Oil regulator to revise remit to address climate crisis
Britain’s oil industry watchdog plans to overhaul its mission to wring as much value from the North Sea’s oil reserves as possible before the UN climate talks this year.
The Oil and Gas Authority (OGA) was due to meet a government minister on Wednesday afternoon to discuss how the regulator, which was set up to extend the life of the North Sea, could play a part in tackling the climate crisis.
Andy Samuel, the OGA’s chief executive, told delegates at an industry conference that the watchdog was considering how it could help the UK meet its climate targets and would open a consultation on how to redefine the OGA’s strategy within the coming months. “We will be discussing this with a minister this afternoon,” he said.
The overhaul follows a pledge by Ofgem, the energy regulator, to play a bigger role in helping to meet the government’s climate targets, after coming under fire for failing to prioritise the climate emergency.
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The OGA was established five years ago by the government to extend the life of the North Sea, after the oil price crash cast doubt over the future of the UK’s ageing oil basin. Since then, the statutory duty has raised questions over whether it is compatible with the government’s commitment to tackling the climate crisis.
The regulator’s new strategy is expected to align its work safeguarding North Sea jobs and investment with the UK’s legally binding ambition to cut carbon emissions virtually to zero by 2050.
This is likely to pile pressure on North Sea firms to shrink their carbon footprints by reducing flaring and methane leaks, and even use renewable energy to run the rigs.
The OGA is also likely to push for companies to collaborate on big investments in carbon capture technology and clean hydrogen production, which could help the UK meet its net zero targets.
The strategy may also mean the North Sea produces fewer barrels of oil if companies shift their portfolios from oil towards gas in line with future demand forecasts.
Bob Ward, a director at the Grantham Research Institute on Climate Change at the London School of Economics, welcomed the OGA’s attempt to “reconcile the UK’s target for net zero emissions by 2050 with its strategy for maximising economic recovery” from the North Sea.
“If the world is serious about achieving the Paris Agreement’s goal, it should mean a global decline in demand for oil and gas. The North Sea has relatively high operating costs compared with other basins, so its oil and gas might be among the first to be priced out of global markets if overall demand falls,” he said, speaking on the sidelines of the International Petroleum Week conference.
The Department for Business, Energy and Industrial Strategy did not respond to a request for comment.
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