Road to net zero: Aberdeen looks to a future without oil | economics

[ad_1]

The oil companies know this. Car dealers who sell the highest range of Porsche cars get it, as well as owners of hotels and restaurants. Change is coming to Aberdeen: The UK’s center for fossil fuel production in the North Sea has been trying since the 1970s to avoid becoming a city of stranded assets.

The Granite City became Scotland’s boom town almost by accident. It was Dundee down the coast that was originally identified as a potential hub for offshore production when exploration work established significant oil and gas reserves under the continental shelf.

Aberdeen has never looked back. Kristi Blackman, MP for Aberdeen North and Westminster spokesman for the SNP’s economy, says there are more cars with license plates on city streets than anywhere else in the UK pub in central London. Aberdeen is the only city where taxi drivers can set the spot price for a barrel of crude oil. “Everyone knows the people who go abroad,” Blackman says.

The Total Culzean platform is located 45 miles east of Aberdeen. Photo: Andy Buchanan/AFP/Getty Images

However, the UK government’s decision to target net zero carbon emissions by 2050, the five-year deadline put forward by the Scottish government, forced a change of direction. As delegates descend on Glasgow for the COP26 Climate Summit, Aberdeen looks to a future free of fossil fuels.

Sir Ian Wood, who has become one of the richest men in the country through his Wood Group’s oil and gas activities, notes that crude oil production is barely a third of 4.5 million barrels per day (B/D) at its peak, and will drop to 400,000 b /j only by 2050.

He says Wood Group is already diversifying its oil and gas resources, which now account for only 25% of its activities. “The goal is to transform Aberdeen from the oil and gas region of Europe to the entire energy region of Europe,” he says.

Wood wants the city and the broader Grampian region to diversify into the life sciences of renewable energy, food and drink, the digital economy, and tourism. The proposed energy transition zone – which is adjacent to the city’s new southern port development – is expected to create 2,500 green sector jobs by 2030 in high-skill areas such as hydrogen manufacturing and fueling facilities.

Do the lights go out? Union Street in Aberdeen. Photo: Simon Price/Almy

Some say the currency depreciation in Aberdeen took too long. “They should have thought about this a long time ago,” says Andrew Carter, CEO of the Cities Center think tank. “I didn’t get the impression that they were fully committed or serious about it.”

But Carter says Aberdeen is in a better position to weather structural change in its local economy than other cities. “Our data shows a very dynamic economy. Startups are good. There is a reasonable stock of activities going on and more than 50% of people have a degree or higher. They are in a better position than some single-industry towns, like Sunderland where Nissan is leaving.”

Wind turbines off the coast of Aberdeen. Photo: Mordo MacLeod/The Guardian

Fraser Milne is the director of engineering and products for the Balmoral Group, which was founded in 1980 when the oil boom was at its height. He says the company is now shifting its marine products business towards the renewable energy sector. Currently, 7% of Balmoral’s £100m turnover comes from the offshore wind sector, but Millen says: “We expect growth to be 30% in the next three years – and possibly even higher.”

Oil and gas account for at least a third of the local economy once all complementary activities are taken into account.

There has been a time, says Russell Borthwick, chief executive of the Aberdeen and Grampian Chambers of Commerce, “every time the price of oil goes up, the cowboys come back again”. He says the goal now is not only to be a net zero city but to help other cities achieve net zero as well.

Since the first barrel of crude was brought ashore in 1975, oil has been a political issue, with a long-running dispute over whether the proceeds should go to Scotland or the United Kingdom. The debate now revolves around whether to leave 10 billion to 20 billion barrels of crude oil that can be pumped into the ground.

Extinction Rebellion protesters block the entrance to Shell’s headquarters in Aberdeen in January 2020. Photo: Extinction Rebellion/PA

The Scottish Green Party, allied to the SNP in Holyrood, wants to speed up the transition away from fossil fuels, with no more licenses to produce North Sea oil. The Greens say two-thirds of Scots have backed away from their plan to start winding down extraction, adding that the way forward is to provide an alternative future for communities that depend on fossil fuels and not be left “waiting until we extract every last bit of oil”.

Subscribe to the daily Business Today mail or follow Guardian Business on Twitter at BusinessDesk

The oil industry says the transition cannot be accelerated without hurting jobs and increasing reliance on imported fossil fuels.

Deirdre Michie, chief executive of Oil & Gas UK trade organisation, says steps are being taken to decarbonize oil and gas supplies from the North Sea through carbon capture and storage, and hydrogen as an energy source.

“I don’t want to see us stop overnight because we’ve been there with the mining industry. We want it to be a glide path,” she says.

Unite has 9,000 members working overseas, and its regional organizer John Boland fears that few will find jobs servicing the giant wind turbines. “We find ourselves in an uneasy agreement with the industry,” he says. “There has to be a transition but it has to be smooth and there has to be jobs at the end of it. There is a lot of talk about that, but I tend to ask: What are green jobs?”

Employees work at the Total Culzean platform on the North Sea, about 45 miles east of Aberdeen. Photo: Andy Buchanan/AFP/Getty Images

Where there is agreement that investment in renewables needs to be accelerated and planning for the transition.

Phil Kirk, chief executive of Harbor Energy Europe, the UK’s largest listed independent oil and gas company, says the government should encourage the next generation of North Sea development – everything from hydrocarbon production and carbon capture and storage to floating wind turbines and green turbines. and hydrogen blue.

“I expect it is a huge political pity that we lost windfall manufacturing gains. We have invested heavily in wind but we don’t make a lot of equipment here,” says Kirk.

“The transition will not happen overnight unless we want to turn off the lights and shut down our industry and hospitals. We will have a carefully planned plan and understand the consequences of any hasty decisions – for the UK and not just for Aberdeen.”

[ad_2]