Summary
Scotland is at the forefront of the global oil and gas industry, which contributed £9.2 billion to the Scottish economy in 2017 and supports 135,000 jobs in Scotland. It 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.
The sector has come through a significant and challenging downturn; while there are signs of recovery, some key indicators, such as the rate of new well exploration, remains low. At the same time the industry needs to look to future challenges and find ways to prepare for a decline in production to ensure that the economic benefits and highly skilled jobs the sector have brought to Scotland are not lost. The sector also needs to respond to both Government’s climate change ambitions and use its skill and engineering knowledge to help develop low-carbon, and renewable, technologies.
We believe that the best way for the Government to support the industry through these challenges is to agree an ambitious sector deal. A well supported sector deal, backed by firm commitments from industry and government has the potential to deliver £110 billion for the UK economy between now and 2035, with Scotland being one of the main beneficiaries. To prepare the industry for its future, the sector deal should focus on:
- Developing new technology to maximise the recovery of the 10–20 billion 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 basins around 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, and
- Helping the industry reduce its carbon footprint and using the sectors skills, technology and infrastructure to the support the development of carbon capture technology.
The opportunities presented by an oil and gas sector deal for Scotland are too significant to be overlooked. The sector deal would both provide energy security for the UK for decades to come and support the industry to remain a global leader in energy production.
Published: 4 February 2019