The Commons Scottish affairs committee has voiced its support for a sector deal for the oil and gas industry in Scotland.
In its report, “The future of the oil and gas industry”, the committee highlights the need to protect the “vital” industry with an “ambitious” sector deal.
The proposed deal, entitled “Vision 2035” is being jointly led by Oil & Gas UK and the Oil & Gas Authority.
Vision 2035 would cost an estimated £176M but could deliver £110bn to the UK economy leading up to 2035.
At the centre of the deal is the creation of three innovation hubs including the National Decommissioning Centre, which aims to develop technology to minimise the cost of decommissioning oil and gas production facilities.
Of the other two centres, one would focus on transformational low carbon technology and less carbon intensive production. The other would look at developing underwater innovations to maximise oil and gas extraction. The proposers of the deal claim this could deliver an additional 1.3bn barrels of oil which it estimates to be worth £44bn.
The oil and gas industry supports 135,000 jobs in the country and delivered £9.2bn to the economy in 2017.
The committee also said that protecting the sector is central to future of the UK’s energy sector - an issue made more pressing by the recent cancellation of large nuclear projects inlcuding Wyfla and Moorside.
“[Scottish oil and gas] is also central to the UK’s energy security, with it being forecast that two-thirds of the UK’s primary energy needs will be met by oil and gas until at least 2035.”
However, the report made clear that the sector deal should do more to commit to reducing its carbon footprint, primarily through development of new carbon capture usage and storage (CCUS) technology.
“We believe that the sector deal could be more ambitious in [CCUS] and recommend that before the sector deal is finalised the sector should bring forward a more detailed proposal on how the three centres of excellence could support the development of CCUS technology and how their success will be measured”.
The Scottish Affairs Committee sector deal recommendations:
- Developing new technology to maximise the recovery of the 10bn to 20bn barrels of oil and gas remaining in the UK Continental Shelf
- Finding ways to reduce the costs of decommissioning oil and gas rigs
- Exporting the sector’s expertise, know-how and technology to other parts of the world, including in subsea engineering and decommissioning
- Supporting the transfer of skills and technology from the oil and gas sector into other industries, particularly renewable energy
- Helping the industry reduce its carbon footprint and using the sector’s skills, technology and infrastructure to support the development of carbon capture technology
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