Fast-tracked North Sea decommissioning projects should be used as a “skills bridge” to get hundreds of oil workers over the current job-cuts crisis and into green energy roles, a new report said.
The Scottish Government’s Just Transition Commission (JTC) said bringing forward deferred oil-well plugging and abandonment (P&A) work would immediately create jobs.
Industry figures said this “practical” idea was being discussed at the “highest level” and could be implemented quickly to save jobs, retain critical skills and provide a link to the energy transition.
In its new Green Recovery report, the JTC also called for direct investment in manufacturing facilities for offshore wind components and net-zero technologies, and the rapid delivery of carbon capture projects and a floating wind centre of excellence.
And it claimed the UK Government’s pledge to dish out an oil and gas sector deal during the current parliament could be the “biggest single opportunity” to secure a just transition for workers.
Earlier this week, Cabinet Office Minister Michael Gove said Westminster was considering a deal to boost the ailing North Sea oil industry.
The JTC was formed last year to make the most of the economic and social opportunities that the move to a net-zero economy by 2045 offers Scotland.
It wants to help ensure workers are not “left behind” during the transition away from fossil fuels.
Since the JTC was launched the oil and gas industry has been plunged into a crisis by a crude price rout brought on by a slump in demand caused by the Covid-19 outbreak.
Representative body Oil and Gas UK (OGUK) warned in April that 30,000 oil industry jobs could be lost Britain in the next 18 months.
OGUK chief executive Deirdre Michie told the Scottish Affairs Committee at the start of April that 7,500 roles had already been axed, while RMT regional organiser Jake Molloy said today he understood the toll had reached 9,000.
It is feared that the bloodletting will accelerate over the coming months as support provided by the UK Government’s furlough scheme dries up.
Scotland, and the UK as a whole, do not currently have domestic renewable and clean energy manufacturing businesses big enough to provide alternative employment for such large numbers of workers — and aren’t likely to solve that problem quickly.
Most of the gear used on wind farms installed in Scottish waters is built overseas, for example.
And while the oil and gas industry has identified carbon capture and hydrogen as technologies it can help develop in the UK, the likelihood that those areas will create jobs in the near-term is questionable.
That’s why the JTC has urged the creation of large-scale decommissioning campaigns centred on well P&A to drive North Sea activity.
Doing so would help get drillers who recently lost their jobs back into employment and keep them in work until they can transition into low carbon energy jobs.
It would also help the oil industry position North Sea infrastructure for a “new integrated future”, as certain pipelines and other kit will need to be preserved to facilitate offshore carbon capture projects.
The UK Government is responsible for ensuring North Sea infrastructure is dismantled safely and the Oil and Gas Authority (OGA) is helping oil companies reduce decommissioning costs.
Will Rowley, interim managing director at Decom North Sea (DNS), said the well P&A idea would help maintain highly developed expertise which is “at risk of being lost or diminished”.
Mr Rowley said DNS had been working with companies, regulators and government on business models that would “address the practicalities” of delivering a large campaign.
The OGA, which regulates the sector and issues production licences, has even identified the most suitable wells, Mr Rowley said.
He added: “A large well P&A programme is a practical and feasible consideration, and one that could be actioned in weeks, not months if the government will is there to follow through.
“The supply chain has the capacity and capability to deliver this quickly so that it protects jobs and retains critical expertise today whilst providing that link into the energy transition future”
Mr Molloy, who also chairs the Offshore Coordinating Group, a coalition of trade unions, said North Sea industry needed “something to keep the skills going” at a time when exploration and development work had ground to a standstill.
He said: “A lot of P&A work is being deferred and government is allowing industry to defer that work because of the difficult times we face, but that is not a sound economic argument.
“It could cost more at a later stage so let’s get on with it.”
Mr Molloy also said the OGA should use its licensing powers to compel operators to take their platforms to UK ports for dismantling which, combined with the effect of P&A campaigns, could potentially mean “a couple of thousand jobs” being saved.
The report added oil and gas supply chain companies would benefit from a “strong sense of direction from government” if they are to invest in technologies that will be the building blocks of a net-zero energy system.
It said the Scottish Government should use its devolved powers, where possible, to maximise domestic manufactured content in energy projects.
Prof Jim Skea, chair of the JTC, said the report’s recommendations should be used to “shape urgent action” for the coming months.
Scottish Climate Change Secretary Roseanna Cunningham said Holyrood’s commitment to the just transition principles were “unwavering” and would be at the heart of Scotland’s recovery from Covid-19.
Scottish Government recently announced a £62 million Energy Transition Fund with the intention of helping oil and gas firms make a green recovery from the Covid-19 crisis, with particular focus on the north-east.
OGUK’s Ms Michie welcomed the report and said the oil and gas industry was “already driving forward” a number of areas picked up on by the commission.
A spokesman for the OGA said: “We recognise the pressing need to stimulate activity in the UKCS to safeguard the large number of supply chain jobs which have been lost, are under threat, or are currently furloughed.
“We are pursuing a number of initiatives, including a coordinated approach to decommissioning programmes, which have the potential to help safeguard jobs, and lead to greater cost efficiency and we are working with government and industry to progress these.”