A review of the oil and gas industry’s progress against the terms of the North Sea Transition Deal (NSTD), conducted by OGUK, has shown strong progress in the first ten months since the ground-breaking deal was signed, with several key milestones already reached.
The NSTD, agreed at the end of March 2021, set out an ambitious plan for how the UK offshore oil and gas sector and the UK Government would work together to deliver the skills, innovation and infrastructure required to meet the UK’s carbon reduction targets. In addition to the sector achieving net zero by 2050, the deal seeks to safeguard and transition thousands of existing jobs while creating another 40,000 new jobs by 2030, in areas including carbon capture storage (CCS) and hydrogen production.
Ten months on from this agreement, the first of its kind among G7 countries, both industry and government have made strong progress in a number of areas – from the reduction of carbon emissions from the UK Continental Shelf, to the launch of the Methane Action Plan, the selection of two ‘Track 1’ CCS projects in North East and North West of England and the successful OGA £1m electrification competition.
Energy & Climate Change Minister Greg Hands MP said: “Since agreeing our landmark North Sea Transition Deal we have made great progress towards delivering on its ambitious commitments, helping support and safeguard the sector’s highly-skilled workers and supply chain as we shift to a lower carbon future.”
Just Transition Minister Richard Lochhead MSP said: “It is positive to see how much progress has been made since the North Sea Transition Deal was agreed in March last year.
“Ensuring our journey to net zero by 2045 is just and fair for everyone is critical, and the ambitious terms for the North Sea Transition Deal will be fundamental in achieving this. We will continue to engage with OGUK and UK Governments to ensure the plan for the sector is delivered.”
Deirdre Michie, CEO of OGUK, said: “In less than ten months, the UK Government and the offshore sector have made huge progress against the ambitious terms of the North Sea Transition Deal – working to reduce carbon emissions, invest in new energy technology and build the foundations for a just transition to net zero by 2050. This is only the beginning, but I believe that through close cooperation with governments across the UK, we will deliver on the deal – which can act as a blueprint for collaboration in other countries.”
The key areas of progress within the NSTD are outlined in further detail below:
- Carbon emissions from the UK Continental Shelf are down by 10% since 2018 – half of which is as a direct result of action taken by oil and gas operators.
- The Oil and Gas Authority launched a £1m competition for ideas to advance the electrification of platforms in the UKCS. Several major electrification projects are already underway, including Central North Sea and West of Shetland.
- The Methane Action Plan was launched in June, outlining how the industry can reduce methane emissions and intensity.
Carbon, Capture, Usage and Storage
- The UK Government selected the East Coast Clusters and Hynet to receive the first round of funding from the £1bn Infrastructure Fund – with the potential for other projects to receive future funding.
- Government is to agree on a business model with industry by Q3 2023.
- Industry technical standards for CCS storage are currently in development, with the first set to be released by Q3 2022.
- The UK Government published its Hydrogen Strategy in August, which was well received by the industry.
- The HSE published advice in conjunction with the Hydrogen neighbourhood heating trials, finding that 100% hydrogen can be as safe as natural gas.
- Several hydrogen projects are either in progress (East Coast Cluster, Hynet) or are under consideration (SNS Hydrogen Hub).
- OGUK appointed a Supply Chain Champion to ensure UK energy companies are in a strong position to compete for, and win, contracts for new, clean energy projects.
- The Supply Chain Strategy is currently in development to ensure the UK’s energy supply chain makes the most of the opportunities presented by the energy transition.
- The Prompt Payment Code is currently in development to ensure buying organisations pay suppliers on time.
People and Skills
- The Energy Skills Alliance is developing an integrated workforce plan and forecast to be released in Q1 2022, which will focus on transitioning the workforce’s skills, progressing cross-sector training and standards to facilitate workforce mobility.
- Progress has been made in delivering Diversity and Inclusion activities to address the issue of underrepresented groups in the workforce.