Stuart Payne, NSTA's Chief Executive, delivered a speech at the International Energy Week in London on 28 February 2023. His speech, which highlights how the North Sea is at the forefront of the Energy Transition, is below:
I was delighted to be asked by Peter to open this panel on successful examples of the energy transition.
I’d like to say a few things about the context in which the transition is taking place, the opportunity for the UK and how the NSTA is seeking to support turning good words and ideas into delivery.
Starting with the external context - like all parts of the global energy world, we are grappling with the fundamental challenges - trying to provide secure supplies, as cleanly as possible at a price people can afford, whilst recognising that the war in Ukraine and the climate crisis have made accelerating the transition more pressing than ever.
In the UK:
- We have declining oil and gas production in a country still reliant on fossil fuels for ¾ of our primary energy needs – and where imported LNG has twice the carbon footprint of domestically produced gas.
- We are ramping up renewable deployment to meet ambitious targets but discovering commercial, regulatory and technical challenges that need to be overcome.
- And we have an oil and gas industry that is providing vital energy, vital tax revenue and employing hundreds of thousands of people - whose expertise, along with industry’s capital and infrastructure will be needed to deliver the transition
But that industry is operating in a polarised external environment which could result in these capabilities being lost before the opportunities of the new technologies are sufficiently scaled up.
It is not just the skillset of the current workforce we need for the transition but those of the future workforce too. We need the next generation to see the North Sea as a viable place for a career.
Because the key to a successful transition is not just about molecules and electrons but growth for the country and opportunity for individuals – it’s about the people as much as the pipelines.
Turning off the taps today will not deliver a clean, resilient energy system tomorrow.
There is a fantastic new industrial revolution available to us, anchored around the energy transition.
If we can overcome the policy, technical and financial challenges, the UK and the North Sea has the opportunity to play a massive role in this revolution.
So let’s look at the opportunity in a bit more detail.
The North Sea itself has the core ingredients to be a successful transition case study.
- It is resource rich in offshore wind
- Has 6 billion of barrels of oil and gas to be produced
- Has a huge network of pipelines and infrastructure in place
- And in the UKCS alone up to 78GT of carbon storage potential.
78GT. This would be sufficient to sequester all the CO2 emitted in the UK since the industrial revolution.
There is potentially up to £220 bn of expenditure in the North Sea between now and 2030 alone, split between oil & gas, offshore wind, CCS and Hydrogen.
But this is just potential. We need to get on with delivery, demonstrate progress and get real projects scaled up and running.
The organisation I lead, the NSTA, is stepping up to do all we can help the UK seize this great opportunity.
In a busy and often complex landscape, I have set my team the challenge to stay focused on delivering three things: Secure energy supplies for the UK; Rapid decarbonisation of that supply; Acceleration of the transition to net zero.
For securing energy supplies, we are working with operators to steward 26 current projects through their maturation, and last year we launched the 33rd offshore licensing round, the results of which will be announced in the coming months. These are all projects we need to help the country get as much energy as possible from our own resources.
We also regulate the sector to ensure that energy is produced as cleanly as possible. Decarbonising production is essential and the North Sea Transition Deal provides a strong focus to the sector.
There has been good early progress with emissions down 20% since 2018 including a 41% drop in flaring and venting, which in 2021 was equivalent to the gas needed to heat 130,000 homes.
We benchmark and monitor the sector’s progress, facilitating the sharing of good practice and highlighting those who are lagging behind. We want to see industry go further and faster and surpass the targets in the deal.
Platform electrification will be key to success and we are working very closely with industry and other parts of the regulatory ecosystem to get key electrification projects into FEED this year.
And when it comes to transition, our work spans everything from decommissioning and repurposing oil and gas assets through to carbon storage and hydrogen.
Since we started working hard with industry on decommissioning cost improvements, the estimated total cost of decommissioning the UKCS has fallen from around £59bn to around £37bn – a massive projected saving for industry and the taxpayer, and we’ve identified the potential for billions of pounds of savings that could be realised through reuse and repurposing of offshore facilities.
And last, but very much not least, we will shortly be announcing the awards from the UKs first carbon storage licence round – a key step to unlocking the UK’s storage potential – something we are very proud to have initiated.
It’s important of course to also remember finance. These are big changes which are going to need big investment. There is a wall of capital looking for energy projects to invest in across the globe.
Clearly there is going to be an arms race to attract that capital. Some healthy competition is good and we need to embrace the race.
But we also need to work together. Different countries and different sectors will be grappling with these issues, sometimes succeeding – sometimes failing but always learning as they go.
For the UK and the North Sea, as we push forward into this challenge, we can be the place to deploy, learn and succeed, and then our world class supply chain can deliver for the UK and export across the world.
So as you can see, the way we view the next few years there are fascinating and challenging times ahead for the offshore energy industry, and a generational opportunity for positive change.
Emerging sectors will need to rapidly accelerate whilst existing ones continue to keep our lights on, our homes heated and industry moving. Technologies will be needed to unlock new opportunities and create entire new roles and even new industries.
All of this has to happen in the same bit of sea…
At the NSTA we believe the key to making this happen is integration.
If collaboration was the word on everyone’s lips for the last decade, in the next decade, that will be replaced by integration. The North Sea is going to become an integrated place to do business.
The UK has an amazing, global opportunity if we can move forward fast and move forward in a smart way. If we work by integrating all the pieces of the puzzle, we can deliver the transition and meet today’s energy needs.
Please note - There may have been some slight variations in the delivery of this speech