UK Faces Stark Energy Choice

The UK faces a stark energy choice; invest in its offshore industry to build energy security, jobs and a managed green transition, or rely on other countries for its energy needs.

That’s according to industry body Oil & Gas UK (OGUK), whose recently published economic report highlighted that the UK’s gas imports hit a record high in winter 2021, a development the organisation said underlines the need to manage the nation’s transition to green energy while minimising reliance on other countries.

The report found that the UK had to import 56 percent of the gas needed to keep the nation’s homes warm and its power stations running between January and March this year.

OGUK highlighted that the gas imports were needed because demand rose last winter at the same time as UK production fell. This was partly due to Covid-19 but also because gas output from the North Sea is in long-term decline, OGUK outlined.

According to the report, a “cliff-edge” transition, by cutting UK gas and oil production, would risk jobs and leave the country reliant on imports, damaging its balance of payments but doing nothing to cut demand or emissions. The report also found that a failure to invest in new oil and gas fields, to replace those in decline now, would mean the UK could meet only a third of its future needs and leave the country more reliant on imports.

Overall, the UK still gets 73 percent of its total energy from gas and oil, with production from the UK Continental Shelf providing around 70 percent of this demand, the report revealed.

Between now and 2050, half the UK’s energy will still need to come from oil and gas, the report found. The report also showed that the industry is estimated to support almost 200,000 jobs this year, spanning every region of the UK. Of these, 26,900 jobs are direct, 91,500 are indirect and 77,500 are induced, according to the report.

“Oil and gas provided nearly three-quarters of the UK’s total energy last year, and we will continue to rely on them to heat our homes, keep our lights on and create many of our everyday essentials from medicines to mobile phones to road surfaces,” OGUK Chief Executive Deirdre Michie said in a statement posted on the organisation’s website.

“We all know that change is needed so the question is how fast we make that change. This report shows the reality that cutting off the domestic production of oil and gas faster than we can reduce demand risks leaving us increasingly dependent on other countries that often generate higher emissions,” Ms Michie added in the statement.

“Cutting back our greenhouse gas emissions will not be easy, but we will do it faster if we support the companies and people who have the skills to get us there. From energy workers to energy consumers, we all need a managed and fair transition which benefits everyone,” Ms Michie went on to say.

Speaking at the launch of OGUK’s economic report, Ms Michie also emphasised how different parties must work together. “Oil and gas, and the UK’s transition to a low carbon future, are inextricably linked,” she stated.

“We need to and want to work together with governments to deliver a transition which cuts emissions, prioritises UK energy and supports jobs and companies already driving change,” Ms Michie added. “Now is the time for us to work together – not against each other,” she continued.

OGUK’s 2021 economic report provides a detailed insight into the changing energy landscape at a critical time, the organisation notes on its website. Its launch included a webinar, sponsored by Deloitte, which included appearances from Deloitte economist Tom Simmons, Shell UK’s senior vice president and upstream director Simon Roddy and Three60 Energy CEO Walter Thain.

Source: Rigzone