In 1965, BP made history by discovering the first North Sea gas field at West Sole off Yorkshire. Four years later, US oil and chemicals company Amoco found the first oil in UK waters in the Montrose field, 135 miles east of Aberdeen, and it was another US operator, Hamilton Brothers, that brought the first British oil ashore in 1975. The great black gold rush in north-east Scotland had begun.
By the early 1980s, the region was producing millions of barrels a day as operators flooded Aberdeen, the ‘oil capital of Europe’. By the mid-1980s, Britain was a net exporter of oil and a decade later was exporting gas as well. In 1999, UK production peaked at 4.5 million barrels of oil equivalent per day.
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By GlobalDataHalf a century on from that historic first find, north-east Scotland continues to make a significant contribution to the Scottish and UK economy. More than 20% of Scotland’s export value is produced there, and around half a million energy industry jobs have been created in and around Aberdeen.
Now, the city is gearing up for the next – and potentially most critical – phase of its evolution, using its proven oil and gas infrastructure and expertise to become a world leader in renewable energy.
“Significant knowledge and experience in offshore project management, underwater cables and foundations, semi-submersibles, moorings, autonomous vehicles and robotics is transferable and essential to the commercial-scale success of offshore wind and other offshore renewable energy,” states Maggie McGinlay, deputy CEO at private sector catalyst Opportunity North East (ONE).
“The experience of working subsea in oil and gas is critical to the success of carbon capture and storage (CCUS), for example, while the planned Global Underwater Hub in Aberdeen will ensure such expertise is harnessed for both UK developments and to support efforts internationally.
“The supply chain, meanwhile, is geared up to meet the challenge with excellent offshore engineering skills, capability and technology, together with a world-leading track record in the planning and execution of major offshore infrastructure projects.”
Boom and bust: diversifying north-east Scotland’s economy
An economy dominated by oil and gas inevitably left Aberdeen and the wider north-east especially vulnerable to the oil price crash that began in late 2014, and brought into sharp relief the need for economic diversification and innovation, as well as investment in physical and digital infrastructure.
“The long-term economic challenge is energy transition and diversification,” agrees McGinlay. “The recent announcement, by ONE, of the ambition for an Energy Transition Zone (ETZ) will accelerate the delivery of net zero solutions and create an energy transition cluster built on offshore wind, hydrogen, and CCUS linked to Aberdeen Harbour South with the new deep-water facilities, providing the physical infrastructure and collaborative environment to fast-track investment.”
Having done as much as anybody to establish and promote Aberdeen’s global standing as an oil and gas centre of excellence over the past 40 years, Wood Group billionaire Sir Ian Wood – whose Wood Foundation is funding ONE to the tune of £62m over 10 years – has recently emerged as an unlikely champion of the city’s renewable energy aspirations, particularly as a focus for hydrogen innovation.
“Aberdeen has already demonstrated first-mover advantage with involvement in hydrogen buses and fleet vehicles, and the P&J Live/TECA conference and exhibition centre has the largest hydrogen fuel cell installation in the UK,” says McGinlay. “The city has invested £35m in hydrogen production, refuelling infrastructure and hydrogen-powered vehicles, and the City Council, alongside ONE and Scottish Enterprise, is looking at the potential for a production, storage and distribution hub.
“The ETZ will provide a focal point for academic and industry research, test and demonstration, building on the established energy-related research excellence of the regions two universities.
“We are confident that we can create a powerful energy transition cluster, connecting people, companies and universities to create an integrated approach to R&D, innovation and manufacturing that puts the north-east at the forefront of the energy transition.”
Refocusing on renewables: are Aberdeen’s clean energy aspirations strong enough?
Not everyone shares her enthusiasm, however. Speaking at a future energy event in April 2019, Peter Strachan, an energy professor at Robert Gordon University, and Dick Winchester of the Scottish Government’s energy advisory board, claimed that the £250m city region deal made a “mistake” in spending £180m on the Oil and Gas Technology Centre (OGTC), describing it as a “barrier” to renewables.
“One of the most disappointing things that I have seen in recent years in Aberdeen is that we have lost this focus on Aberdeen being the energy capital of Europe,” Strachan commented.
“I think in terms of the City Region Deal, that we’ve made a big mistake in terms of that £180m devoted. It has turned out to be pretty much devoted to oil and gas research and development.
“We do seem to be back talking about Aberdeen as being the oil capital of Europe and I think we should be selling this vision once again of Aberdeen as being the energy capital.”
McGinlay points to well-established offshore renewable energy projects that have already been deployed in the north-east of Scotland, including Hywind Floating Wind, the European Offshore Wind Deployment Centre, Kincardine Floating Wind and the planned Acorn CCUS project.
“Investment in floating wind is a big opportunity, and one where the oil and gas sector’s experience of deeper water is needed in order to provide solutions and accelerate cost reduction,” she says.
“The oil and gas industry was one of the first industrial sectors to formally support the 2050 net-zero emissions timeline and has a clear plan in OGUK’s Roadmap 2035 which sets out how the industry will contribute to achieving this goal,” she adds.
McGinlay also cites the recently launched Net Zero Solutions Centre at the OGTC, which will develop technologies in partnership with the likes of BP, Shell, Total and Equinor aimed at decarbonising offshore operations and developing the UKCS as the world’s first net zero oil and gas basin.
“The industry supply chain has a significant, active role in delivering the rapid growth of low carbon solutions needed and the OGTC’s Net Zero Solutions Centre is a key enabler for this,” she says.
Capital gains: planning, investment and the future energy mix
Sir Ian Wood recently cited delays in the local authority planning process and a lack of political will as potential hurdles to Aberdeen becoming the ‘energy capital of the world’.
As a potential fix, McGinlay believes an Oil & Gas Authority-style regulator governing the offshore industry, spanning renewables and CCUS, and with a remit to promote an integrated energy approach, could work well.
“To achieve net zero by 2050 needs political will and action underpinned by legislation, as well as transformational regulation in national and local government planning; as both the UK and the Scottish Government have said, this is a climate emergency,” she states.
“Oil and Gas UK predicts that UK energy sector capital investment will have to double to circa £50bn per annum to decarbonise the UK economy, and therefore commitment in the offshore wind sector deal to increase UK content up to 60% by 2030, for example, is welcome.”
She concludes by reiterating that oil and gas still has a vital role to play in Aberdeen’s clean energy renaissance and to the ultimate goal of bringing all greenhouse gas emissions to net zero by 2050.
“By mid-century, two thirds of the UK’s energy requirement will come from renewables, with the remainder coming from oil and gas,” McGinlay says. “Therefore, production from the UKCS offshore industry remains critical if the UK’s energy needs are to be met in the medium to long-term.”
