The last 18 months have been full of unprecedented challenges for us all, but perhaps nowhere more so than the UKCS oil & gas sector. In addition to the physical and logistical issues caused by COVID-19 and Brexit, the huge impact on oil and gas prices worldwide and the hefty catalogue of cancelled or delayed projects globally, there has been an increasing social and political focus on oil and gas production. Momentum built quickly during 2020 on the back of a desire for a sustainable recovery from the pandemic, and in 2021 the UK, and Scotland, has been under particular scrutiny ahead of hosting COP26 in Glasgow this autumn.
The issue of field development consent for the Cambo field has been the subject of many recent headlines given the run up to COP26. Although it may be seen to be politically popular to refuse approval of new oil and gas developments, in the UK we have recently seen the immediate – and far-reaching – impacts of lower global gas supply. Wholesale UK gas prices have risen sharply – a 250% rise during this year – increasing gas and electricity prices for consumers, putting pressure on energy suppliers due to the price cap mechanism – and other consequences, including a potentially catastrophic impact on food production and availability.
It will take many years to invest in large scale renewable energy projects and the infrastructure required to support them in order to achieve net zero. We have started that journey – the energy transition – but it is a transition and clean energy cannot replace hydrocarbons overnight. Given that even in the most optimistic scenario the UK will continue to require fossil fuels for the foreseeable future, perhaps it is better for us to develop our own resources – and to do that responsibly and with as few emissions as possible – than to rely on importing oil and gas from countries with less stringent environmental regulations than our own.
Clear government leadership on this issue will benefit us all. A known and stable regulatory framework is crucial for continued investment and dealmaking. Continued confidence and investment in the UKCS is necessary for us to achieve a smooth energy transition, maintaining control over the carbon efficiency of hydrocarbon production, making the most of our infrastructure to enable hydrogen production and CCS projects, and developing transferable skills in the workforce.
This article originally appeared in The Scotsman.