What will happen with Scotland's North Sea oil and gas after election

The new licences for oil and gas under the Conservative government have led to intensifying Just Stop Oil protests with a backdrop of damning predictions of our prospects of reaching net zero by 2050, (or indeed 2045).

Energy security and climate change mitigation were top of the agenda in the run-up to Thursday’s election down south, while up north, there is growing fear for the jobs and communities which have been reliant on the North Sea oil and gas industry for decades.

Behind the controversy and politics, a host of new technologies and systems are quietly taking shape, forming an ever-clearer outline of what a net-zero North Sea can look like.

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Offshore wind farms, ­hydrogen production and export, carbon capture and storage are all being investigated, alongside the question of reducing oil and gas extraction and ­decarbonising it in the meantime.

Across the board, there is strong optimism that the infrastructure and workforce can be repurposed to transition the North Sea into a green energy giant.

The most advanced aspect of decarbonising the North Sea is offshore wind generation. With the first floating offshore wind farm in the world operational since 2017, Scotland is securing its position as a world leader in wind generation.

The combined capacity of newly licensed offshore wind projects is expected to be around 30 gigawatts (GW) – that’s double the capacity of all wind farms in Scotland in 2024.

Much of this is located in the North Sea. In ­Shetland alone, a 443 megawatt (MW) onshore wind farm is due to go live – along with a connection to the National Grid – by the end of this summer.

This is ­expected to cut the emissions of Shetland’s ­electricity supply down by two-thirds overnight. A further 260 MW of onshore wind and 2.3 GW of floating offshore wind capacity are in the pipeline for the island group.

The newer technology of marine energy (tidal or wave-generated) is also promising.

Once again, ­Scotland has hosted a world first – the first ­offshore tidal array is in the Bluemull Sound in ­Shetland. ­Orkney, another key location for North Sea ­industries, hosts the world-leading European Marine Energy Centre for testing marine energy technology. However, the scale of marine energy is still very small; the Bluemull Sound array is a mere 15 MW capacity.

The next step in fully harnessing the powerful ­renewable resources of the north of Scotland is ­energy storage. “Energy Hubs” have been developed across Scotland to become massive producers of green hydrogen, using electricity from wind farms and benefitting from nearby oil and gas industry ­infrastructure and expertise.

The Kintore Hub, close to Aberdeen, plans to be operational by 2028. Their end goal is to have a 3GW capacity electrolyser, using excess wind energy to produce 0.2 megatonnes (Mt) of hydrogen per year; almost one-third of the current target for total hydrogen production in the UK.

The operators of Sullom Voe Terminal – Shetland’s ­primary oil and gas terminal – have also won funding for a trial of hydrogen production on the site.

(Image: Newsquest)

Prospects for the use and export of green ­hydrogen are starting to appear, too. Local distilleries are ­collaborators in the Cromarty Hydrogen Project, and plan to purchase hydrogen fuel when it is ­operational.

Down in the Cotswolds, ZeroAvia have designed and tested a hydrogen plane engine which they aim to have in small commercial aircraft by next year.

The key goal for hydrogen, though, is export – discussions with the Dutch and ­German government are also well underway to establish a Hydrogen Backbone Link, ­allowing Scotland to export hydrogen to mainland Europe.

While there is great potential, there are still many questions regarding ­hydrogen, as Darren Gee tells me from the Net Zero Technology Centre (NZTC) in ­Aberdeen.

“We’ve got real appetite, we’ve got real engagement, with the Dutch and the Germans, around the backbone and how excited we are about having a backbone, but we hadn’t asked the question of how do we fill it … we have to create an export market that doesn’t exist, how do we do that?” Gee says.

As the project manager of seven key projects looking to accelerate key ­technologies to decarbonise the North Sea, and develop an export market to ­support Europe’s decarbonisation ­efforts, all funded by the Scottish Government, much of Gee’s work is to answer these questions.

While it remains a highly contested issue, as it stands, oil and gas extraction will continue in the North Sea for some time.

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The oil fields to the east of Shetland, for example, are expected to be fully decommissioned in 2030, but new oil fields in the west of Shetland – such as the highly contentious Rosebank Oil Field – would last far longer.

The emissions simply from operating oil and gas extraction make up a significant portion of the UK’s carbon emissions.

Thanks to emissions trading stipulations, these CO2 emissions are very expensive for offshore operators; there is, therefore, a strong industry appetite to decarbonise oil and gas extraction.

The West of Shetland Electrification group has been established to investigate how to electrify the operations in the west of Shetland oil rigs; this is in part in response to the stipulations on new oil licences from the North Sea Transition Authority (formerly the Oil and Gas Authority – in-keeping with the theme).

Gee and his team at NZTC are also exploring alternative fuels for the gas turbines which currently power North Sea extraction.

(Image: Robin Rigg)

The process has required trialling various different options, but last year a trial using green methanol in one of the most common turbines on the North Sea, showed the potential to cut offshore CO2 emissions by 75%.

NZTC is now working to produce a retrofittable solution so that existing oil rigs can quickly switch to alternative fuels without having to replace their machinery.

Gee was shocked at just how much ­appetite the industry has for ­decarbonising operations: “One of the operators said to me, in a meeting, ‘If you had two million tonnes, I’d buy it today’, and I went, ‘But I haven’t told you the price yet’. He said, ‘I don’t care’.”

In fact, on all scales, industries and communities are chomping at the bit to build, test and scale up net-zero technologies in the North Sea.

Douglas Irvine, who heads up the Orion Project, a holistic project run by the Shetland Islands ­Council to transform the islands’ ­industries to a net-zero future, said: “I think that there’s a huge part of the economy just itching to get through here that could be ­enabled and that could get on a faster track ­towards a green energy system.”

Finally, on the more controversial end of the journey to net zero is carbon capture and storage (CCS). While it is criticised as being a cop-out from the real solutions of reducing greenhouse gas emissions, the injection of CO2 into empty oil wells is extremely accessible as alternative work to those with oil and gas expertise.

Iain Martin, technology ­manager from the NZTC, who began his career as a geoscientist for oil exploration, says: “There’s a lot of knowledge, we’ve got a lot of skills that could be put everywhere else … I think that’s how we can sustain [North Sea] communities”.

Martin is adamant that technologically, we are capable of storing carbon underground. Four sites have already received licences for carbon storage in Scotland, too. “However,” he adds, “there is a long way to go in making CCS financially ­viable for private enterprises.”

With its healthy collection of world premiers and ambitious projects, the potential for the North Sea as a renewable energy hub is undeniable. But does policy do enough to release this ­potential and provide employment? Is this ­technology enough to keep the UK within its 2050 net zero target and to limit global heating to 1.5 degrees?

Not yet.

From industry to Just Stop Oil ­campaigners, there is a wide consensus that much stands in the way of the North Sea moving from potential to practice. ­

Irvine, who worked for many years at the Sullom Voe Oil Terminal, is adamant that reducing our demand for energy has to go alongside producing renewable ­energy.

NZTC’s Iain Martin is clear that while he believes CCS will be necessary as part of the UK reaching net zero, it should be seen as a solution for the slow-moving, hard-to-abate sectors such as agriculture; not as a silver bullet for all emissions.

Grahame Buss, former principal ­scientist at Shell, argues that the pace of change is simply not good enough. “None of the political parties are treating this with sufficient urgency,” he says.

“The rate at which the climate’s breaking down is much faster than people predicted in the past … The cost of dealing with that is going to be immense and eventually, it will consume our entire economy.”

Lastly, while everyone agrees the North Sea communities have transferable skills relevant to the new green economy, ­nobody is naive enough to believe that this job transfer will happen overnight.

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Buss argues that deliberate policy to ­retrain the workforce is needed, while others argue for oil and gas extraction to decline gradually to allow time for workers to move from one industry to another.

What will change with Labour in power?

This election has been critical for the future of the North Sea. “I think this election is quite different from any other,” Irvine said days before it.

“There’s a higher degree of apprehension than there’s been in previous elections – more felt in oil and gas than renewables but even the renewables industry will be wondering what the energy strategy is going to be going forward.”

With Labour taking a landslide ­­majority not only across the UK, and grabbing dozens of SNP seats in ­Scotland, what does this mean for the future of the North Sea?

The first and most crucial difference is the future of oil and gas – with Labour promising not to revoke the licences handed out by the former government, but ruling out the possibility of any new licences for oil and gas exploration.

This is totally different to the Conservatives’ promise to keep licensing oil and gas ­exploration every year, and it’s also more definitive than the SNP, who promised an “evidence-based, case-by-case” approach to approving new oil and gas exploration.

(Image: Ithaca Energy)

The response to this is mixed – Irvine is uncertain whether the workforce will be able to transition fast enough, and ­renewables supplies – particularly for ­heating – catch up.

“This idea that you can just knock oil and gas on its head and stop it is … it’s flawed because we’ve just a cost of living crisis … caused by the price of energy going through the roof.”

Climate campaigners on the other hand are pleased but want to see ­existing ­licences revoked too.

“The next UK ­Government has made a commitment to enact our original demand which was no new oil and gas, so obviously that’s a positive step,” said a representative of Just Stop Oil, “but ­obviously we’re highly cognisant that that is not anywhere near the level of ­action required.”

Buss, who now campaigns for Just Stop Oil, argues that the quantity of oil and gas produced by newly licenced fields will not be enough to ensure ­stable ­energy prices.

He also points out that the ­Rosebank oil field will cost the UK ­Government a ­significant amount in ­subsidies and ­incentives and will simply delay the ­transition away from fossil fuels.

When it comes to renewables, Labour’s plans are undoubtedly more ambitious than the previous government – aiming to decarbonise the entire grid by 2030, and supporting new energy technologies, particularly marine energies such as tidal.

The other flagship manifesto promise, GB Energy, holds some potential for North Sea jobs as it will be based in ­Scotland.

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However, with the SNP losing significant ground, it’s unsure whether the party will be able to push for Scotland to receive a decent share of energy ­transition funding.

But what about everything else? ­Industry actors on all sides say that from hydrogen production to carbon capture, funding has too often been inconsistent and uncertain.

Irvine argues that a full review and overhaul of the energy sector is needed, rather than piecemeal funding and policies on separate issues. In particular, Irvine argues that in order to unlock the huge industry appetite for renewables in the North Sea, the current regulatory frameworks need to be changed.

“There is just a lack of joined-up thinking about the energy transition … we think we can do things competitively the whole time [but] climate change needs collaboration more than it needs competition,” he says.

Irvine also argues that the current regulatory framework disadvantages small and medium-sized or community energy companies from being able to progress. For example, the Shetland community trust lost out on a stake in the 443MW Viking onshore wind farm, the most ­powerful in the whole UK ­because it didn’t meet the Contracts for ­Difference criteria.

The SNP had ­promised to ­modernise the contracts for difference system, but there appears to be no ­mention of it in Labour’s manifesto. This doesn’t mean that Labour won’t ­review the regulatory framework. Perhaps the creation of a national energy provider will be the prompt needed to review the whole regulatory framework.

The fact of the matter is that we don’t yet know the details. One thing is for sure – the new government is going to be watched carefully, by civic society and by industry.

Labour’s aims for the North Sea seem to be positive, but they will be under pressure to flesh out the details very soon.