The UK must compete globally, and act on unlocking energy investment – and it must act fast, Offshore Energies UK’s chief executive has said in a speech launching the organisations 2023 Economic Report in Aberdeen today.
David Whitehouse told an audience of industry, stakeholders and media that the answer to unlocking key investment to safeguard the industry’s future, whilst tackling affordability, security and delivering climate goals, was on the UK’s own doorstep.
He said the answer is “with our homegrown offshore energy industry, our geography, and our people”.
He also pointed out the sector is in a global race to secure potentially up to £200 billion worth of investment over the next decade – which it cannot afford to lose.
His remarks came in a speech at the launch of OEUK’s Economic Report: Unlocking our energy future attended by more than 300 senior figures from the UK’s energy industries.
The speech is set out in full below:
“It is an honour to be here at SPE Offshore Europe 2023 celebrating 50 years of achievement and looking forward to the next 50 years. It has been great to see how busy the exhibition and conference is. This reflects the importance of our sector at a critical time.
“The UK sector embraces the challenges and opportunities of the energy transition. Not only oil and gas but the future opportunities in wind, carbon storage, and a hydrogen economy.
“At its core, this industry remains fundamentally about decent people, working together, doing the right thing. The skills that have been brought to bear in the last 50 years, are exactly the skills required to unlock opportunities in the next 50 years.
“With war in Ukraine, an ongoing cost of living crisis and increasingly evident impacts of climate change, energy policy remains firmly at the centre of the political debate.
“And in 2024, there will likely be a UK general election. It’s an important time for our industry.
“So, how do we successfully tackle affordability, security and delivering on our climate goals, whilst also creating high value jobs in communities up and down the country?
“The answer is right here with our homegrown offshore energy industry, our geography, our people.
“Our Economic Report 2023 sets out the framework for us to answer this question; the UK must compete globally, and act on unlocking energy investment – and we must act fast.
“Our domestic oil & gas sector has powered the UK for the last 50 years.
“Today the offshore oil and gas sector supports around 220,000 jobs and in 2022 generated almost £30bn in gross value added – around 1.5% of the total UK economy.
“But the sector has delivered so much more. Our standard of living in the UK is, in part what it is because of our sector. We continue to be a development ground for thousands of highly skilled jobs. Our standards are adopted globally. North Sea experience is seen as mark of quality across the world. We have built companies to be proud of.
“We all recognise our future energy mix must change. Our sector, through the North Sea Transition Deal, was the first to sign up to a commitment to align with the UK’s net zero ambition. And we are in action reducing emissions in preparation for the future.
“But the North Sea is not just oil and gas.
“Twenty years ago, Blyth was one of the world’s first offshore wind projects that was generating enough energy to power 2,000 homes.
“Today the UK now boasts the world’s second-largest offshore wind capacity behind China, the world’s first operational floating wind project, Hywind, and will have the world’s largest operational wind farms at Dogger Bank. That project when completed will be capable of powering 6 million homes.
“And the future opportunities are significant.
“Our report highlights that total offshore energy spend could, and I would argue should, reach £200bn this decade in oil and gas offshore wind, carbon transport and storage and low carbon hydrogen.
“£80bn of offshore wind private investment. The UK can continue to lead the world in offshore wind with ambitious targets ahead of us.
“The UK’s first wave of carbon capture and hydrogen cluster projects delivered in this decade – with a spend of up to £20bn. The UK is blessed with geology, infrastructure and skills to store up to 70 billion tonnes of carbon dioxide.
“£90 billion of oil and gas expenditure of which £30bn is oil and gas capital investment over the next 10 years.
“But about half of this total amount – £100 billion – is waiting on Final Investment Decisions from businesses that need renewed certainty to sign off.
“The opportunity is clear. But make no mistake we are in a global race to secure these opportunities, secure these jobs, to secure the people we need.
“Other countries are in action. In the US, the Inflation Reduction Act is ploughing many billions into the next generation of energy infrastructure, building on its position as the world’s leading exporter of gas. In China and the EU similar programmes have been put in place.
“We must not get left behind. But there are worrying signs.
“The windfall tax is biting. All credible net zero scenarios say that we will need abated oil and gas for decades to come. In the first six months of this year, 13% less crude oil was extracted from the North Sea and the mainland. With investment on hold, our production volumes are as low as they have ever been.
“When there is a cost-of-living crisis hitting people across the country, it is right that all sectors play their part. But when the extraordinary conditions have gone, the windfall tax must go.
“Earlier this year we heard that Vattenfall will stop development of its huge British Norfolk Boreas offshore wind project due to rising costs and warned that Britain could struggle to meet its wind targets without improved incentives.
“We welcome the cross-party support for track 2 carbon storage projects. But there is more clarity required to give line of sight to final investment decisions for these stores. There is more we can do to unlock the huge opportunity not just for these 4 carbon stores but for the next 44.
“The truth is we have huge opportunities. But we have too much investment on hold. Projects are progressing but not in the numbers that the UK needs to deliver secure affordable energy, protect jobs, and deliver on our climate goals.
“So how do we unlock this? We must re-frame the energy debate.
“Parliaments may thrive on opposition and argument, but we know big engineering projects only succeed through collaboration. The transition to net zero will be the biggest engineering project this country has ever seen. We need consensus to support the very industries and workers whose skills will be vital for building our energy future.
“We must show that you can have affordable, reliable, lower carbon energy which creates jobs, grows the economy and cuts emissions.
“The path to this must be honest about imports, about trade offs and about what those trade offs will mean.
“So, this debate is not oil & gas versus renewables. We need to support both oil and gas and renewable energy. Increasingly these are the same companies and people.
“The debate is not what we just stop, but what we must start.
“I have heard some who say, we need to stop the investment in oil and gas, so that the supply chain can focus on renewables. Policy makers need to talk more to industry & I applaud those who are doing just that, some in our audience today.
“The truth is the bulk of companies investing in opportunities like floating offshore wind, hydrogen, CCS and decarbonising our economy will require the cashflow from a stable and predictable oil and gas business to fund these opportunities.
“Fundamentally, we need supportive and stable policy. It is essential that we create a competitive fiscal environment across the entire energy landscape that encourages investment and allows a fair return.
“To provide project developers and supply chain companies greater surety, we must streamline and align our regulatory consenting and project approval processes.
“Where public money is required to unlock new opportunities in the energy transition, we need to work with Treasury to demonstrate that this is investment to unlock economic growth and jobs.
“The bedrock to success and delivering growth in the economy can only be in collaboration between private and public capital.
“People and companies have a choice where to work and invest. The UK mustn’t just become a good place to do energy business, it must become irresistible.
“And at the same time, we need to ensure that we engage with the public on the journey. The energy transition has to be done with people and not to them.
“Our polling consistently shows that the public want to see action to deliver on net zero. But we, industry and governments, need to engage in a meaningful way with the public on the changes that must come and the vital role that our sector plays.
“We must get this right. We will work with all political parties and parliamentarians from across the political spectrum, in each part of the UK to deliver a home-grown energy transition – only through collaborative working – and listening – can we seize the opportunity that lies ahead of us.
“Getting this right, we will grow the economy, cut emissions, support jobs and protect energy security in the UK, and for the UK.
“So – an ask of governments: recognise the integrated nature of our energy sector, recognise that domestic oil and gas has a key role to play, work with us to unlock the opportunities across the energy spectrum.
“And an ask of our industry: it is more important than ever to tell your story. If you are proud of the industry, proud that we provide decent jobs, we deliver economic growth, we deliver energy security, we are the platform to deliver the energy transition, please speak up.”
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