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Committee demands a future deal to support oil and gas industry

In a report published today, the Scottish Affairs Committee recommends that the UK Government agree an ambitious sector deal, to ensure that Scotland’s oil and gas industry can navigate the challenges of its future and continue to prosper.

The report

In the report, which follows an in-depth inquiry with six evidence sessions with industry experts, stakeholders, environmental groups and Ministers, the Committee makes the case for an oil and gas sector deal that has the detail and ambition needed to support the industry’s challenging future, including responding to both Government’s climate change targets. The report outlines a framework for the sector deal that would ensure Scotland’s oil and gas industry can thrive whilst preparing for a decline in production. The Committee recommends that:

  • The industry should focus on maximising economic recovery, to provide a domestic source of oil and gas that the UK is expected to need for decades to come;
  • The Government should work with the sector to develop a decommissioning export strategy for the sector deal and support the industry in sharing best practice and learning valuable lessons from historic decommissioning;
  • The Government should ensure the sector deal contains specific and measurable outcomes on increasing skills transfer to new sectors, to ensure skills of people who have made Scotland's oil and gas industry so powerful are not lost as the industry prepares for the future;
  • The Government should outline how it will integrate focus on underwater innovation to provide a cohesive and unified strategy to support the sector in increasing the amount of this technology and expertise it exports;
  • Before the sector deal is finalised, the industry should come forward with a detailed proposal of how the new centre on transformational technology will limit the carbon footprint of the extraction process;
  • The Government and Oil and Gas Authority consider options for ensuring oil and gas infrastructure can be reused for carbon capture, usage and storage, where practicable, and encourage the industry to take a more proactive approach;

Chair's comments

Chair of the Scottish Affairs Committee, Pete Wishart MP, commented on the report:

“Scotland should be enormously proud of its globally recognised oil and gas industry. However, the industry is going through a period of immense change as it prepares for a challenging future, and the Government urgently needs to step up and support the industry. My Committee’s report sets out a pathway for the future of the industry; a sector deal that would support the industry’s past, present and future.

There is potentially another 30 years of oil and gas production in the North Sea but it’s important the sector uses this time to ensure the sector’s future as production starts to slow. To do this the Government needs to support the sector in exporting its skills and expertise around the world and to transfer the sector’s world leading engineering into other sectors, like renewable energy and carbon capture technology.

Only by doing this can the Government ensure that in 30 years the North East of Scotland is still home to a world class energy sector.”

Sector deal and maximising economic recovery

Scotland is at the forefront of worldwide oil and gas industry, and is estimated to have nearly 60% of oil reserves in the EU, however the challenging and uncertain economic climate of recent times has made it difficult for the industry to flourish. The Committee states that a sector deal would secure the industry’s future and cement Scotland’s place as global leader in oil and gas while enabling the industry to respond to new challenges.

The Committee acknowledges environmental concerns about maximising economic recovery in the UK basin, but argues that as oil and gas looks likely to form a substantial part of the UK’s energy mix for at least the next 15 years it makes sense to meet as much of this need as possible from domestic sources. The Committee recommends that the sector deal must clearly set out whether any additional investment sought for the underwater innovation centre will be used to fund work in technological innovation.

Decommissioning

Decommissioning is the process by which oil and gas infrastructure is shut down, or reconfigured, after oil and gas production ceases. The Committee notes that decommissioning expertise presents an economic opportunity for the industry and recommends that this is a central part of the sector deal. The Committee calls for a decommissioning export strategy and simplified information sharing to ensure that the industry can share best practice and learn valuable lessons from historic decommissioning.

The Committee notes that throughout its inquiry, it heard conflicting views on the right approach to “rigs to reefs” based decommissioning (i.e. the suggested benefits to marine life of leaving some infrastructure in situ). The Committee urges the industry, environmental groups and regulators work together to establish a common evidence base to allow an agreed solution to ensure maximum environmental protection.

Preparing for transition

In order for Scotland’s oil and gas industry to maximise economic recovery over the next two decades, while preparing for cessation of production, the Committee recommends that the sector deal include details on how the sector will expand into new markets and transfer skills and technologies into other sectors. The Committee recommends a cohesive and unified strategy to boost exports and measurable objectives to ensure skills transfer to new sectors fit for a low carbon future.

The climate change challenge

The report outlines that one of the biggest challenges facing the industry is climate change. The Committee recommends that the industry take a visibly more proactive approach to limiting its carbon footprint, and calls on the Government to make this a precondition of the sector deal. Additionally, the Committee recommends the development of technologies that enable carbon capture, usage and storage, a process that prevents the majority of CO2 entering the atmosphere.

Launch event - Oil and Gas Technology Centre (OGTC) Aberdeen

The Committee will be launching its report with a special event at the Oil and Gas Technology Centre at 10am on Monday. The event will involve a speech from Chair of the Committee, Pete Wishart MP followed by an opportunity for questions and discussion about the report chaired by OGTC CEO Colette Cohen. The Committee extends invitations to all interested stakeholders and journalists.

Channel website: http://www.parliament.uk/

Original article link: https://www.parliament.uk/business/committees/committees-a-z/commons-select/scottish-affairs-committee/news-parliament-2017/future-of-oil-and-gas-industry-report-published-17-19/

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