakeholder and Communications Director Gareth Wynn said:

“Digitalisation isn’t just the future, it’s the here and now. Today’s event showed that while this industry has a firm grasp on the opportunities digital transformation could bring, we must continue to collaborate and share good practice.

“From setting up an agile culture which removes barriers to decision making, to ensuring colleagues have fit-for-purpose skills and technologies, there are changes both big and small that this industry could make which could have a real impact on the safety, efficiency and competitiveness of our sector.

“This is an industry shaping up for the future and the delivery of Roadmap 2035 – our blueprint to a net zero future. It’s clear from today’s event that how we choose to embrace digitalisation could make or break our ability to be part of the low carbon economy we all want to see.”

Marc O’Connor, Consulting Leader – Energy, Resources & Industrials at Deloitte said: “Deloitte has extensive experience of digital transformation, and while the journey can be complex, we know that a successful outcome can be characterised very clearly and simply. When integrated and used effectively, digital has the potential to add value throughout a project’s lifecycle and those who invest with a data from day one approach can realise significant benefits.

“It was great to share our perspective on digital capital projects at this morning’s OGUK breakfast meeting. As well as covering real-world examples of how digital initiatives are being used on capital projects, I discussed a way forward for how businesses can navigate their own digital transformation journey and outlined the various opportunities that exist for operators and suppliers working in the UK’s oil and gas sector.”

New starts urged to drive industry future

The next generation of the UK’s oil and gas industry are being called upon to make their voices heard on key issues including the energy transition and climate change at a new event being held in Aberdeen on Thursday 24 October.  

Leading representative body for the sector OGUK today announced a second industry insight event aimed at graduates, young professionals and those starting out their career. It follows the success of an intern event in July attended by over 100 young people with placements in operator, service and supply chain companies.

The event sponsored by Spirit Energy will provide attendees with the opportunity to shape the future of their industry through direct involvement in Roadmap 2035: industry’s blueprint for a net zero future.

The audience will take part in an interactive workshop looking at the five key themes from Roadmap 2035 before hearing from a diverse panel chaired by OGUK Supply Chain Director Matt Abraham.

  • Sophie Guy-Pearson, Lead Business Advisor, OGUK
  • Guiseppe Tizzano, OGUK Mentor of the Year 2018, BP
  • Trevor Thomson, Director, Technical Function, Spirit Energy
  • Ryan Fernando, OGUK Apprentice of the Year 2018, Aker Solutions

Commenting on the event, OGUK Supply Chain Director Matt Abraham said:

“The people joining our industry today are among the most important voices in shaping the industry of tomorrow. The world of work is changing at a time when our industry is also looking to the future through the energy transition.

“Understanding how we can meet the ambitions outlined in Roadmap 2035 will require fresh thinking and OGUK is passionate about ensuring the voice of the next generation is not only heard but acted upon. This event is a great opportunity for people starting out their careers to drive the future of the sector and make a valuable contribution on our journey to becoming a net zero basin.”

Get your tickets for OGUK Insights for Young Professionals 

 

No winners from Greenpeace stunt

Commenting on reports that Greenpeace has ended its protest in the North Sea, OGUK Stakeholder and Communications Director Gareth Wynn said:

Gareth Wynn – Stakeholder and Communications Director

“There are no winners as a result of this stunt, which both put safety at risk and failed to produce any solutions to how we can achieve the net zero future we all want to see. The arguments from Greenpeace are fundamentally flawed and sadly fail to recognise the reality that prematurely shutting down the North Sea will only increase the UK’s reliance on imports from across the world.

“We live in a world with ever-growing demand for energy which at the same time needs an ever-reducing carbon footprint. Our industry is committed to help find practical solutions to one of the biggest challenges we will face. It’s time for deeds not words and we’d encourage anyone with a serious interest to work with us.”

READ NEXT: OGUK Energy Transition Outlook 2018

UKCS decommissioning costs unveiled in flagship industry report

A key industry report detailing the cost of decommissioning on the UK Continental Shelf and the progress being made by industry, government and regulators to reduce costs by more than 30 per cent will be unveiled at OGUK’s upcoming business breakfast in London.

The annual UKCS Decommissioning Cost Estimate Report, published by industry regulator the Oil & Gas Authority (OGA), will give a deeper insight into the landscape of the sector as well as highlight the opportunities and challenges currently facing the market.

Sponsored by White & Case LLP, the event will be held on Tuesday, July 2, at 5 Old Broad Street, London.

Commenting, Joe Leask, Decommissioning Manager at OGUK, said:

“We’re delighted to host the launch of this vital piece of research from the OGA and I look forward to hearing more about the progress industry has made in achieving the 35 per cent cost reduction target.

“The UK is a first mover in the decommissioning of complex, deep-water oil and gas assets and the industry must seize future opportunities in the global decommissioning market.

“This includes the development and deployment of CCUS (carbon capture, usage and storage), building on the re-use of offshore infrastructure, industry geological expertise, and utilising the skills and knowledge of our supply chain.”

 

Industry can be an essential partner to UK climate ambitions

The leading representative body for the UK’s offshore oil and gas industry has today reinforced the role the industry can play in supporting the UK to meet its climate change ambitions.

Speaking in response to the Prime Minister’s commitment to deliver net zero emissions by 2050, OGUK Chief Executive Deirdre Michie set out the role industry can play to enable the energy systems of the future and to help the development of technology that can mitigate carbon from other heavy emitting industries.

Commenting, Deirdre Michie said:Deirdre Michie

“Achieving net zero is a huge challenge that will affect all industries, businesses and people. Our sector needs to be involved in this agenda, work to realise the opportunities it presents and be an essential partner in supporting the UK to achieve its climate change ambitions.

“We can help design the diverse energy system we need for the future, and through our knowledge and experience can be a central part of developing some of the technology needed to mitigate carbon from other heavy emitting industries through for example, Carbon Capture Usage and Storage.

“We have already welcomed the Climate Change Committee report and are engaging with our members on the practical steps we need to take to in relation to continuing to manage and reduce the emissions from our own activities, to play our part in achieving net zero.

“With world-leading engineering skills, infrastructure and energy expertise, our industry stands ready to work with sectors across the UK economy to enable the UK to achieve its climate change goals.”

OGUK Industry Conference: Deirdre Michie speech

Speaking to over 400 delegates at the OGUK Industry Conference in Aberdeen this morning, OGUK Chief Executive Deirdre Michie said:

Ladies & gentlemen, good morning and welcome, to OGUK’s conference and exhibition for 2019: An Industry in Transition

I’m very pleased that so many of you have joined us here for what I hope will be an interesting and insightful 36 hours, where we consider the progress industry is making as it continues to emerge from one of the most challenging downturns, while positioning itself for a sustainable future that supports a lower carbon economy.

Four years ago, when I addressed this conference for the first time, before the possibility of Brexit or Trump had registered with anyone, none of us had any idea of the challenge and change that was to test us all at every level,

And that would take this industry to the point from which many thought it couldn’t return.

But the sector’s “come back” is very much in progress,

Thanks to the resilience, courage and can-do attitude that has typified its success over the years and will be key to its sustainability going forward.

To help us consider all of this and more, I’m delighted to be joined in this opening session by Sam Laidlaw of Neptune Energy, Torgrim Reitan of Equinor and Jean-Luc Guiziou of Total,

Sam, Torgrim and Jean-Luc are three excellent leaders of companies epitomising this industry’s transition whether it’s because they are attracted to the competitiveness of the basin or are embracing and taking the lead in the energy transition,

Their thought-provoking views will lay the foundations for the focused and interactive programme that we have ahead of us with compelling and insightful industry leaders speaking and chairing our sessions throughout our time together.

I’d also like to thank Jean Luc and Total as our principal sponsor, for supporting us once again as well as of course all our other sponsors

Your backing for this key industry event is very much appreciated.

Ladies and gentlemen, ensuring we sustain our licence to operate while we transition to a lower carbon economy are key challenges for us.

I believe that there are three tests that we need to satisfy if we want to protect our licence to operate as well as simply do the right thing as responsible UK and global citizens.

One- Are we ensuring safe operations for our people and our organisations?

Two – Are our business models geared towards sustainability through thick and thin?

And three – do we proactively meet the expectations of the society we work in and for?

Indeed, as we look back over the last 4 years – the pace of change has been extraordinary and as we look ahead we need to stay focused on the things we can influence, deliver or change.

Because as Benjamin Disraeli said – when you are finished changing – you are finished -and this industry certainly is not.

  So, when thinking about the society we live in and its expectations, another quote comes to mind,

(“Until you start focusing on what needs to be done rather than what is politically possible, there is no hope. We can’t solve a crisis without treating it as a crisis. We need to keep the fossil fuels in the ground, and we need to focus on equity. And if solutions within the system are so impossible to find, maybe we should change the system itself.”)

These are the words of Greta Thunberg – an impressive young woman we can all take inspiration from.

A woman who wants to change the world.

I would like to reassure Greta- we are listening, because we want the world to be a better place too.

And while we believe that our industry’s global contribution has improved the lives of billions of people, we are clear that climate change is a real and present danger that we must deal with together.

When Greta says, “If solutions within the system are so impossible to find, maybe we should change the system itself.”

I would like to suggest that as the UK’s offshore oil and gas industry has so many talented people, engineers, data scientists, remote vehicle operators, technologists and more

We can find and deliver the solutions needed while at the same time positioning ourselves to be at the heart of an energy system that also needs to change.

Whether it is by the sector working to reduce its operational emissions as well as supporting the advancement of low carbon and abatement technologies.

Indeed, along with our sector delivering from exploration through to decommissioning, it’s already unlocking the energy transition with some operators extending their portfolios into other energies – Equinor –Total, Shell and BP.

And of course, the downstream and utilities sectors are doing a lot of work in this too.

This is why we welcomed the Climate Change committee report last month

Where it recommended that the UK set a net zero target for GHG by 2050 and by 2045 for Scotland.

This report provides a balanced and thoughtful blueprint towards a lower carbon future and I would commend it to those of you who haven’t read it yet.

Its recommendations are rooted in practical and societal choices that we need to embrace as an industry and as individuals if we are truly to make a leading and constructive contribution to the future of our industry, our economy and our society generally.

The climate change committee also recognised that the indigenous offshore oil and gas industry needs to be a key part of a diverse energy mix going forward and is therefore not in competition with renewables.

Official figures show that production from our offshore industry will be needed to meet two thirds of the UK’s oil and gas energy needs, while the gap between what we produce and what we need to heat our homes and fuel our cars is made up from imports, shipped from across the world often with a bigger carbon footprint,

It’s why the Climate Change Committee report talked about “energy sovereignty” and the need to make up that demand from domestic resources while we transition to a lower carbon future.

And our supply chain is already very much in action, using its transferable skills and expertise to service the needs of alternative energy companies from Global Energy to Wood to Aker Solutions.

So, while we continue to advocate with facts and evidence I appreciate that it can sound like corporate speak that doesn’t have the emotion or the urgency that society and we, as part of society, are all feeling.

This is why Vision 2035, and Our Vision, Our Future campaign is set in the context of energy transition and not in isolation

It’s about our industry supporting an accelerating energy transition through our people, expertise and infrastructure, while meeting as much of our country’s oil and gas needs from home produced resources,

Where our world-class supply chain, anchored in the UK and with its international reach, adds value across the energy sector at home and abroad, developing technologies which help to decarbonise the economy

Delivering a diverse energy mix which can help us meet the UK’s dual challenge of satisfying ongoing supply demands with a lower carbon footprint

Powering your iPhone- heating your shower – providing the screens for your computers or TVs or the glue to stick yourself to doors- unless you used a plant-based glue of course!

Indeed, anyone and everyone who wants to change the world for the better can work with us to help ensure a fair and just and managed transition and at a pace that will also be required.

And so today I can confirm that later this year we’ll publish the road map which will set out how we can successfully deliver the vision and our industry’s sustainable future, to ensure it continues to contribute to the country  in terms of hundreds of thousands of jobs, security of energy supply, billions of pounds in taxes and investment levels, for decades to come.

So, if I have one ask of you today ladies and gentlemen, it is that you get behind our campaign – Our Vision Our Future and support our industry in delivering a sustainable lower carbon future.

So, if this is where we are heading, where are we now?

Well as we continue to emerge from the downturn our businesses are adapting to the new reality where an ongoing volatile commodity price,

Back down to between $60 and $70 with an outlook that remains in the $50 to $60 range means retaining a tight focus on budgets and looking for innovative ways of working that unlock opportunities across the basin.

It means sustaining and deepening the competitiveness that this industry has achieved through its own focus and endeavours as well as working well with both governments, regulators and the OGA to ensure a cohesive and comprehensive approach that is delivering results.

Production is up 20 percent over the last 5 years – costs are being contained at an average of $15 per barrel and production efficiency is up to 75% from the low 60s.

Our fiscal regime continues to be one of the most globally competitive and capital is being attracted back into the basin,

Over £3.2bn for 13 projects in 2018 with the same anticipated this year too.

The deals that are continuing to be done, Delek and Chryasor’s being such recent examples of companies considering this to be a great place in which to do business

The momentum around exploration is building,

Although drilling continues to be at an all-time low.

Many E&P operators are cash flow positive for the first time in years – rebalancing their books and yes paying off debt and giving back to shareholders but also increasing their activity too.

Parts of the supply chain are starting to see the benefits but not all.

With margins remaining under pressure the sustainability of some areas of our supply chain is challenged and so some operators do have a choice.

And that is to ensure a better share and more balance in terms of the risk and return now or find yourselves and industry as a whole or paying for it sooner rather than later.

The supplier principles that we drew up earlier this year can be a key enabler to companies throughout the supply chain, addressing some of the issues that continue to challenge our industry in a constructive and mature way.

We will be encouraging our members to embrace them, and I urge everyone to get behind them and use them- what do you have to lose?

No one wants to see a return to boom and bust,

And this is where innovative projects and ways of working including the use of new technologies can unlock activity in a sustainable way and this industry has some great and increasing examples of this happening today.

And as we focus on our sustainability there will of course continue to be an important role for our politicians and regulators in ensuring a competitive and sustainable business environment,

Yes, indeed Brexit – no speech is complete these days without some sort of reference no matter how brief or colourful!

Our message to political parties of all persuasions remains the same – when it comes to Brexit, like every other industry, we need clarity and predictability, we need it sooner rather than later and we consider, that a deal outcome is in the best interests of this industry and the UK economy and society as a whole.

And so, ladies and gentlemen, those are two of our three tests – a sustainable industry, meeting the expectations of society, but what about safety?

 When it comes to safe operations OGUK’s most recent HS report shows a continuing improvement in people and process safety with record low numbers of reportable incidents 67% lower than 2001.

Concerted action to reduce hydrocarbon releases together with the HSE key programme initiatives has resulted in a continued decrease but the number of major releases while very small, appear to have plateaued.

Any release is one too many and the HSE rightly continue to challenge the industry and we are committed to working with them on this key area through process safety, audit and sustainable learning.

I’m pleased to announce today that we will host an HS and E conference in November and I hope you can join us

I’m sure you will agree that last year’s successful Safety30 was also a very poignant reminder of why we must be constantly vigilant about the safety of our operations and our people.

Reflecting on the three tests I’ve outlined today,

Are we upholding safe operations for our people and our businesses? Yes, but we cannot and will not take this for granted.

Are our business models geared towards sustainability through thick and thin? Yes, indeed firmer foundations are in place – but there is always more to be done.

Are we proactively meeting the expectations of the society we live and work in?

No not really. We do need to step up and show leadership and this is why we need your active support for our vision our future campaign and the actual delivery of Vision 2035,

And so, ladies and gentlemen, we have much to be proud of and nothing to be complacent about given the journey we are on and our commitment to seeing it through

Wisdom is of course about knowing the right path to take, and Integrity is about following it.

And when it comes to safety, sustainability and our society we should be proud about what we can offer and humble in how we deliver it,

Thank you for listening to me – and now it gives me great pleasure to introduce our first speaker of the morning

Sam Laidlaw is a well kent face to this industry and his impressive bio is in the conference app that I would encourage you to download to get all information about the conference  from the agenda to the delegate list to asking questions of your speakers and details of how to do this are in the programme.

Ends

Trio of VIP speakers mark final conference line up

Ministers from the UK and Scottish Governments and a leading strategist on sustainability and climate change are revealed as the final trio of speakers to join an impressive line-up for OGUK’s 2019 Industry Conference taking place this week from 4-5 June.

Scottish Government Cabinet Secretary Michael Matheson MSP will give a speech to delegates on the morning of the first day of conference. Lord Duncan, Parliamentary Under Secretary of State for Scotland and Parliamentary Under Secretary of State for Northern Ireland, will give a speech on the morning of the second day, Wednesday 5 June.

Dr Gabrielle Walker, a keynote speaker, author and advisor on sustainability and climate change, will bring conference to a close with her reflections on the changing industry.

The full conference agenda can be found here.

Speaking ahead of the two-day industry event, OGUK Chief Executive Deirdre Michie said:

“I’m delighted to reveal an impressive trio of speakers which concludes the line-up for our OGUK Industry conference 2019. With the theme of an industry in transition, delegates will have a valuable opportunity to hear insights from key speakers on the big issues affecting the sector.

“Cabinet Secretary for Transport, Infrastructure and Connectivity Michael Matheson has significant knowledge and experience from the forefront of Scottish politics.

“Lord Duncan brings a wealth of experience from his time in Europe and maintains impressive knowledge and links across many countries. His insight will be invaluable, particularly his environmental credentials, as we look to the big issues for our industry and our country.

“I’m also delighted to have Dr Gabrielle Walker bring conference to a close with her reflections on the energy transition.”