An Increasing Focus on the UK Oil & Gas Industry's Emissions Management

Thorne, Robert (Oil & Gas UK) | Mittal, Raaghav (Oil & Gas UK)



As a result of the 2016 Paris agreement, the challenge of climate change and the imperative of moving to a low carbon economy has intensified. This challenge has been added to the traditional objectives of affordable and secure energy sources. These three criteria are the basis for the Energy Transition. Increasingly, investors, consumers and policy makers are looking to energy businesses to reflect all these criteria as the basis of their company culture and objectives.

This paper looks to explore opportunities for the UK oil and gas industry to further align itself with the drivers set out above and continue to promote investment into a sector that is key to delivering the Energy Transition:

Improved communication of carbon reduction and mitigation efforts at both a national and global level

Increased collaborative efforts aimed at reducing emissions resulting from exploration and production offshore

The potential for UKCS oil & gas companies’ involvement in carbon mitigation and storage

Over recent years, the offshore UKCS oil and gas sector has focused on improving cost efficiency in its offshore operations. This implies a commitment to continuously improve environmental performance despite the challenges of doing so in a maturing oil and gas basin, where maximising economic recovery from fields requires greater effort. Notwithstanding these challenges, the overall long-term trends in environmental performance are improving as a result of efforts by the industry.

Moving forwards, the benefits of effective emissions management will continue to intensify, beyond the regulatory requirements of environmental protection, as a result of two key drivers:

To maintain investor and public confidence – reducing both the carbon footprint of operations and carbon intensity of products used by consumers, will help position companies for a lower carbon economy.

The business case - EU ETS Phase IV is modelled to cost the sector £2.2 billion from 2021 to 2030 as the cost of allowances is projected to increase combined with the reduction in free allowances. Therefore, reducing emissions at installations will continue to be imperative for improved environment performance as well as the continued economic viability of the installation.

The sector must therefore continue to adapt to these ongoing fundamental changes that are taking place in energy supply more widely. As with any industry, businesses need to respond to shifting economic and societal demands and the consequent changes in energy needs. Hence, the effective management of emissions must proliferate through both operations (exploration, production and transportation of hydrocarbons), and use of the products delivered.