The new UK energy minister has reaffirmed his support for the oil and gas industry as the COP26 climate summit beckons.
Greg Hands toured Aberdeen this week, in a visit including CHC, Harbour Energy, Balmoral Group and Oil and Gas UK ahead of the critical meeting of world leaders in less than three weeks.
It comes amid rising calls to “Stop Cambo”, a new oil project in the west of Shetland, and news earlier this week that Shell’s Jackdaw development in the North Sea had been blocked by regulator OPRED.
Climate pressure is also being placed on the UK to follow countries like Denmark in ceasing new oil and gas exploration.
But Mr Hands, who took on the energy portfolio last month, said government remains supportive of the industry as it “makes that transition in a gradual way”.
Speaking to Energy Voice, he said: “Doing something abrupt would be unhelpful, let’s help the industry work together with the OGA to make that transition.
“We need oil and gas today, but we also need a lot of its expertise, skills and technology for the energy of tomorrow.”
He added: “I think it’s important to put across a balanced view of the industry. The UK has very considerable energy needs today. The oil and gas sector is providing a large part of that. 50% of the gas that we currently utilise comes from the UK Continental Shelf.
“But, at the same time, the industry as a whole is committed to the transition. The good thing here is that a lot of the technology, skills and infrastructure is also transferrable to renewables. Particularly offshore wind but also some aspects of CCUS (carbon capture utilisation and storage). This is where I think the term transition is really important for people to understand.”
The visit also comes as the UK Government is expected to make an announcement later this month on the first two of four CCUS cluster projects to be developed in the UK, sharing a £1billion pot.
At St Fergus, the Acorn project is in the running as a key component of the “Scottish Cluster”.
Mr Hands wouldn’t be drawn on the chances of success, saying: “We’ll have to wait and see the actual decision. The UK, as many in the industry have told me, is very well positioned for CCUS.
“We’re in a good position there as a country, but we’ll have to study all of those propositions carefully before making any decisions.”
Mr Hands also kept relatively schtum on the fate of Cambo, saying the UK has “an established process in place, which would apply to Cambo as indeed to other projects”.
However, he added: “The UK Government very much values the sector and the importance of the sector to energy today, tomorrow and into the future and its role in the transition. Government policy is unchanged on that approval process.”
This marks Mr Hands’ third trip to Aberdeen, but his first since taking on the energy portfolio in September.
He echoed the rhetoric of industry in terms of its role in the energy transition, and the importance of North-east Scotland in that process.
“It’s where a huge amount of skills are, many of which are transferrable or potentially transferrable from oil and gas to renewable technology, CCUS and other technologies. This is where the skills base is located.
“So I think it’s a very exciting future for North-east Scotland as the most significant, largest UK energy hub going forward. It’s where the skills are, a lot of the assets are, a lot of the technology. This has got a really bright future as a vital UK energy hub.”
Mr Hands said not to “interpret anything in terms of timing” in relation to approvals, or indeed COP26, simply that the visit was a key one to make for a new energy minister given the importance of the region.
However he said government would be showing off the recently-signed North Sea Transition Deal, and the industry’s commitment to net zero.
“The fact that the industry itself is moving to net zero, the uk as a whole is moving to net zero by 205. That’s very much the message we want to be sending at COP. Getting others to commit to net zero as well.”