‘Shockwaves’ through oil and gas sector at Cambo decision

 Katy Heidenreich, operations director at Oil & Gas UK on a North Sea platform

Katy Heidenreich, operations director at Oil & Gas UK (OGUK), argues that home-produced oil and gas is still needed to fill the energy gap - Credit: OGUK

Oil and gas workers based in East Anglia have been left reeling after oil company Shell decided to suspend its involvement in Cambo, the UK’s next big oil field development off the Shetland Islands, an industry body has warned.

The decision has “sent shockwaves” through the industry and the 20,000 workers involved in it, said Katy Heidenreich, operations director at Oil & Gas UK (OGUK) which represents the offshore industry and has been lobbying hard for it as the country transitions to a low-carbon economy. 

OGUK believes the decision will have a knock-on effect for the wider industry – including gas fields lying off the coast of East Anglia. The Southern North Sea is just as likely to be as affected by a slow-down in development as the oil fields in the north of Scotland, the body warned.

“They are the backbone of an industry that works through the year to keep our country running. They supply the gas that helps heat 24m (83%) of UK homes and generates nearly half our electricity. They also produce oil that gets refined into the petrol, diesel and other fuels that power our cars, vans, buses and trains,” said Ms Heidenreich.

“Right now, 10,000 of them are living offshore on 250 oil and gas installations in the North Sea, the Atlantic waters north of Scotland and the Irish Sea. Those workers come from all over the UK – but especially from regions like East Anglia, Liverpool, Newcastle, Middlesbrough, Scotland’s central belt, Dundee, Aberdeen and Inverness.”

UK oil and gas workers' residential locations

A graphic showing the addresses of clusters of oil and gas workers around the UK - including a concentration around east Norfolk of between 1300 and 2900 workers - Credit: OGUK

Tens of thousands more are working onshore in the supply chain, with firms based all around the UK providing engineering, manufacturing and other services, she said.

“In the future we will rely on them for new forms of energy too. Over the next couple of decades, the oil and gas workers of today will become the people who build and maintain our wind turbines, carbon capture systems, hydrogen production factories and other hardware needed for Britain’s low carbon future,” she said. 

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“That future needs a lot of work and a detailed plan. The UK has a target of becoming carbon neutral by 2050. But we will not hit that target by shutting down our existing oil and gas fields or stopping new ones being developed.” 

Stifling the existing energy industry would have the opposite effects, she warned, wiping out the jobs and the workforce skills, such as marine engineering and construction, which are essential to hit the 2050 target. 

“It would also be expensive. At the moment the UK produces only half the 74bn cubic metres of gas it consumes annually. It also produces 53m tonnes of oil – and consumes 59m tonnes. Last year importing the extra gas and oil needed to make good those production gaps cost the nation about £7bn net – around £250 per household. 

“The UK is blessed with lots of oil and gas, but it’s not found in massive reservoirs like those found in Russia and the middle east. Instead, it’s spread out across hundreds of smaller reservoirs. That means some are always becoming depleted and so need to be replaced by new ones. 

A graphic from OGUK looking at the UK's oil and gas reserves and charting trends

Should the UK open more oil and gas fields asks OGUK - Credit: OGUK

“The next 10 years, for example, will see 1,600 oil and gas wells being decommissioned. These closures  would also see UK production of oil and gas plummet by 75% – unless we open new fields. That decline would be far sharper than any reduction we could achieve in demand – so imports would surge with householders and businesses facing all the extra resulting costs.”

New fields like Cambo were needed to maintain rather than boost overall production, she said. “That will help maintain the flow of energy needed to see us through till 2050. By then, hopefully, there will be far less need for new oil and gas fields.”

There were big challenges ahead for transitioning to low-carbon energies, she said.

“We could shut down the whole UK oil and gas industry, but the only result would be to send imports surging – with no reduction in emissions. The reductions will come only when we find low-carbon replacements for the machines, vehicles and appliances that power our homes, businesses, and transport,” she said.

The industry was working on two UK projects to capture CO2, the main global warming gas and planning to build three more, she said. It was also looking at hydrogen production plants and building and operating ever-larger wind and solar farms.