North Sea supply chain ‘essential to the UK’s energy transition’

Writing in Energy Voice, Aberdeen-based Chris Sawyer of Pinsent Masons said the North Sea industry is “holding its breath for answers” in relation to aspects of UK government policy, including on licensing and tax. He said eagerly anticipated policy papers, consenting decisions and the Budget later this month offer the chance to provide comfort to the industry over the viability of their operations.

Providing that comfort would serve, rather than contradict, the UK’s plans for an energy transition and its wider ‘net zero’ agenda, Sawyer said, because it would help sustain a supply chain that will be needed to service renewables and cleantech projects in future.

“If operators revive cancelled or delayed projects, and green-light new prospects, it is the North Sea supply chain who will deliver them – the same supply chain that will be needed to support non-oil and gas projects in support of the energy transition, whether offshore wind, CCUS or hydrogen,” Sawyer said.

In his article, Sawyer cited an assessment undertaken by Offshore Energies UK which suggests industry proposals around licensing would deliver economic benefits.

“The industry is offering a possible solution, namely, to permit infrastructure-led drilling around existing fields and the development of previously discovered fields to support existing hubs and pipeline systems,” Sawyer said. “Importantly, UK oil and gas operations would continue and it’s possible to envisage an accelerated consenting system to give operators an opportunity to quickly develop those existing hubs.”

“OEUK argues that this could add £137 billion to the economy by 2050, secure £41bn of extra investment in UK energy by 2050, unlock £12bn in additional tax receipts by 2050, halve production emissions by 2030 and cut them by 90% by 2040. It would safeguard 165,000 jobs, with an additional 23,000 highly skilled roles supporting communities across the UK,” he added.

Sawyer believes securing those skilled jobs supports decarbonisation in the long run because it would sustain the existing North Sea supply chain and avoid a scenario where there is a talent drain and skills gap for delivering offshore renewables and cleantech projects at scale.