Photo: Tim Eggar; Image: OGA

OGA chairman: O&G industry must do more to help solve climate change challenges

In an address to a group of senior industry leaders at a meeting of the MER UK Steering Group in Aberdeen, the chairman of the Oil and Gas Authority (OGA) Tim Eggar has said that, if the industry wants to survive and contribute to the energy transition, it has to adapt.

In his address on Wednesday, Eggar said that the oil and gas industry’s ‘social license to operate’ is under serious threat and there is no scope of a second chance, adding that it must do more to help solve the challenges of climate change and the drive to net zero.

He called on the industry to act much faster and go farther in reducing its carbon footprint.

Ahead of the 2020 United Nations Climate Change Conference, also known as COP26, later this year, he suggested that the industry would need to develop a package of measures to counteract climate change.

Eggar stated: “The biggest challenge has been the speed of the shift in public and industry opinion on climate change. I have been involved one way or another in this industry for over 40 years. I have been through a number of oil price cycles but I cannot remember anything like the industry rethink of the last few months.

“Clearly, climate change is happening right now. That debate is over. The framework, the license to operate for the industry, has changed fundamentally and – unlike the oil price – forever.

“If the industry wants to survive and contribute to the energy transition it has to adapt.

“So today, in that context, I’d like to share with you some personal observations on the issues facing the OGA and the industry and what you can expect from us going forward, with particular regard to energy transition and net-zero.

“Since 2015, a ‘tripartite’ partnership between government, industry and the OGA has firmly focused on our prime objective – maximizing economic recovery.

“Out of the oil price crisis, that partnership has helped add nearly 4 billion barrels to forecasts and achieve year-on-year production efficiency increases. We’ve seen operating costs stabilize and hugely encouraging decommissioning cost efficiency.

“But the world of 2020 is not the same as the world of 2015.

“Public opinion on climate change, and the Government’s legally-binding commitment to net zero emissions by 2050 (2045 in Scotland), means that we have to do everything we can to contribute to achieving this. That applies to the OGA, and to every oil and gas operating and service company.

“The Committee on Climate Change’s ‘Net Zero’ report – points to oil and gas remaining an important and critical part of our energy mix for the foreseeable future, as we transition to net zero. Indeed, without gas, we cannot transition to net zero.

“[The industry] is, in my opinion, collectively not doing enough and its social license to operate is under serious threat.

“We have to act much, much faster and go farther in reducing the carbon footprint. Action not just talk or more analysis. The oil and gas industry should be the leader in developing some of the solutions to tackling climate change, rather than continuously being seen as the problem or the blocker. It is quite feasible for the UKCS to be carbon negative by 2050.

“In November this year, COP26 will be in Glasgow. Well in advance of [it] the industry needs to have developed and gone public on a compelling package of measures which demonstrates real, genuine leadership and commitment to net zero. Now is not the time for anyone to be waiting on anyone else.

“For COP26, we need:

  • First, the offshore industry to commit to clear measurable greenhouse gas targets, with real progress on methane.
  • Second, to show real CCS progress. How about serious work having started on at least two – and ideally more – major projects for starters?
  • Third, measurable progress on energy integration opportunities – for example, we need an electrification project off the ground.
  • Fourth, an acceleration of the move to ensure there is a diverse array of skills and people for the long-term energy offshore and supply industry.

“Maximizing economic recovery of oil and gas does not need to be in conflict with the transition to net-zero. They can and should be fully integrated.

“That’s why this year the OGA intends to fully integrate net-zero into our requirements.

“As part of this new approach, we will review and update the MER UK Strategy. This review will not only ensure the UK’s net-zero ambitions are fully embedded, but will also reflect stewardship and other changes in the basin’s operating environment over the last four years.

“Industry will be given the opportunity to help shape this new future with us. In particular, I hope we will see more participation in our joint journey from the smaller innovative service companies.

“Let me reassure you that even with all this substantial and important new work starting, we will not neglect our core work and business as usual.

“Real leadership right now is vital if the industry is to convince the public and politicians of our relevance, if we do not do so we cannot hope to thrive, compete for talent or continue to access capital.

“This is a very exciting industry. I’ve been around long enough to have seen the oil and gas industry prove itself time and time again, over many decades, to be adaptable and highly resilient. You have ridden out the cycles; surmounted huge geopolitical and technology challenges. You have contributed massively to economic growth and people’s well-being.

“You are now facing a more fundamental challenge; a challenge outside your comfort zone. If together, we do not surmount it we will all be doing the world’s environment a major disservice.”

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