Oil and gas from the UK North Sea will remain important in meeting the country’s energy needs, the UK government confirmed in its long-awaited Energy White Paper on May 23, but it stressed that nuclear power may have a role in diversifying the energy mix.
According to the Energy White Paper, oil and gas is expected to rise to 80% of its primary energy supply by 2020 from 70% in 2006. Alistair Darling, the secretary of state for trade and industry, said the UK will ensure it has diverse suppliers and will fight for liberalized markets in Europe and internationally.
The government plans to triple the amount renewables will contribute to electric power generation by 2015 and has launched a 5-6-month study to clarify the future role of nuclear power stations.
Oil & Gas UK, the pan-industry body representing the UK oil and gas exploration and production industry, welcomed the government’s views on domestic oil and gas in the energy mix.
Malcolm Webb, Oil & Gas UK’s chief executive, said the economics of many offshore fields, new gas developments in particular, are becoming more challenging “given the current high operating and development costs and low gas price. It is therefore encouraging to hear the government emphasizing the importance of an appropriate fiscal and regulatory regime for our industry.”
The next major source of oil and gas for the UK appears to be the West of Shetlands, which is estimated to hold around 17% of the UK’s remaining oil and gas. “Currently, overall development costs are expected to be in the region of £4 billion, and the economics are sufficiently encouraging for the task force to consider more detailed technical and commercial assessment of specific options,” the Energy White Paper stated.
Low-carbon initiatives
Greater energy efficiency and a secure, low-carbon energy mix for the long term were important themes in the paper, which the political opposition criticized for lacking substance and for indecisiveness on implementing a nuclear strategy. New nuclear power stations are unlikely to be built before the end of 2017 at the earliest, raising a potential shortfall in electric power supply earlier in the decade. The government said it would announce its decision on nuclear power at yearend. It wants to offer private energy companies the option of investing in new nuclear projects.
The government has proposed cutting carbon emissions by 23-33 million tonnes by 2020, stressing investment in new, low-carbon sources. “We want to lead in the development of carbon capture and storage,” Darling said, adding that the government would strengthen the EU Emissions Trading Scheme to ensure a long-term market price for carbon.
Darling’s announcement on carbon capture and storage sounded hollow when BP PLC revealed on May 23 that it would drop its carbon capture and storage project in Peterhead, Scotland, after the government delayed a competition offering subsidies until November, which BP said was too late for it to make a final investment decision.
However, it remains questionable whether energy policy can be fulfilled if the UK is struggling with a skills shortage with dwindling numbers of graduates in science, engineering, and technical careers.
Louise Kingham, chief executive of the Energy Institute, said: “A survey carried out last year by the EI revealed potential skills gaps in the energy industry in the next decade. Increased efforts are required to assess the problem, share best practice and knowledge between regions, and stimulate training activity, to avoid a skills shortage becoming a constraint on policy implementation.”
The Energy White Paper was due to be published in March, but this was delayed after Greenpeace launched a legal challenge claiming that the government had not carried out its nuclear consultation process properly.
