UK’s oil & gas industry on its way to surpassing methane and production emissions cuts years before deadline

The road to net zero is often perceived as a bumpy ride but some countries, like the United Kingdom (UK), have made considerable progress in reaching their energy transition goals. In line with this, the oil and gas industry’s efforts in achieving targets agreed with Britain’s government are bearing fruit as the industry is closing in on meeting the methane abatement aspirations seven years ahead of the 2030 deadline and exceeding the 25% reduction target for production emissions four years ahead of schedule. The UK wants decarbonized oil and gas production to power its homes and businesses with low-carbon and zero-emission energy.

Britain’s trade body for the offshore energy industry, Offshore Energies UK (OEUK), puts the spotlight in its ‘2024 Emissions Reduction Report’ on the headway the UK’s North Sea energy industry has made to stay ahead of greenhouse gas (GHG) emissions targets in its drive to net zero, as it has more than halved methane emissions since 2018 and reduced overall emissions associated with the production of oil and gas by 28% in the same time frame.

This means the goals set out in the North Sea Transition Deal (NSTD), which committed the oil and gas industry to emissions reductions of 10% by 2025, 25% by 2027, and 50% by 2030, are being reached earlier than expected since methane emissions have fallen over 50% since the 2018 baseline and the overall GHG emissions from oil and gas platforms have dropped by more than the target of 25% since 2018 four years ahead of the target date of 2027.

The report outlines that nearly 70% of these decarbonization efforts have been achieved through operator improvements, such as modifying power systems to extract oil and gas from reservoirs deep under the seabed or introducing new systems to capture unused gas under pressure, previously burned off for safety reasons.

While emissions from flaring and venting processes have also decreased by more than half in the past five years, OEUK’s assessments show the North Sea still has the potential to unlock the equivalent of 13.5 billion barrels of domestic oil and gas.

The trade body is convinced that securing a continuing supply of homegrown energy will also sustain the supply chain, perceived as vital to bringing wind or hydrogen energy ashore as Britain transitions to a greater reliance on clean renewable energy.

Mark Wilson, HSE & Operations Director at OEUK, commented: “We are pleased by the huge efforts made by the UK oil & gas industry and the supply chain to reduce emissions as we scale up new sources of renewable energy. Oil and gas will remain essential for decades to come. It is better from all points of view – financial, environmental and social that energy comes from our own homegrown North Sea supplies.

“The alternative is importing more of the oil and gas we still need. This can increase the carbon footprint by up to four times and lead to loss of UK revenue, endangering jobs as well as impacting our security of supply.”

Given its belief that imports from abroad involve higher greenhouse gas emissions and risk exposure to more price and supply shocks, Offshore Energies UK pinpoints the need to unlock private investment in the homegrown energy supply to protect 200,000 jobs, provide billions in revenue to the Treasury, and reduce UK dependence on imports.

Furthermore, Britain’s trade body for the offshore energy industry revealed in its data published earlier this month that government revenue from the North Sea could fall by as much as £12 billion by 2029 if all the proposals under discussion are implemented to raise total taxes on profits to 78% and remove tax allowances on new investment.

“The UK oil and gas industry remains committed to its emission reduction targets and has made significant progress, but supportive policies and new investment are essential to ensure the energy transition is achieved without compromising energy security,” emphasized Wilson.

With the natural resources of up to 5 billion barrels of oil and gas, a 60 GW target for offshore wind, and up to 78 GT of carbon storage potential in mind, Stuart Payne, Chief Executive of North Sea Transition Authority (NSTA), seems to agree with Wilson, as he points out that the oil and gas industry can rise to the challenges posed by the energy transition and make the North Sea’s next chapter its best one by maintaining a sharp focus on the basics: safety, emissions cuts, timely well decommissioning, and greater diversity.

Payne elaborated: “We all know that oil and gas production in the UK is in decline. Our projections show a continued fall through to 2050. However, the rate of this decline is not guaranteed. The projects that deliver those projections require further investment. If we get the transition wrong, the decline could be much more rapid. We know that means more imports to meet UK demand, in the case of gas with up to four times higher production and transport emissions for LNG.

“If we get it wrong it means a lost opportunity to decarbonise production, leaving only older, dirtier assets in the basin. And it means that world class supply chain dwindling or moving abroad, just at the time we need it to deliver the energy transition. If we can get this right however, then the UK can be a shining example of how to transition an oil and gas province into a clean energy super basin. If we get this right the next chapter of the North Sea can be its best chapter.”

While noting that the UK is entering a new era of hub-based development, NSTA’s Chief Executive underlines the country’s infrastructure, consisting of onshore terminals, offshore clusters, and more than 100 pipelines with real repurposing potential, alongside the energy supply chain and workforce, which can link these parts of the story together to make the transition work through the integration of different energy systems.

Payne hammered his points home by underlining: “Oil and gas hubs today can become decarbonised through connections with offshore wind farms, or power from shore, enabling cleaner production. Oil and gas production in the future will be the feedstock for industrial processes, with the carbon dioxide emissions captured, transported and stored offshore, maybe through repurposed pipelines and into depleted fields.

“This infrastructure will be powered by the clean electricity seeded years before. By integrating these systems we make a virtue of what is currently a challenge – how to co-locate different technologies in the same small space of sea.”

North Sea Transition Authority’s estimate shows the UK needs up to 100 appraised carbon stores and 120 new injection wells to meet its 2050 net zero target. NSTA’s Chief Executive is adamant that any oil and gas produced in Britain needs to be decarbonized through electrification or other means.

Payne noted: “When we grant licences, they include a commitment to decommission wells properly and in a timely manner. Frankly, whether these obligations are met is a test of industry’s credibility. A clear and visible test of whether the sector can be trusted, of whether it pays its bills or not. The good news is many companies are fulfilling their duties. Decommissioning activities have been carried out on approximately 120 wells a year over the last five years.

“The bad news is many aren’t. There are more than 1,500 wells that will need to be decommissioned by 2030, including 500 that have already missed their original deadline. Not only do missed deadlines have a negative impact on industry’s reputation but it makes it harder for the supply chain to plan effectively, pushing up costs. Our latest cost estimate report forecast over £20bn of decommissioning spend over the next decade.”

Moreover, NSTA’s Chief Executive indicates the potential for decommissioning to become ”a vital bridge between oil and gas work today and carbon storage work in the future,” however, he also warns that the rig exodus from the North Sea basin due to no “clear sight of upcoming work” is bound to push the decommissioning costs up, which in turn will make the transition not only harder to achieve but also a more expensive endeavor.

Payne concluded: “As we look ahead to the next 60 years of the North Sea we see a vast set of opportunities, and we acknowledge too the very real challenges in the way. Those challenges are real, they’re tiring and can feel overwhelming. But this sector has faced many challenges before; the challenges of crashing oil prices, of conflict, of having to push the boundaries of technological and geological understanding and in the darkest days – challenges of safety.

“Industry has risen to those challenges, and it will rise to today’s as well. Getting this transition right is a huge challenge, but one we chose to embrace and one which we are already realising. Get the basics right and the next chapter can be the safest, cleanest and most exciting in the North Sea story, the next chapter really can be the best chapter.”