New Net Zero Requirement for UK Oil and Gas Industry

Oil & Gas
Image of oil platform

A revised Strategy from the Oil & Gas Authority featuring a range of new net zero obligations for the UK oil and gas industry, was submitted for laying before the UK Parliament on 16th December 2020.

The revised Strategy reflects the ongoing global energy transition. Oil and gas currently provide about 75% of the UK energy consumption and official government forecasts expect oil and gas to remain important to the UK’s overall energy mix for the foreseeable future, including as we transition to net zero.

As long as this demand exists, managing production and maximising value from the UKCS as cleanly and efficiently as possible is necessary for security of supply, to ensure an orderly energy transition, and to reduce reliance on hydrocarbon imports. This is especially important as some imports, such as liquified natural gas (LNG) has a carbon footprint more than twice that of UK-produced gas.

The Strategy requires industry to operate in a way consistent with net zero ambitions, lowering production emissions and making serious progress on the solutions that can contribute to the UK achieving net zero. The OGA believes the industry has the skills, infrastructure and capital to help unlock net zero solutions, such as Carbon Capture and Storage (CCS) and hydrogen production.

In addition to the net zero obligation, the revised Strategy also requires industry to work in such a way that encourages collaboration with the supply chain and actively support carbon capture and storage projects. The OGA will monitor governance closely and ensure that carbon costs are considered in its regulatory decisions.

Alongside the direction set out in the Strategy, Industry is also making progress in commitments to reducing production greenhouse gas emissions, and as well as stewarding towards emission reductions, the OGA will track, monitor, benchmark and report on this overall emissions reduction, and published its first benchmarking report on emissions from flaring and venting earlier this year.

The OGA is working with industry and government to unlock net zero opportunities at pace, and many in industry have already made real progress by taking positive action such as announcing targets for production emissions.

The OGA’s analysis of Energy Integration illustrated the substantial overall net zero potential of the UKCS. Integration has the potential to make a deep and meaningful impact, with a possible 30% contribution towards the country’s overall net zero target, primarily through CCS projects and through CCS plus hydrogen production. Adding offshore renewables (wind, wave and tidal) could take that up to 60% of the abatement required in 2050.