Investment is needed now to close the gap on key technologies and transform the North Sea into an integrated energy system, according to a report.
On 16 September, the Oil and Gas Technology Centre (OGTC) published a comprehensive roadmap, setting out the key technologies required to deliver an integrated net zero energy system on the UK Continental Shelf (UKCS), while highlighting the “major economic opportunity” such a transformation has to offer. Closing the Gap: Technology for a Net Zero North Sea – prepared for the OGTC by Wood Mackenzie, with support from Chrysaor and the Scottish government – said an integrated net zero energy future in the North Sea could generate more than £2.5tn in value to the UK economy and generate £36bn per year in revenue by 2050 through the domestic sale of products and services.
It explained that through maximising opportunities to innovate across the renewable and fossil fuel sectors, growing offshore renewables, hydrogen and CCUS, over 200,000 new jobs could be created across the UK. This would result in a diversified energy sector, support a new generation of highly skilled jobs and open up “exciting export potential”.
However, to capitalise on the opportunity, the paper stressed investment must be made with pace, with £430bn needed to reduce emissions in the oil and gas sector, to innovate in offshore wind and green hydrogen, and enhance technology for blue hydrogen.
One of the main barriers to developing a hydrogen economy are challenges around hydrogen transport and storage, which will have to be overcome, the paper said. Blue hydrogen can play a key role, though needs an improved yield and enhanced CO2 capture efficiency for it to become commercially viable, while the cost of green hydrogen must come down. This will only happen through technology innovation, such as through developing cost-effective saltwater electrolysis technology to unlock its potential.
In total, over £70bn of UK-based capital investment will be needed if the Committee on Climate Change’s (CCC) target of 270TWh of hydrogen demand by 2050 is to be met. By developing a hydrogen economy, over 100,000 jobs could be supported in 2050 while it would result in a total economic impact of £800bn between now and then.
Elsewhere, the paper identified platform electrification, methane leakage and flaring mitigation as key to cutting emissions in oil and gas. Around £80bn of capital investment will have to be spent in the UK between 2020 and 2050 to meet production targets and reduce offshore emissions. It could deliver a total economic impact of £900bn.
The abundant potential and significant development momentum of offshore wind means it is on track to meet the CCC’s target, but technology innovation is still needed. The report cited larger blades, taller towers and automated inspection technology as areas for innovation, while adding that innovation gaps will have to be addressed for the UK to become a leader in floating offshore wind. Meeting the 75GW target by 2050 will call for £60bn investment in UK industries such as construction, with the offshore renewables industry supporting 150,000 jobs and generating an economic impact of £600bn.
A lack of a feasible business model is holding back CCUS, which could generate a total economic impact of £200bn between 2020 and 2050, creating 15,000 new jobs. Significantly reducing the cost and improving the efficiency of carbon capture technologies is key to driving growth and scale, while fully realising the CO2 storage potential of the UKCS requires technological innovation. Upwards of £60bn investment is needed to meet the CCC’s target of 176MtCO2/year.
The paper also drew on how other renewable energy technologies will have a part to play on the UKCS, with innovation essential to harness the abundant wave and tidal resource available across the UKCS. In marine energy, innovation is necessary to develop economically feasible power take off technologies and foundations and support systems. For floating solar, enhancing existing systems to cope with harsh UKCS conditions could result in another option for the UKCS renewable energy portfolio, the report noted.
It stressed that for a net zero UKCS to be created, understanding and managing interdependencies will be critical. Delivering of an integrated UKCS energy system will result in many, meaning a clear and cohesive strategy is needed to ensure technological innovation, regulation and policy are both aligned and harmonised. As well as this, the report drew on the importance of digital technologies, which will have to be leveraged across oil and gas, renewables, hydrogen and CCUS to create an efficient, coordinated integrated energy system on the UKCS.
