More than 200,000 jobs could be created across the UK by 2050 if the potential of the North Sea to support the transition to a clean energy system is maximised, experts have said.
The finding comes from a report that looks to map out a way forward for the key offshore energy sector, which is in the eye of a storm.
The plunge in oil and gas prices triggered by the coronavirus crisis and growing concerns about climate change have left the oil and gas industry in turmoil.
Thousands of jobs have been lost this year as oil and gas firms have slashed investment in the North Sea, causing pain across the supply chain.
The downturn has intensified the challenges facing what is seen as a mature basin.
However, the report by the Wood Mackenzie energy consultancy for the Oil & Gas Technology Centre (OGTC) found the North Sea oil and gas industry could play a leading role in the UK’s drive to achieve net zero carbon emissions by 2050.
Expertise developed in the North Sea combined with the advantages offered by Scotland’s geography could help speed the development and implementation of renewables technologies that help transform the area into a world-leading integrated energy centre.
These include offshore wind farms and hydrogen production networks, which could effectively create fuel from seawater. Depleted North Sea fields could be employed in carbon capture, storage and usage (CCUS) projects that may have a huge impact on emissions.
The resulting surge in offshore activity could generate huge amounts of business for sectors such as construction and manufacturing.
Renewables technologies could in turn help to cut the emissions associated with oil and gas production and boost the competitiveness of the industry, which will remain important for years.
The report found innovation in the renewables and fossil fuel sectors could generate £2.5 trillion value for the UK economy over the next 30 years.
The 200,000 jobs that could be created would be more than the 150,000 supported across the North Sea supply chain before the coronavirus crisis erupted.
“The North Sea is at the heart of the UK economy. This won’t change, but our energy ecosystem will,” said Malcolm Forbes-Cable, vice president, upstream consulting at Edinburgh-based Wood Mackenzie.
“This report underlines how the United Kingdom Continental Shelf (UKCS) can be redeveloped into a decarbonised, integrated energy system; one that can optimise the offshore sector’s economic value and deliver a secure supply of affordable energy.”
Energy minister Paul Wheelhouse said the system envisaged in the report could help Scotland and the UK meet the emissions reductions targets set by their governments on the timescales required, while also supporting Europe’s decarbonisation. Scotland aims to achieve net zero by 2045.
Mr Wheelhouse said the skills, expertise and infrastructure of the oil and gas sector and its supply chain would be vital in unlocking the opportunities presented by the energy transition.
The report noted there could be strong overseas demand for low carbon technologies, products and expertise.
However, it also underlined the scale of the challenge that the energy transition will involve.
Around £430 billion investment will be required, along with incentives and support from governments. Much faster progress will need to be made in key areas such as hydrogen fuel production and carbon capture and storage.
“Reimagining the North Sea as an integrated energy system is essential for the UK and Scotland to achieve their net-zero ambitions,” said OGTC chief executive Colette Cohen. “But we need to invest now to close the gap on the key technologies needed to make this ambition a reality.”
The OGTC was founded to support the development of technologies that could help the North Sea industry fight back amid the deep slump triggered by the oil price plunge from 2014 to 2016.
It said the report produced by Wood Mackenzie provided a comprehensive roadmap setting out the critical technologies needed to deliver an integrated net-zero energy system on the UKCS.
The technologies that Wood Mackenzie reckons have the most potential in terms of decarbonisation include offshore wind, using fixed and floating platforms, hydrogen fuel production and carbon capture, storage and usage.
The report highlights areas in which investment must be stepped up to ensure these are developed and deployed at the required pace.
For example, new electrolysis technologies must be developed to reduce the cost of producing what is known as green hydrogen from seawater.
Technologies that could be used to help reduce the emissions associate with oil and gas production in the North Sea include the electrification of oil and gas platforms.
The report, called “Closing the Gap: Technology for a Net Zero North Sea”, was produced with support from the Scottish Government and the Chrysaor oil and gas firm. This bought a $3 billion North Sea portfolio from Shell in 2017.
Chrysaor chief executive Phil Kirk said: “The oil and gas industry in the UK has all of the competence, innovation and resources to deliver the engineering and technical solutions to fulfil the energy transition. As an industry, we are experts in solving problems and safely engineering solutions.”
Source: The Herald
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