The UK’s Exploration Task Force (‘XTF’) has recently issued an information pack making the case for responsible investment in UK oil and gas exploration and production. Investment will support the industry in limiting the impact of global supply challenges as it works towards meeting its 2050 net zero commitment, in parallel with UK demand reduction and expansion of low carbon energies and energy storage.

The UK’s upstream oil and gas industry has a key role to play in UK decarbonisation, through carbon capture and storage, hydrogen supply, reduction of its upstream supply emissions and integration with offshore renewables. The recent North Sea Transition Deal and the new strategy of the Oil and Gas Authority (‘OGA’) place the industry on a measurable pathway to net zero by 2050, whilst the industry endeavours to meet up to around 60% of the c. 17 Billion barrels of oil equivalent that the Climate Change Committee forecasts the UK will consume over that period. The XTF’s case for responsible investment envisages the re-invention of the UK Continental Shelf (‘UKCS’) as an integrated, lower emissions energy supply and carbon storage basin. It highlights the positive and growing environmental, social and governance (‘ESG’) differentiation of the UK upstream petroleum industry from many of the sources of the UK’s imported oil and LNG supply.

Exploration and production utilising the extensive infrastructure network on the UKCS can make a key contribution to the UK’s energy security, whilst the current surge in oil and gas prices highlights the security, affordability and sustainability challenges that arise when energy demand exceeds supply. As the world transitions to lower-carbon energy sources, oil and gas will continue to be a critical but declining part of the energy mix. The XTF makes the positive case for responsible investment in emissions reduction, local lower emissions oil and gas supply and de-carbonisation technologies. Such investment will play a vital role in helping the UK to achieve net zero by 2050, limiting the UK’s contribution to global emissions arising from the importation of oil and Liquified Natural Gas (‘LNG’) from mostly less transparent, higher emissions sources.

Nick Terrell, XTF Chair commented:
“The Climate Change Committee’s central net zero trajectory forecasts substantial UK oil and gas demand of around 17 Billion barrels of oil equivalent (‘Bnboe’) to 2050. With investment, the UK industry has the potential to limit the UK’s net oil and gas imports to around 7 Bnboe, whilst simultaneously driving down its own emissions through ongoing initiatives such as eliminating routine flaring, reducing methane emissions and implementing offshore electrification.

Investment is critical for the industry to allow it to maintain local oil and gas supply, limit the sharp pace of production decline and accelerate UK de-carbonisation via much needed recycled investment into carbon capture and storage and blue hydrogen deployment. The UK industry is increasingly differentiating itself from other countries upstream sectors as highlighted by its measurable, committed pathway to net zero by 2050 and its growing climate-related financial and environmental transparency.”

Graham Goffey, XTF Member and investment pack co-ordinator noted:
“Combined UK oil and gas demand in the central net zero trajectory of the Climate Change Committee (‘CCC’) falls at around 4% p.a. over the next 10 years, whilst UK production is forecast to fall rapidly at around 6% p.a., meeting less than half of UK demand to 2050. The XTF’s suggested ambition for UK production to meet up to around 60% of UK demand envisages investment in lower emissions exploration and development, with potential to slow production decline to 3-4% p.a. Such decline rates are in line with those that the recent UNEP Production Gap Report asserts are required to limit global warming to 1.5°C, highlighting the sustainability impact of UK hydrocarbon demand, which exceeds forecast 2050 production in all CCC scenarios except the “highly optimistic” ‘Tailwinds’ scenario.”

Professor John Underhill, Chair of Geoscience and Energy Transition at Heriot-Watt University and XTF Member said:
“Current global gas and oil prices highlight the issues that arise when supply falls short of demand, leading to detrimental outcomes, with increased oil and coal usage and fuel poverty being exacerbated. Our reliance on fossil fuels needs to be managed downwards at pace in order to move towards a sustainable, renewable energy future. There is a clear case for responsible investment in the UK upstream sector where oil and gas has a lower carbon footprint compared to equivalent imports, and is one of very few basins where industry is committed to reducing its emissions and making a significant contribution to national decarbonisation.

Geoscience has a crucial role to play in helping the UK limit the threat and impact of energy shortfalls, for example through developing gas and compressed air energy storage, as well as emissions reduction through carbon capture and storage. Many of the skills, techniques and
datasets used in the petroleum industry are the very same as those needed to explore for, appraise and develop storage sites, highlighting the key role of skills retention and development as we move towards a decarbonised future.”

Jenny Morris, XTF Member & Harbour Energy SVP Exploration remarked”
“Continued investment will support the UK upstream industry in limiting the affordability and sustainability impacts of global energy supply challenges, whilst lower carbon technologies scale-up to realistic levels enabling a longer-term transition away from fossil fuels. With the North Sea Transition Deal and OGA’s New Strategy driving rapid upstream change, the UK can make a positive case as a destination and exemplar for responsible upstream investment to achieve a sustainable transition to net zero by 2050.”

The downloadable investment information pack is available on the Exploration Task Force’s LinkedIn page or via the website of OGUK.

The XTF is a collaborative structure between industry and regulator (OGA), under the umbrella of the OGA’s North Sea Transition Forum, which is the body that provides senior government and industry leadership for the offshore oil and gas industry. The XTF comprises exploration leaders in the oil, gas and emerging carbon storage sectors. Its purpose is to maintain UK exploration and appraisal activity, making the most of the UK’s own energy resources in support of the transition to a net zero carbon future and beyond.