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‘There is a clear appetite to unlock the remaining potential of the SNS’

Mike Tholen, sustainability director at OGUK, takes us through the North Sea Transition Deal and what it means for the East of England.
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The oil and gas industry is geared up to use its problem solving skills on new challenges in a carefully managed transition. Picture: Getty Images/iStockphoto

To deliver a home-grown transition to Net Zero through the UK supply chain, the North Sea Transition Deal (NSTD) will unlock up to £16 billion investment for the oil and gas industry to work with the government to develop low-carbon solutions, using more than half a century’s skills and expertise to shape a new generation of energy production. 

The East of England’s supply chain has the chance to be at the heart of the emerging sectors of Carbon Capture Usage and Storage (CCUS) and hydrogen, and a key energy hub of the future, if it grasps the opportunities, says OGUK’s sustainability director Mike Tholen. 

Mike Tholen 26042021Mike Tholen, sustainability director at OGUK. Picture: OGUK

What is the North Sea Transition Deal, and what part can East of England businesses play?  

It is the first deal of its kind by any G7 country which recognises the oil and gas industry is key to achieving net-zero carbon emissions by 2050. It will secure and create jobs in energy communities across the UK, including the East of England. 

The East of England supply chain has a role in ensuring the gas and oil we will use on the journey to net-zero carbon emissions by 2050 is as sustainable as it can be, by helping to slash emissions from production operations by half compared to 2018 in the next decade and developing new energy technologies such as carbon capture and hydrogen to help decarbonise the wider economy. 

East Anglia is one region leading the way in delivering sustainable and low carbon energy solutions to underpin UK economic growth. 

With many supply chain companies evolving to meet the needs of the southern North Sea, shallow water engineering, mature asset management and normally unmanned installations (NUIs) are among the many areas of expertise that have been developed in the area, adapting to an ever-changing industry, and this expertise will evolve to support new low carbon energy requirements. 

The Southern North Sea currently has more than 150 offshore gas assets, with 986 offshore wind turbines generating 3.75GW of renewable power directly off the region’s coast, with an additional 1,000-plus turbines generating Main image: The oil and gas industry is geared up to use its problem-solving skills on new challenges in a carefully managed transition. 

The SNS is an important gas producing region, and the fact that gas is the interim fuel of choice in the energy transition (since 2010, the switch from coal to gas has saved around 500 million tonnes of CO2 from being emitted, according to the International Energy Agency’s World Energy Outlook 2019), alongside some significant projects such as Neptune Energy’s Cygnus and Spirit Energy’s Pegasus, there is a clear appetite to unlock the remaining potential of the SNS. 

All of this means that the East of England will have a very important role to play in the UK’s energy future. 

Maximising UK content will be important, and the sector is setting its own voluntary target of 50% UK content, including capital investment, over the lifecycle of all low-carbon projects, and offshore decommissioning, as well as 30% for locally-sourced technology. 

 

How does a more than 50-yearold industry address the challenge of re-invention?  

The UK oil and gas industry has a track record for re-invention. It has solved some of the most complex engineering problems in the harshest environments. Its longevity is thanks to the ground-breaking thinking and technological innovations by our world-class supply chain. 

We are adapting and applying this ingenuity to ensure we can be net-zero in our current operations while supporting the development of technologies that help commercialise low carbon technologies. 

We will apply our problem-solving skills to new challenges in a carefully managed transition, not an overnight switch. 

Recent work looking at the hydrogen generating potential in the Southern North Sea as part of the Bacton Energy Hub, commissioned by the Oil and Gas Authority (OGA), signals the potential opportunities to generate hydrogen serving the south east of England energy market. 

Other examples are:  

• SNS operator Neptune Energy’s pilot project with partners to demonstrate how green hydrogen could be produced within an integrated offshore system. 

• OPEX Group’s advanced data analysis techniques to help an operator optimise gas compression performance on a UKCS asset, saving 2MW of power and reducing CO2 emissions by more than 3,000 tonnes. 

• The North Endurance Partnership (NEP) – BP, Eni, Equinor, Shell, Total and National Grid – aiming to develop offshore carbon dioxide (CO2) transport and storage infrastructure in the UK North Sea. 

 

It sounds so easy – as if technology and mindset need to be tweaked and changed in ‘transition’ but, in reality, it is a revolution. Is the industry prepared and capable of what is needed?  

Yes. We have the expertise, the capabilities, the technological know-how and the commercial acumen to make the energy transition a reality. Many skills are transferrable across the wider energy sector. 

Offshore renewables, CCUS and hydrogen will rely on many industry skillsets, such as geologists, project managers, a wide variety of engineers, HSE specialists and fabricators. 

Our existing skills can be deployed in new ways. Exploration and subsurface service companies can use seismic skills to analyse potential sites for CCUS storage. Wells specialists can analyse the integrity of cap rock to prevent CO2 leakage from reservoirs used for CCUS. Drillers can use their expertise to guide operations for CO2 injection and help ensure the safe capture, transport, storage and monitoring of the mobility of CO2. 

The Deal will also focus on how to support people to reposition themselves and repurpose their transferrable knowledge through programmes such as the Energy Skills Alliance. 

 

The energy transition is as much about people as technology and adapting engineering. How does it feel to have an industry of highly-skilled people being ordered to turn on its head and find a new way?  

It’s less turning the industry ‘on its head’ and more about helping people recognise the continued role of oil and gas in an evolving and diverse energy mix and helping people understand our sector plays a key role in delivering low carbon energy to meet net zero emission targets. 

People are a central part of the industry’s Roadmap 2035. 

Created following extensive engagement with more than 2,500 stakeholders, the Roadmap outlines how we can continue to meet much of the UK’s oil and gas needs from domestic resources, progressively reduce associated production emissions and develop economy-wide decarbonisation technologies. 

Launched in 2019, this roadmap was one of the first major industrial responses to government plans to reduce or offset carbon emissions to net zero by 2050 in the UK, and the 2045 target set by the Scottish government. 

Our workforce’s skills and expertise will play a key role in making the net zero journey a success and this is recognised in the NSTD that industry and government agreed in March 2021. 

Key focus areas include enhanced understanding of future skills needs, helping to promote mutual recognition of standards and qualifications across sectors, and promoting diversity and inclusion initiatives. 

 

So many people have dedicated their lives and careers to hydrocarbon production, it must be difficult to view it as the past. How is that aspect being dealt with?  

There is no enforced death of hydrocarbons in the UK – this sector is vital to the economy and meeting consumers’ energy needs. 

Oil and gas meet 75% of the UK’s current energy needs with 70% met from domestic production. 

The government’s Climate Change Committee estimate that in 2050, oil and gas will still be needed to meet around 20-25% of our UK energy needs, meaning that oil and gas will continue to be an important part of our energy mix for years to come. 

It’s important we meet as much of that demand as possible from our own domestic resources, as we can ensure that it meets robust environmental standards, and will bring secondary benefits, like jobs, and contributions to GDP. 

 

GettyImages-1159446591The North Sea Transition Deal is good for jobs, energy security, energy communities and our climate change goals. Picture: Getty Images/iStockphoto

 

What is the best thing about the NSTD, and what causes you most concern?  

It’s a deal that’s good for jobs, energy security, energy communities and our climate change goals. 

We want to accelerate progress so we can achieve a healthy, diverse energy mix as soon as realistically possible. 

We also need to ensure that the pace of this transition is managed to balance the need to decarbonise with the need to maintain energy security and affordability and ensure a fair transition for our workforce. 

 

What can businesses do to ensure access to research, development and innovation funding?  

They need to be proactive about sourcing information. Trade bodies are invaluable resources for providing or signposting to relevant and useful information and provide opportunities for networking and engagement through forums and workgroups. 

As part of the NSTD, the industry and government will conduct a full review of UK industrial capabilities and map this against the expected requirements of the emerging sectors. 

This will allow us to create appropriate strategies to make sure that the UK supply chain benefits as much as possible from the investment unlocked. 

 

What can OGUK offer for businesses to be active in the transition?  

Providing information and signposting to opportunities the government will make available with investment areas including:  

• Platform electrification and reduced flaring and venting  

• CO2 transportation and storage infrastructure  

• Hydrogen production  

• Supply chain transformation  

• Technology  

• Supply chain capability mapping  

• Support GeoNetZero programme (matched funding for UK Centre for Doctoral Training (CDT) in Geoscience and the Low Carbon Energy Transition, helping create the next generation of academic expertise in the energy transition. 

• Global underwater hub and Energy Transition Zone  

 

What does the industry need to embrace more – new technologies or a change of mindset to tighter margins and leaner operations? What will be the most difficult to achieve?  

A combination of both is most likely and already things are under way. 

Maintaining cost competitiveness will be key in terms of attracting investment on a global stage. 

The industry is already committed to delivering more efficient operations and driving improvements in performance via mechanisms like its Efficiency Task. 

Adopting new technology will be crucial – and organisations like OGTC are key to helping businesses realise the benefits of innovative new technology. 

 

Is the industry “off the blocks” fast enough to meet targets?  

We are keen to maintain the pace of change and find opportunities to accelerate progress. 

Now that the NSTD has been agreed, it will help the industry to move more quickly towards a lower carbon future and show global leadership in helping the UK achieve net zero emissions. 

Our production emissions targets are ambitious, but with the right support, and with the industry’s enthusiasm and problem-solving skills, we are very confident we will meet our targets. 

 

How do you envisage the supply chain in 20 years’ time?  

The NSTD includes commitment to Supply Chain Transformation. We envisage the UK energy supply chain to be as strong in the new energy opportunities as it currently is in oil and gas. 

Success will see:  

• A globally competitive UK energy supply chain, founded on its oil and gas heritage, building capability and securing the UK’s position as a global leader in a range of energy sectors including net zero solutions, services, and technologies. 

• Supply chain-led consortia focused on unlocking opportunities across the energy transition, bringing together their collective critical skills and capability to provide attractive and innovative industrial solutions, winning net zero business domestically. 

GettyImages-461234115The SNS is an important gas producing region and there is a clear appetite to unlock the remaining potential.Picture: Getty Images/iStockphoto

NORTH SEA TRANSITION DEAL AT A GLANCE  

•Unlocking up to £16bn investment in the next decade in crucial low carbon solutions  

•Securing up to 40,000 jobs in industrial heartlands across the UK  

•Cut UK emissions by up to 60 million tonnes – equivalent to taking 2.5m cars off the road, with 15 million tonnes to be reduced from industry production by 2030  

•Boost the world-leading infrastructure  

•Kickstart hydrogen in the UK, with opportunities in the SNS, building a platform to provide an alternative for heating, heavy industry, and transport  

•Ensure energy communities like East Anglia can successfully transition, retaining jobs and skills and creating a more diverse and inclusive workforce  

•Reduce reliance on imported oil and gas – and ensuring we remain accountable for associated emissions