The ‘golden age of gas is over’ according to the The International Energy Agency (IEA). The company recently forecast that global oil demand will have peaked by 2030 as a result of the growing popularity of heat pumps, electric cars and buses, and the success of renewables in producing electricity. Europe’s deliberate move away from gas following the Russia/Ukraine conflict has also fuelled the notion that renewable technologies and low emissions fuels will be sufficient to meet future energy needs. Writing in The Financial Times, the agency warned of the economic, climate and financial impacts of new oil and gas projects.1
The article has divided opinion, with oil and gas producers in particular having criticised the IEA’s approach towards the energy transition. According to Reuters, the CEOs of oil giants Aramco and Exxon Mobil have expressed the importance of continued investment in oil and gas as a key factor in the transition to cleaner energy.2 OPEC Secretary General, HE Haitham Al Ghais, has echoed these sentiments in a statement following the release of the forecast, claiming that the global energy system has been “set up to fail spectacularly.” The statement continued: “[This narrative] does not take into account the technological progress the industry continues to make on solutions to help reduce emissions. Neither does it acknowledge that fossil fuels continue to make up over 80% of the global energy mix, the same as 30 years ago, or that the energy security they provide is vital.”3 Considering that many net zero technologies are still in their infancy, it is no surprise that a number of political figures are inclined to agree that the energy transition should not be rushed.
Prime Minister of the United Kingdom, Rishi Sunak, recently made the decision to ease UK climate targets, pushing back on a range of measures, from taxing meat consumption, to discouraging foreign travel by raising air fares. A nine-year delay has also been placed on the ban of fossil fuels being used to heat off-gas-grid homes, whilst a ban on new petrol-only cars has been suspended, with Sunak claiming that net zero will be met in “a proportionate and pragmatic way.”4 This follows the UK government’s recent announcement that new licences would be granted for oil and gas exploration in the North Sea. Sunak defended this decision, claiming that using the energy we have at home is consistent with a transition to net zero.5 The subseqeuent approval of the controversial Rosebank project, therefore, was to be expected.
Acquired by Equinor in 2019, Rosebank is the largest undeveloped oil and gas field in the UK, located west of the Shetland Islands, with an estimated 300 million bbl of potentially recoverable reserves. The development of the field is highly contentious, yet the proposed advantages in terms of UK energy security cannot be ignored. Furthermore, Equinor plans for the field to be developed with a redeployed, refurbished Floating Production Storage and Offloading vessel (FPSO) tied to a subsea production system, which will be electrification-ready and able to be powered from shore. The operator claims that this has the potential to reduce production emissions from the field by over 70%. The North Sea currently produces oil at around 20 kg CO2/bbl; post-electrification, it is believed that Rosebank could produce oil at 3 kg CO2/bbl. An estimated £8.1 billion of direct investment into UK businesses is also an undeniable advantage of Rosebank, as is the promise of 1600 jobs created for highly-skilled oil and gas workers.6
While the world continues to battle over the right approach to net zero, and fossil fuels continue to represent a large percentage of the global energy mix, the best thing oil and gas producers can do is aim to provide energy security whilst decarbonising their operations. For now, this can help to bridge the gap between a climate disaster and a rush towards renewables.
*References are available upon request.
