The chief executive of the leading representative body for the UK’s offshore oil and gas industry has today urged Aberdeen to grab the £1trillion of business opportunities presented by moves to net zero.
Speaking at the State of the Cities Conference today in Aberdeen, OGUK Chief Executive Deirdre Michie said
“Indeed, as the excellent Climate Change Committee report showed, there will still be demand for oil and gas in the UK by 2050, at just under half of what it is today,
“And meeting as much of this from domestic resources is therefore crucial.
“At the same time our industry and this city can support the development and commercialisation of low carbon technologies including CCUS and hydrogen – identified as vital to a net zero outcome by the CCC.
“To put the size of that prize in context, oil and gas companies currently support CCUS schemes at only 18 sites across the world,
“But we know that 10,000 will be required globally by 2070.
“It’s an exciting proposition because as we look to become a smart net zero energy industry we will need a smart net zero energy Aberdeen and shire to help us do this.
“Aberdeen as Europe’s oil capital has served us all well and we are hugely appreciative of the support from the north east,
“The opportunity is now as the industry shifts its focus, for Aberdeen to also position itself not just as Europe’s net zero city but as the world’s net zero energy capital.”
The full speech is below:
Good afternoon ladies and gentlemen and thank you to you DJ for your kind introduction and Aberdeen City Council for inviting me to speak today,
Can I add my congratulations to Hanan, Dougie and Graeme on their insightful and thoughtful and helpful report,
And to the city council for the progress made – the overview that Councillor Laing gave this morning is very impressive and as I said to Angela Scott – examples like the TECA are real triumphs for the city and her team.
I’ve really enjoyed the insightful sessions so far and it’s an honour to follow you Sir Howard,
I absolutely support that a joined up – collaborative public private approach is key and so today I’d like to talk about areas where, working together, we can realise a successful future for this region and for our industry.
1 – Attracting and retaining talented people here,
2 – Improving our international competitiveness,
And 3- enhancing our global reputation,
Aberdeen city and shire are considered by many to be the engine room of the UK’s offshore oil and gas industry,
We have a truly special relationship that has been built up over the last 50 years or so,
Our histories are intertwined as will be our futures and so
Looking ahead to the energy transition and delivery of the net zero ambitions, I believe there is a huge opportunity for us to go after together.
We are an international industry and an international city and so staying competitive and attracting investment is key,
And it’s great that our 2019 Economic Report, shows, that as a sector, we’ve significantly improved efficiency and are fitter and more competitive than we have been for years.
As a result, investment is returning, and activity is picking up.
We have increased production by 20 percent over the last 4 years –as Hanan said an extraordinary achievement for a mature industry like ours and a reinforcement of our resilience and ability to keep on reinventing ourselves.
Utilising technology, introducing smarter and more efficient ways of working have helped to improve our competitiveness as we continue to emerge from one of the most challenging downturns in our history,
And while significant pressures remain on the supply chain here in the north east, staying competitive, working co-operatively with a fair sharing of risks and reward, need to be the cornerstones to unlocking more activity across the whole sector
The economic impact of getting this right for the local and UK economy is considerable –
Production of oil and gas accounted for 1.2 percent of UK GDP – equal to around £24bn
The industry continues to invest around £15bn per annum across the oil and gas lifecycle and has over the years contributed more than £350bn in production taxes alone.
And looking ahead, the OBR forecasts that production tax payments by this industry will amount to more than £8.5bn over the next five years,
When it comes to employment – so important for the north east – this sector supports 270,000 jobs across the UK,
The economic impact is clearly a positive one – but we recognise that with the challenges of climate change – we have to be better at communicating the positive contribution that this industry makes – and needs to continue to make if we are to ensure a fair and managed transition to a net zero future.
And just as we’ve heard today how Aberdeen is a city with a firm eye on the future,
You should be in no doubt that we are also an industry in action,
Because we too are part of a society which wants change, and we are confident that as the UK’s offshore oil and gas industry – we can play a key role in being part of the solution – helping to drive change that can contribute to a net zero economy which can then be exported to the rest of the world.
We are moving forward positively and constructively, and we must continue to do so and at pace.
And so, what are we doing as an industry to be part of what will be a challenging but exciting, refocused energy future?
Well this year we published Roadmap 2035: A Blueprint to Net Zero,
It is one of the first major industrial responses to government commitments to deliver net zero carbon emissions by 2045 in Scotland and 2050 in the UK.
It sets out five key themes requiring tripartite action of industry, BOTH governments and regulators to ensure delivery. Support from them is crucial to our industry and to this city.
One – Helping meet the UK’s needs for energy and industrial products
Two – Driving technology and innovation and the launch of OGTC’s – that came out of the city deal and its Net Zero Solutions Centre is a great example of the kind of action that is needed and is happening
Three -Growing the economy and exports,
Four – developing our people, our skills and a collaborative culture
And Five – Supporting net zero, because the UK needs our oil and gas products as part of an increasingly diversified energy system if it is going to deliver its net zero ambitions,
The roadmap was developed out of over 2,500 conversations that continue today with people from across the sector and our stakeholders – many of whom are in this room today,
Indeed, as the excellent Climate Change Committee report showed, there will still be demand for oil and gas in the UK by 2050, at just under half of what it is today,
And meeting as much of this from domestic resources is therefore crucial.
At the same time our industry and this city can support the development and commercialisation of low carbon technologies including CCUS and hydrogen – identified as vital to a net zero outcome by the CCC.
To put the size of that prize in context – oil and gas companies currently support CCUS schemes at only 18 sites across the world,
But we know that 10,000 will be required globally by 2070
It’s an exciting proposition because as we look to become a smart net zero energy industry – we will need a smart net zero energy Aberdeen and shire to help us do this.
Aberdeen as Europe’s oil capital has served us all well and we are hugely appreciative of the support from the north east,
The opportunity is now as the industry shifts its focus, for Aberdeen to also position itself not just as Europe’s net zero city but as the world’s net zero energy capital,
So why is place important to the energy transition?
Surely every city could be and indeed should be a net zero energy city?
But the granite city like our industry has the skills, the experience and the ability to reinvent itself, as it has in the past, from ship building to fishing to the early oil industry founded on whale oil!
Building on our expertise as a global oil and gas hub, and with the right support,
Aberdeen’s future potential as an energy city is limitless,
We’re already seeing the real benefits that this expertise can bring,
We have the European Offshore Wind Deployment Centre directly visible from the coast (when there’s no har..!) and we have , Hywind – the world’s first floating offshore wind development, as well as RGU’s Energy Transition Institute – taking insights and learnings to countries like Mexico, and Columbia to name but a few.
Many of our companies operating in Aberdeen are already leading the way –and we should be especially proud of our supply chain companies like Wood and Global Energy Group which have expanded their footprint over the years into other parts of the energy sector,
And while yes, every economy should have a diverse ecosystem of businesses and industries to ensure it is sustainable,
We should also embrace the enormous value this industry has added and can continue to add as we look to the future. It’s a USP to be treasured.
Place is important and it’s why we are so pleased to see the progress being made here in recent years in relation to infrastructure -like, the Harbour – AWPR and the fibre network as well as amenities like TECA, the art gallery and Music hall that are so key to establishing this city as a great place to work and live and so helping us to secure the talent we need.
But more than this, projects like the hydrogen bus project and Hydrogen Aberdeen – reinforce the ambition and drive which will ensure Aberdeen can enjoy more success.
Aberdeen has, as we are all saying – a golden opportunity to claim the mantle of being a global net zero energy capital,
Grasping a healthy portion of the £1 trillion spend the UK Government estimates will be required to meet the challenging targets.
So, my ask of you today is to help champion Roadmap 2035,
In Developing a diverse energy workforce with transferable skills, that’s renowned globally for finding solutions to some of the world’s most challenging problems,
Helping to bring to life CCUS, hydrogen and low carbon technologies by encouraging innovation and establishing Aberdeen as a global hub for low carbon technologies.
And in so doing, realising Aberdeen’s full potential in the transition,
So, looking to the future, I’m confident we have the ingredients for success and that there should be no limits to our ambitions.
It’s an exciting time for this industry and I know you will agree, an exciting time for Aberdeen and the shire.
Thank you. I’d now like to hand over to Chris Murray, director of core cities UK.