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New Energy World magazine logo
New Energy World magazine logo
ISSN 2753-7757 (Online)

Industry perspective on the UK’s energy transition


6 min read

Oil and gas platform out at sea Photo: Pixabay
The offshore industry operates in places where no one can see its achievements

Photo: Pixabay

David Whitehouse is Chief Executive of Offshore Energies UK (OEUK), representing companies producing energy from offshore oil, gas and wind in UK waters. He looks forward to a low-carbon future – but says Just Stop Oil’s pathway to net zero would plunge the nation into energy chaos.

This article was written in response to Just Stop Oil’s article, available here.


It’s a shame that the offshore industry operates in places where no one can see its achievements. Because if Just Stop Oil campaigners could only slow march out into the North Sea, they would find something to stop them in their tracks: the world’s biggest wind farm being built by an oil company.


Equinor, the Norwegian state oil company, and its partner SSE Renewables, are installing more than 270 giant wind turbines – collectively capable of powering six million UK homes.


The Dogger Bank wind farm is just one of many projects where companies whose origins lie in oil and gas are using the engineering and financing skills gained from offshore projects to help build the UK’s future low-carbon energy systems.


Last year, Shell, along with its partner ScottishPower, announced plans to develop large-scale floating wind farms as part of Crown Estate Scotland’s ScotWind leasing round. Shell, together with its partner, was awarded two sites representing a total of 5 GW off the east and north-east coast of Scotland. For comparison, Sizewell B nuclear power station’s electrical output is just 1.2 GW.


BP is doing the same, developing three offshore wind farms - Morgan and Mona in the Irish Sea, and Morven in the North Sea. Its investment in the Port of Leith will make it Scotland’s largest offshore wind hub where wind turbine towers and blades will be assembled and deployed. And Aberdeen will be BP’s centre of excellence for global operations and maintenance of offshore wind.


Essential to the transition
This is the energy transition in action, and the UK’s offshore sector, my industry, will be essential for that transition. The UK’s offshore energy companies and their supply chains have the skills, resources and a 200,000-strong workforce ready to help build a net zero future. Our industry has even signed a formal agreement – the North Sea Transition Deal – pledging to help the government meet its target of net zero by 2050.


But, as the date implies, that change will take decades – and that is why Just Stop Oil’s call for an end to new oil and gas exploration in the North Sea, Celtic Sea and the UK’s Atlantic waters is too much too soon. It would be damaging for the industry, risky for consumers and would undermine the UK’s net zero target.


And it would leave us far more vulnerable to the future energy crises and shortages that will surely come our way before we reach net zero.


That’s why I want to challenge Just Stop Oil’s claim that shutting down UK oil and gas production would reduce UK emissions – which I find wholly illogical. That’s because the UK’s greenhouse gas emissions derive largely from the fuels we consume in our homes, businesses and transport. Where those fuels come from makes very little difference. So, if we want to cut emissions, cutting consumption should be the priority.


Successive governments have shied away from that task. That’s because the infrastructure for our homes, businesses, transport and power generation is designed around oil and gas. Persuading people to spend money on installing home insulation or replacing their gas boilers and petrol or diesel cars with low-carbon alternatives will always be controversial. Consider these figures:

  • 76% of the UK’s total energy still comes from oil and gas and a small amount of coal.
  • 24 million homes (85% of the UK total) rely on gas boilers for heat and hot water.
  • 1.5 million homes rely on oil for heating and hot water.
  • 38 million UK vehicles rely on petrol or diesel for fuel.
  • 40% of UK electricity comes from gas-fired power stations.
  • 19 million UK homes lack proper insulation.


What these stats show is that, for now, the UK is still reliant on oil and gas. So, even if we shut down the whole North Sea tomorrow, we would still have to import them – or leave many UK homes and businesses without heat, light or transport. We can change this reliance, but it will take time – decades in fact – plus careful planning and a great deal of collaboration between industry, government and civil society.  


Reducing overall emissions
A policy of simply blocking new oil is a simplistic approach which would actually drive emissions up. That’s because it would do nothing to reduce demand for oil and gas – so imports would have to increase. The problem is that imported oil and gas has a higher carbon footprint due to the emissions generated by producing, processing, and transporting it.


For gas transported as LNG, the emissions generated by imports is more than double that of UK-sourced gas, according to North Sea Transition Authority (NSTA) research.


Why, though, are new UK licences so important? Why not rely on those already approved – which Labour has pledged to leave running indefinitely should it win power? The answer lies in the geology of the North Sea, Irish Sea and our Atlantic waters where oil and gas reserves are nowadays typically found in multiple small reservoirs – which have a limited life and must then be replaced.


This ‘churn’, the constant replacement of dying fields with newer ones, is crucial. In the past five years, OEUK analysis shows that 12 new gas fields were opened, and they now provide 30% of our gas. Without them the Ukraine crisis would have forced Britain to source far more LNG from overseas.


The figures are clear. UK energy operators produced 40% of our gas and 60% of our oil from 283 active oil and gas fields. About 180 of those fields will shut down by 2030.


Last year those 180 fields supplied the UK with 46% of its oil and gas. So, if we don’t replace them with new ones, then production will plummet, leaving the UK increasingly reliant on imports – and those imports will be expensive.


In 2021 our energy imports cost the UK £54bn; but in 2022, the Ukraine crisis drove those costs to £117bn – more than double. That equates to £4,000 per household – money pouring out of UK homes and businesses to support jobs and companies abroad.


So, we need new licences just to slow the natural decline in North Sea production while we build the offshore wind, the carbon capture and the mass hydrogen production facilities of the future.


The future of fossil fuels
It also means that, as we build that future, there is no simple choice between oil and gas on the one hand and renewables on the other. The reality is that to keep the lights on and grow our economy, we need both. As time goes by and our renewable infrastructure takes shape, the proportion and amount of oil and gas will shrink. But by the mid-2030s, oil and gas will still provide for 50% of our energy needs, according to the government’s Climate Change Committee.


That’s why we think consumers and businesses won’t forgive anyone who shuts down the UK’s oil and gas industry only to replace it with imports of foreign oil and gas.


They may also struggle to forgive anyone who drives out the investors in our low-carbon future who, to a large extent, will be the same energy companies which built their financing, engineering and workforce skills in gas and oil.


We need new licences just to slow the natural decline in North Sea production while we build the offshore wind, the carbon capture and the mass hydrogen production facilities of the future. 


The Office for Budget Responsibility calculated in 2020 that the energy transition would cost the UK £1.4tn by 2050 – based on 2020 prices. About £1tn of that money, it said, would have to come from private investors.


The good news is that this is already beginning to happen. For example, TotalEnergies has long been one of the UK’s largest oil and gas operators, but, along with SSE Renewables, has now co-invested £3bn in Seagreen, Scotland’s largest wind farm. Its 114 turbines produce up to 1.1 GW of electricity – similar to the output from one of the UK’s existing nuclear power stations.


In Humberside, BP is leading a set of low-carbon projects. Net Zero Teesside Power is a first-of-a-kind gas-fired power station with carbon capture technology – and an electrical output of 860 MW, enough to power up to 1.3 million homes per year.


H2Teesside aims to be one of the UK’s largest blue hydrogen production facilities, targeting 1.2 GW of hydrogen production by 2030, over 10% of the UK government’s hydrogen target for 2030.


These are just a few of the ways in which the UK’s offshore operators and their supply chain partners are working to build the partnerships and projects that will underpin the UK’s energy transition. But much more is needed. The energy transition is probably the most ambitious engineering project the UK has ever attempted – and it will take decades.


A successful transition
Success will depend on UK policymakers providing the political and fiscal stability essential for such a huge project. That means avoiding sudden changes in taxation, as with the recent windfall tax, or in regulation, as proposed by Labour, or investors will simply take their money elsewhere.


Our sector’s role will be to apply the offshore engineering and financing skills built over the last five decades to new forms of energy generation – while continuing to provide oil and gas. Some of us will no doubt keep hankering after the simpler days of oil and gas production, but increasingly we must embrace the opportunities of the future.


We will need the support of civil society too. Just Stop Oil and its fellow groups are well-intended and passionate campaigners whose actions have highlighted the climate crisis and accelerated political and industry responses. We share their passion and their aspirations for a net zero world. But we disagree, strongly, with their simplistic vision of how to get there. Right now, they will no doubt disagree with the very different path that we are proposing.


Nevertheless, the success of the energy transition will depend on resolving such differences. That means our leaders in government, industry and civil society must build bridges, not walls. The UK is much further forward on this than you might think. Our main political parties are in broad agreement on climate change and net zero – a political consensus many other countries are struggling to reach. That vision is also shared by the energy industry, including my offshore sector, environmental groups and by most voters, polls suggest.


So, our differences lie not in the net zero target but in the path the UK should take to get there. Building a shared vision for that pathway is the next crucial task – one we must all contribute to. The government needs to take the lead, but the responsibility is on all of us, policymakers, industry and civil society, to build it – in collaboration, not confrontation.


The views and opinions expressed in this article are strictly those of the author only, and are not necessarily given or endorsed by or on behalf of the Energy Institute.