Offshore Europe: UK’s Stuart shows balanced energy approach in opening address
The 50th anniversary edition of SPE Offshore Europe (OE) got underway Tuesday morning with a solid, well-received Opening Address by British Minister of State for Energy Security and Net Zero, Graham Stuart, MP. In his remarks, Stuart did his level best to strike a balance between various forms of energy while addressing the issues and concerns likely on the minds of most OE attendees.
In building the case for current energy policy, the minister reached back 50 years in history. “Back in 1973, when Offshore Europe was founded, the UK, then as now, was facing a major energy and oil crisis,” noted Stuart. “And looking at the makeup of quite a few of you in this room, I realize that I was too young at the time to remember the soaring prices at the pumps and all the fast talk about a return to rationing. I do remember growing up with economic ramifications from that process—inflation, recession, and the impact of the Middle Eastern [embargo] on oil exports forced nations to reconsider their energy plans, to protect consumers from volatile oil markets.
“But that was where, and when, Britain’s domestic oil industry really came into its own, by exploiting huge oil and gas fields, far out in the North Sea. The industry helped to restore energy security, drive down prices, and turn our economy around.”
The current situation. Five decades later, said Stuart, the UK faces another global energy crisis, with soaring prices, triggered by what her termed Putin’s unprovoked invasion of Ukraine, in an attempt to weaponize fuel markets. Now, as then, he said that North Sea oil and gas has a huge role to play in protecting the British people and their energy security.
“So, let me be absolutely clear,” stated Stuart. This government firmly believes UK oil and gas production is part of the solution, not the problem. As very recent NSTA research has revealed, domestically produced gas is, on average, almost four times cleaner than gas imported in LNG form. That’s because domestic gas production has around a quarter of the carbon footprint upstream of imported liquefied natural gas.”
Further, explained the minister, when the UK has reached net zero in 2050, as it is legally obligated to do, it’s estimated that around a quarter of the country’s energy needs will still come from oil and gas. By using its own resources, he said, the UK will avoid polluting imports and the high-carbon emissions and reduced energy security that come with them.
“But, it’s fantastic to be in this hall,” continued Stuart, “because I remember my first visit as the minister to Aberdeen, meeting leaders of the industry, and speaking to them, about the need to tell the story. This is not actually a complex argument. But it’s an argument which hasn’t been heard up and down in this country.”
He said that officials, collectively, in the government have failed to tell the people the story of dependence on oil and gas, and the efforts to decarbonize, as far as possible, oil and gas. Nor has anyone discussed the fact that the energy industry, is one industry. “It doesn’t need to be divided into sheep or goats,” emphasized Stuart. “It isn’t divided between the blessed and the damned, the green and the filthy oil and gas. It is one industry.”
As a minister, he said that he visits companies that are working simultaneously on several things, from nuclear to floating offshore wind, fixed bed, and oil and gas. “It’s one industry providing a solution for that fundamental basis of an society, and any economy, which is energy,” declared Stuart. “And we need to tell that story, because it's not that complicated. But if you don’t tell it, then you’ll be crowded out by [screamers], who aren’t interested in nuance, who aren’t interested in reality. They just want to tear down that which we have.”
He said that everyone in the UK government and industry has a duty and responsibility, collectively and individually, to do what they can to tell the story, if they think it’s true. “If you don’t think it’s true, then we shouldn’t be doing it,” deadpanned Stuart. “But if it is true, then we need to tell the story and need to convince people.” And that is why, last month, he said that Prime Minister Sunak confirmed hundreds of new licenses backing North Sea gas. Stuart called it great news, not just for energy security and the economy, but also for the environment.
He noted that domestic production adds about £17 billion to the British economy annually. It supports 200,000 British jobs, and it’s expected to pay around £50 billion in tax over the next five years. He pointed out another important metric, which is that the industry is experienced, its supply chains are mature, and the workers are highly skilled in energy production. So, as the UK expands its renewable projects in the coming years, officials know that they already have a pipeline of what her termed “world class talent with the unique skills” required for success.
The path forward. “So, that brings me to the second major focus I wanted to look at today, which is the energy transition,” continued Stuart. He said he is proud of “the fantastic progress” the UK has made on this over the last half-century. He noted this has been a focus by his government since 2010, back when less than 7% of British electricity came from renewables. “It’s well over 40% today, said Stuart. “In 2012, nearly 40% of our electricity came from coal and dirty fossil fuels. Next year, ladies and gentlemen, it will be zero. I’m not aware of any country in the world that has moved as fast and as seriously as we have under this government.”
The minister said that is why his country has decarbonized and has cut its emissions, more than any other major economy in the world. He said the UK should be proud of that. He also declared that its both his responsibility and that of the industry “to make sure that people are aware that our record in this country is a proud one.”
Stuart also pointed out that the UK has “very successfully developed, and I think transformed the economics of offshore wind. We have the four largest windfarms in the world,” Fig. 1. Earlier this year, at the North Sea Summit, he noted, the UK and eight other European companies laid out a vision to turn the North Sea into the world's largest power region, with 120 gigawatts of energy targeted for 2030 and 300 gigawatts to be produced in the North Sea by 2050. “That’s six times greater than the UK’s demand for electricity last year,” exclaimed the minister.
Accordingly, he said, “the green transition isn’t about doing without. It’s about new industries, new investments, and new growth. It will support up to 480,000 highly skilled, highly paid jobs and leverage up to £100 billion of private investment by 2030. And it will, collectively, bolster our energy security while bringing down the wholesale electricity prices to among the lowest in Europe.”
Stuart said the government’s vision for the future is a diverse, decarbonized energy supply “that will power Britain from Britain.” He then explained how officials are going to work with the industry to achieve that goal.
“Just over two years ago, we agreed the North Sea transition deal,” said the minister. “A perfect example of how government can work with industry on a managed energy transition, which leaves no one behind. The deal just didn’t set ambitious decarbonization targets while supporting the sector as the basin declines. It also harnesses the industry’s existing capabilities, infrastructure and private investment potential to exploit new and emerging technologies, such as hydrogen production, carbon capture usage and storage, offshore wind, and decommissioning. All areas, where we are blessed with natural advantages.”
As an example, Stuart pointed to carbon capture. Without it, he said, there will be no net zero. So, he said that’s why the chancellor has committed £20 billion to kick-start that work. He also made note that it is traditional oil and gas companies that are going to deliver these projects. “It is, in fact, the oil and gas industry’s expertise, the balance sheets, the engineering, the subsea capabilities that makes net zero possible,” said Stuart accurately.
“And that’s another story which we need to tell,” he continued. “By 2030, we need to store 20-to-30 million tons of CO2, which is equal to the emissions from around 10-to-15 million cars. With an estimated storage capacity of 78 gigatons, one of the largest in Europe, carbon capture could add more than £4 billion pounds per year to our economy, just itself.”
The wide picture. In conclusion, Stuart said the British government strongly supports the country’s domestic oil and gas sector. “Why would we, or why should we, curtail our domestic—our declining, admittedly, domestic industry—when our oil and gas produces fewer emissions, provides more jobs and prevents autocrats weaponizing our energy supply while also supporting the exchange,” mused Stuart.
“And in 50 years’ time, he continued, “when we look back at this as another turning point in the history of the energy industry, I hope we can look back with pride. It was only in February of this year that the prime minister created the Department of Energy Security and Net Zero, recognizing the seriousness of the task. Together, we’re going to help the industry navigate net zero. We’re going to exploit fantastic opportunities in new industries, such as hydrogen and carbon capture, and we’re going to deliver a domestic, diverse, decarbonized energy supply, protecting our planet from harmful pollutants and protecting our (people) from volatile global markets.”