Energy Transition Outlook 2021

ENERGY TRANSITION OUTLOOK 2021

While the short-term challenge for the industry is to maintain emissions performance at a time where has the potential to increase from 2022-23, both scenarios demonstrate emissions reduction forecasts are likely to be sustained to meet the short-term targets. Both scenarios include an expectation that around 30 installations and FPSO’s are due to cease production between 2021-25. Of those assets due to come offline, four were commissioned before 1990. Natural decline of production from aging fields and assets and decommissioning older energy intensive installations during this period is anticipated in total to remove around 0.3 Mt/p.a. of CO 2 emissions. During the same period, production will start up from three new platform and FPSO projects which have committed development plans in place, along with around 10 fields which will be tied into existing production infrastructure. There are further project opportunities under consideration, but not yet committed, for development which would likely see around 5 new platforms and FPSOs as well as new fields tying into already producing installations. These installations using latest technology, and in some instances unmanned installations will drive further improvement in emission intensity. In conclusion, new production with improved emissions intensity can be brought online whilst maintaining industry’s emissions reduction progress in line with the North Sea Transition Deal.

For the current year, 2021, both forecasts anticipate a 10 per cent reduction in oil and gas output as a result of outages that were postponed from 2020. The overall impact of this, combined with further reduced drilling activity, means that emissions for 2021 are likely to remain around same level as reported emissions in 2020. Some further improvement is possible depending on emission reduction activities in the remainder of the year. However, this will not be confirmed until full information from 2021 is available in next year’s report. Moving towards 2023, if all investment proposals are sanctioned from 2021-22, OGUK anticipates CO 2 emissions from installations could marginally increase and peak in 2023 before beginning to decline as a result of continuous operational improvements, maintenance and industry best practice. The range set out in Figure 2 is based on the assumptions below: In a reforecast “BAU” emissions scenario : The same rate of continuous improvement is assumed going forward as has been seen over the last two years. At the same time, carbon intensity (CO 2 kg/boe) is held constant, even as production increases in line with basin wide recovery plans. This assumption therefore includes new production from less carbon-intensive projects being brought online as older assets, which have a higher carbon intensity, are retired. In a “Operator Intervention” emissions scenario: OGUK has modelled the likely outcome of all operators improving emissions performance in line with the best practice levels seen to date. In this scenario, while production and emissions increase to 2023, the increase is less pronounced than originally forecast due to alternations in performance of the assets. By 2025 this leads to a further reduction of emissions beyond the NSTD target. This outcome also factors in new production coming online and older assets coming offline. However, operator intervention assumes carbon intensity will improve across the board.

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