New Scots jobs bonanza forecast for Peterhead carbon capture plant as Govt announces new Aberdeen-based oil and gas regulator by Autumn 2014


Peterhead power station - at the heart of Shell's Goldeneye carbon capture project
Peterhead power station – at the heart of Shell’s Goldeneye carbon capture project

The British economy could receive a potential £200 billion boost over the next 20 years, through the recovery of an additional 3-4 billion barrels of North Sea oil and gas, according to the Wood Group report – which was adopted in full at yesterday’s historic UK Government cabinet meeting in Aberdeen.

This will involve improving the efficiency with which the industry operates, increasing production of oil and gas by one third, and boosting jobs in an industry that already employs 450,000. Whilst short-term prospects are good, with investment at record levels of £14 billion, the UK Continental Shelf faces unprecedented challenges.

Production has fallen by 40% in the last three years, and the efficiency with which oil and gas is produced has fallen to 60%, costing the economy £6 billion.

The UK is reliant for North Sea oil and gas for more than half of total oil and gas used, and will continue to need around 70% of gas in the energy mix out to 2030.

Maximising domestic oil and gas production would increase Britain’s domestic energy security and reduce the UK’s reliance on expensive imports.

UK civil servants at the Department of Energy (DECC) in London are  now undertaking detailed planning work around establishing the new arms-length body and aim to have the new body in operation, at least in shadow form, by Autumn 2014. 

As Scottish Energy News went to electronic publication today, it was not known if this date will in fact be before – or after – the 18 September 2014 Scottish Independence Referendum.

Meanwhile – as accurately forecast in the Scottish Energy News – Sir Ian’s key recommendations – adopted wholesale by the UK Government –  include:

  • A new shared strategy for “maximising economic recovery (of oil and gas) for the UK”, with commitment from the government (HM Treasury and a new Regulator) and the oil and gas industry.
  • Creation of a new arm’s length regulatory body to oversee and develop this programme of change and growth, and
  • Greater collaboration by industry in areas such as development of regional hubs, sharing of infrastructure and reducing the complexity and delays in current legal and commercial processes

UK Energy Secretary Edward Davey announced the changes in Aberdeen, where he also visited nearby Peterhead with Deputy Prime Minister Nick Clegg, to sign a multi-million pound deal with Shell to develop the next stage of their Carbon Capture and Storage (CCS) project on a gas-fired power station – a world first in low-carbon projects.

The Peterhead project – along with the White Rose CCS project in England – are the EU’s largest commercially sized projects with this phase supported by around £100m from the UK Government. They could provide more than 2,000 jobs during construction and once built, clean electricity for over a million homes.

 The Peterhead and White Rose proposals are the two projects being supported under the Government’s £1 billion CCS competition.

  • £1bn has been committed to the Programme, with around £100m of that funding being invested now to support the detailed planning and engineering of these two projects
  • In late 2015, the projects will take final investment decisions with Government taking decisions shortly after on investing the remainder of the £1bn funding to support construction of up to two projects
  • The Peterhead and White Rose projects expect to award sub-contracts to around 10 UK based companies including Technip which is establishing a CCS Centre of Excellence at its Milton Keynes office.
  • With the award of the two FEED contracts, the Reserve Projects announced in March 2013 will now be deselected
  • As outlined in the Government’s Response to the Cost Reduction Task Force published in October 2013, DECC is continuing discussions with CCS developers outside of the Competition on what measures they may need to take their projects forward. This includes discussions with the Captain Clean Energy Project and the Don Valley CCS Project under the FID Enabling route.

The UK has the best offshore CO2 storage resources in Europe, estimated at around 70 billion tonnes which would be sufficient to store 100 years’ worth of current emissions from the electricity sector.

Davey said:  “Britain will still need large amounts of oil and gas, even as we cut our carbon emissions over the coming decades. So with recent large falls in North Sea production, I commissioned this report from Sir Ian Wood to see how we can reduce the oil and gas we would otherwise import by boosting UK offshore production.

“I fully back Sir Ian Wood’s recommendations and we will start implementing them immediately. The UK Government already supports Scottish energy projects worth hundreds of millions of pounds each year, and our large tax and consumer base will ensure that the potential £200 billion benefit Sir Ian Wood has identified can be realised.


 “We have also invested in the world’s first gas CCS plant today planned at Peterhead. This project envisions a cleaner, greener future for the North Sea and will support thousands of green jobs.”

Nick Clegg, UK Deputy Prime Minister, added: “The innovation of the UK’s energy industry is something we should be really proud of and the fact that we are a world leader in carbon capture and storage is a great example of our country’s ingenuity.

“Today’s multi-million pound deal with Shell will help to safeguard thousands of jobs and power half a million homes with clean electricity.”


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Click the link to watch Shell’s carbon capture storage technology report on Scottish Energy NewsTV:


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