Oil & Gas Industry
The oil machine employs tens of thousands of workers and directly contributes around £24 billion to UK GDP. Industry leaders say they want to move towards net-zero by 2050 and have set in motion plans to make this happen.
In 2014, an oil price slump posed an existential threat to production of the UK sector’s expensive, hard to reach, oil. But in 2022, with billions of dollars in investment flowing into a restructured North Sea once again, with new wells opening up and new licences being granted, is the industry really serious about its stated commitments to move away from fossil fuels?
Emeka Emembolu is chief of staff to BP chief executive Bernard Looney, having previously served as the company’s senior vice president North Sea. He is frank about the vast complexity of refitting the oil machine for a net-zero future:
“For decades the world has been built on a hydrocarbon-based infrastructure — maybe a good analogy would be it’s almost like replacing all the veins in the human body. You can’t pull them out all at once. The reconstruction of entire systems takes time and that’s what we are going to do.”
BP aims to be producing forty percent less oil and gas by 2030 — with a net-zero goal by 2050. However, a recent study in the journal Nature Communications found that BP’s current plan would exceed the Paris Agreement threshold of 1.5 degrees by a significant margin.
Still, the oil machine’s scale and the skills that are used to operate it are at the heart of the industry’s claim to be an indispensable partner in reaching the Paris goals — despite claims from activists that they are intent on hindering this progress.
For example, Emeka thinks that the skills used in the recent expansion West of Shetland in the Clair oilfield are precisely those that will speed the net-zero race.
“The type of skills that we would normally apply or bring to that are marine engineering, structural engineering to make sure we can build these offshore structures that can withstand the force of the waves that we have in the North Sea [...] As we get into the major rewiring of the whole energy infrastructure it’s going to be very similar.”
Phil Kirk, until recently the CEO of Harbour Energy, now the biggest single operator in the North Sea, makes a similar argument — maintaining a healthy offshore sector now is an investment in the country’s industrial base that will simply be outsourced abroad if the change is too rapid. Phil explains:
“The oil industry has traditionally been full of people who love solving problems. That’s why people join, half the engineers become engineers because they want to build big things and do stuff — it's that challenge in your mind that you love. And this is another challenge to fit in. Now, all being well, there may be opportunity to help society, make your kids feel really proud about what you’re doing.”
The predicament that sits behind these visions of innovation and change is that the industry’s net-zero plans for the UK offshore sector are reliant on a shift to hydrogen production derived from natural gas, which still creates significant emissions, and the development of Carbon Capture and Storage (CCS).
The latter technology — which is fundamental to the North Sea Transition Deal brokered between the UK government and industry to create the ‘world’s first net-zero oil and gas basin’ — is still in development. A recent report by the Institute for Energy Economics and Financial Analysis (IEEFA) found that of 13 CCS projects (representing 55% of current global operational capacity) seven underperformed, two failed, and one was mothballed.
Nonetheless, Deirdre Michie, CEO of an organisation that was called Oil & Gas UK at the time of filming and has recently rebranded itself as Offshore Energies UK, calls for more nuance in public understanding of the way the oil machine functions:
“We know that demand for oil and gas will continue [...] and so we need to make sure that we do still have oil and gas companies producing oil and gas [...] It’s a balancing act without a doubt, but I think it is one that we can manage, but it has to be a managed one. There’s no point having knee-jerk reactions, because it’s not binary, it’s not one thing’s good and the other thing’s bad, it is complicated and dealing with it in a thoughtful way I think is the way we do it.”
