OEUK: Offshore oil, gas industry key to decarbonizing UK as production emissions fall 24% in 2022

(WO) – The UK offshore oil and gas industry has reduced production emissions by 24% compared to 2018, according to a report from the leading industry body Offshore Energies UK (OEUK).

In its Emissions Report 2023, OEUK estimates that emissions from production in the UK fell to the equivalent of 14.28 million tonnes of CO2 in 2022. This compares with the 2018 figure of 18.9 million tonnes.

The sector has also halved flaring and venting and cut methane emissions by 45% compared to 2018, demonstrating a continuous commitment to decarbonization.

The reductions are in line with the sector’s targets under the North Sea Transition Deal, in which the industry committed to reduce emissions 10% by 2025, 25% by 2027, and 50% by 2030.

So far, most of the reductions have been made through operational improvements, process optimization and the decommissioning of older assets.

The report also shows the UK’s carbon footprint will increase by 50 million tonnes of CO2e by 2050 if there’s no new investment in domestic oil and gas production (the equivalent of the entire UK population flying from London to Glasgow almost five times over).

This is because the country would become increasingly reliant on imported liquid natural gas (LNG), which is often produced and shipped to the UK from countries with less commitment to reducing the environmental impacts of production.

The trade body says in a best-case scenario, where investment in domestic oil and gas production is sustained to prevent a rapid over-reliance on imports, the UK industry could still provide 50% of the UK’s oil and gas needs by 2030.

In this scenario, the sector will halve its emissions by 2030, meet net zero by 2050, and continue to support UK jobs and the economy while developing solutions like wind, hydrogen and carbon capture.

Most of the UK sector’s emissions come from generating the energy needed to power offshore installations, including safety systems, plus electricity and heat for the workforce.

Further emissions reductions will increasingly rely on major capital projects, such powering offshore rigs with renewable electricity, known as electrification.

OEUK warns these solutions will only be viable with timely access to the National Grid as well as an attractive environment for investors to support the installation of windfarms.

OEUK has laid out four policy actions for government to attract the investment needed to cut emissions and ensure the UK makes the most of its domestic energy resources.

These actions are:

1. Make the UK an attractive destination for investment in offshore energy. The Energy Profits Levy casts a shadow on investment and makes it much harder to secure long-term investments in the production assets and infrastructure needed to electrify offshore operations. Decarbonization mechanisms, now seen as part of the fiscal regime, serve a vital role in facilitating investment across the energy sector, but they are expensive.
2. Adopt a whole-system approach to decarbonization, with clear accountabilities for the industry, regulators, and government. This will require alignment between regulatory, government and industry bodies to ensure the decarbonization of offshore assets is timely, consistent with delivery of emissions targets, and reflects the wider business environment.
3. Ensure the UK’s oil and gas production facilities are seen as part of a wider integrated energy system. The remit of “Future System Operator" (FSO) needs to adopt a cross sector approach that aligns with other regulators’ remits. Infrastructure development needs to make the most of the UK’s energy resources both on and offshore to support the growth of the economy.
4. Ensure the UK Emissions Trading Scheme (ETS) supports progressive decarbonization and avoids prematurely shutting down activity. The volatility of the UK ETS scheme has made it harder to plan long term investments.

OEUK sustainability and policy director Michael Tholen said, “We have a key role to play in helping the UK tackle the energy trilemma: reducing emissions and energy costs while improving the availability of secure supplies of energy.

“The sector has shown continuous commitment to decarbonization – achieving a third consecutive year of emissions reductions, halving flaring and venting, and cutting methane emissions by 45 per cent in 2022.

“Even though the sector is making big strides, progress is starting to slow. The low-hanging opportunities, like operational improvements and cuts to flaring and venting, having already been achieved.

“Further reductions will now rely on large-scale, capital-intensive projects – so we need to make sure the UK becomes an irresistible place to do business to scale up these solutions.

“Our energy future can be secure, sustainable and provide growth opportunities for UK businesses and people – but only if we have the right support from governments to make the most of our supply chain, skills, and infrastructure.

“The decarbonization of our sector, and indeed the entire UK economy, will rely on supportive energy policy across the whole energy landscape, so we welcome any action from government that aims to attract investment and accelerate our drive to net zero.”