9. Oil and Gas
Objectives and policies for this sector should be read subject to those set out in Annex B and Chapter 4 of this Plan. It is recognised that not all of the objectives can necessarily be achieved directly through the marine planning system, but they are considered important context for planning and decision making.
Part 1: Objectives and marine planning policies
Maximise the recovery of reserves through a focus on industry-led innovation, enhancing the skills base and supply chain growth.
An industry which delivers high-level risk management across all its operations and that it is especially vigilant in more testing current and future environments.
Continued technical development of enhanced oil recovery and exploration, and the associated seismic activity carried out according to the principles of the Best Available Technique ( BAT) and Best Environmental Practice approach.
Where possible, to work with emerging sectors to transfer the experience, skills and knowledge built up in the oil and gas industry to allow other sectors to benefit and reduce their environmental impact.
Marine planning policies
OIL & GAS 1: The Scottish Government will work with DECC, the new Oil and Gas Authority and the industry to maximise and prolong oil and gas exploration and production whilst ensuring that the level of environmental risks associated with these activities are regulated. Activity should be carried out using the principles of Best Available Technology ( BAT) and Best Environmental Practice. Consideration will be given to key environmental risks including the impacts of noise, oil and chemical contamination and habitat change.
OIL & GAS 2: Where re-use of oil and gas infrastructure is not practicable, either as part of oil and gas activity or by other sectors such as carbon capture and storage, decommissioning must take place in line with standard practice, and as allowed by international obligations. Re-use or removal of decommissioned assets from the seabed will be fully supported where practicable and adhering to relevant regulatory process.
OIL & GAS 3: Supporting marine and coastal infrastructure for oil and gas developments, including for storage, should utilise the minimum space needed for activity and should take into account environmental and socio-economic constraints.
OIL & GAS 4: All oil and gas platforms will be subject to 9 nautical mile consultation zones in line with Civil Aviation Authority guidance  .
OIL & GAS 5: Consenting and licensing authorities should have regard to the potential risks, both now and under future climates, to oil and gas operations in Scottish waters, and be satisfied that installations are appropriately sited and designed to take account of current and future conditions.
OIL & GAS 6: Consenting and licensing authorities should be satisfied that adequate risk reduction measures are in place, and that operators should have sufficient emergency response and contingency strategies in place that are compatible with the National Contingency Plan  and the Offshore Safety Directive.
Regional policy: Regional marine plans should consider:
- The positive and negative impacts of any oil and gas activity in their area and the implications for other development and use.
- The implications of the transition to a low carbon economy for their area including the longer-term reduction of oil and gas activity, but also incorporating opportunities to re-use existing infrastructure and promote skills transfer to support emerging industries such as renewables and CCS. <applies to inshore waters>
Scotland's Marine Atlas: Information for the National Marine Plan.
Chapter 5: Productive/Oil, Gas, Pipelines and Gas Storage. Pages 168-169
National Marine Plan interactive (NMPi). Productive/Oil, Gas and Carbon Capture and Storage section.
Part 2: Background and context
9.1 Scotland will need a mixed energy portfolio, including hydrocarbons, to provide secure and affordable heat and electricity for decades to come. As use of renewable energy sources is increased, there is also a duty to minimise carbon emissions in line with climate change targets. The approach is one of careful stewardship of finite resources.
9.2 The Scottish Government supports a low carbon economy which involves the move away from fossil fuel based energy consumption towards investment in renewable energy and increased energy efficiency. However, oil and gas are set to remain a vital source of energy while we move towards a future based upon renewable energy and it is sensible to secure reserves domestically as far as possible for as long as they may be needed.
9.3 The Scottish Government's twin objectives to develop a low carbon economy and maximise resource recovery in the North Sea are complementary over the long term. A successful oil and gas sector is a prerequisite for the diversification of the energy supply and the growth of the market for low carbon goods and services.
9.4 In terms of skills, Scotland has a unique opportunity to use the expertise gained from decades of exploitation of oil in the waters around Scotland in the development of offshore renewable technology and Carbon Capture and Storage ( CCS).
9.5 Health and safety continues to be the highest priority for the offshore oil and gas industry. Following the Deepwater Horizon incident in the Gulf of Mexico, the European Commission published the Offshore Safety Directive  in June 2013. The objective of this Directive is to reduce the occurrence of major accidents related to offshore oil and gas operations as far as possible and to limit their consequences. The Department of Energy and Climate Change ( DECC) and Health and Safety Executive ( HSE) will jointly lead the transposition of the Directive as it contains requirements relating to licensing, environmental protection, emergency response and liability, in addition to safety.
9.6 The great majority of the UK's oil production (98%) and around half of its gas production comes from fields based in the continental shelf around Scotland (Map 8 depicts current oil and gas activity in Scotland). In recent years there has been significant new activity in the area west of the Shetland Islands both in terms of exploration and new production.
9.7 PILOT  (a joint programme involving the UK and Scottish Government and the wider UK oil and gas industry) are working to ensure maximum economic recovery of the remaining oil and gas resources in the UK. More recently Sir Ian Wood's Maximising Recovery Report  has recommended the creation of a new arm's-length regulator based in Aberdeen called the Oil and Gas Authority, with responsibility for delivering the strategy of maximising recovery in the United Kingdom continental shelf which will result in an enhanced form of stewardship of the UKCS.
9.8 Scotland launched its own oil and gas industry strategy  in May 2012. The strategy has an over-arching objective to maximise recovery of reserves through a focus on industry‑led innovation, enhancing the skills base and supply chain growth. The strategy - developed and to be delivered by industry, the Scottish Government and public sector partners - reinforces the long-term future which the oil and gas industry still has within Scotland and the priorities which need to be taken forward by industry, government and others if these opportunities are to be realised.
Part 3: Key issues for marine planning
SUPPORTING ECONOMICALLY PRODUCTIVE ACTIVITIES
9.9 Although a reserved activity not in the direct control of the Scottish Government, the industry, including its supporting services and supply chain, plays a critical role in the Scottish economy and supporting an estimated 225,000  jobs in Scotland. The skill and knowledge base developed since the inception of the North Sea industry are a key strength for Scotland.
9.10 Key priorities therefore include maintaining and developing the competitiveness and long-term future of the oil and gas sector by developing the position of Aberdeen and Aberdeenshire as a world-wide hub, securing increased recovery rates in Scottish waters and supports collaboration between the oil and gas sector and low carbon energy.
9.11 In supporting Scotland's economic recovery, the Scottish Government pledges  to work with the oil and gas sector to maintain its competitiveness, facilitate the transfer of skills and knowledge to other sectors and utilise Scottish-based skills in world markets.
9.12 There are three main elements of ensuring maximum economic return:
Maximise extraction: Although all regions of the North Sea have a productive future  , the region to the west of Shetland is the latest to be developed with production only beginning in 1997. Oil and Gas UK estimate that there have been seven fields of 100 million BOE already discovered within this area of the UK Continental Shelf. It is also believed to have the most undeveloped resource  .
Re-use of infrastructure and expertise: Sustaining existing levels of oil-related employment will be a significant challenge post 2020. The oil and gas industry is a renowned world-leading centre of excellence in engineering, manufacturing and applied technology. Therefore it is important to promote the transfer of skills to developing sectors such as offshore renewables and carbon capture and storage, as well as the export of Scottish-based skills to the world market. The Scottish Government will work with the sector to facilitate this.
Decommissioning: Reduction in activity will require considerable decommissioning effort for both terrestrial and marine infrastructure, which will generate employment and economic activity. Any plans for the decommissioning of infrastructure should consider the potential for infrastructure life to be extended to support potential combustible gas imports and to accommodate the growth of carbon capture and storage networks for use in storage and enhanced oil recovery.
INTERACTIONS WITH OTHER USERS
9.13 Oil and gas extraction can interact with other marine users with positive interactions promoted through marine planning. There are obvious benefits to existing interactions such as those with shipping, and ports and harbours. Both the industry and Scottish Government encourage closer working and diversification between the oil and gas sector and the emerging renewables and CCS sectors. There is also potential for other sea users to be negatively impacted by infrastructure requirements of the sector (which may continue to change as technologies develop).
9.14 Key interactions of relevance to marine planning include:
- Renewables: It is not known how spatially compatible renewable energy arrays will be with oil and gas infrastructures as renewables technology is still developing. To date they have generally not been developed in the same area.
The oil and gas sector can play a significant role in helping to reduce costs of developing offshore wind projects through the application of skills and knowhow of marine operations. Research by Scottish Enterprise  suggests that the oil and gas supply chain has the potential to reduce the cost of offshore wind operations by around 20%. There are also potentially beneficial synergies between decommissioning activity and the emerging offshore wind sector.
- Carbon capture and storage ( CCS): A positive interaction is expected to exist between the emerging CCS and oil and gas sector with the potential for re-use of redundant infrastructure, shared use of existing pipelines and utility corridors and transfer of relevant skills and expertise.
- Fishing: For safety reasons, oil and gas infrastructure that could significantly interfere with fishing operations is located within an exclusion buffer zone, meaning fishing activity can be displaced. Pipelines can cause obstruction to fishing practices. However, the two industries can work side by side, with some elements of the fishing community benefiting financially when employed by the oil and gas sector during installation as 'marker' boats  .
LIVING WITHIN ENVIRONMENTAL LIMITS
9.15 Oil and gas production results in a range of environmental pressures the impact of which depends on the location, longevity, intensity and timing of activities. Impacts of pressures on the environment are detailed in Scotland's Marine Atlas: Information for the National Marine Plan. The main issues are summarised as follows:
- Noise: Generated from seismic exploration activity, drilling, production facilities or vessels, burial of pipelines with some noise sources, e.g. seismic surveys, having the potential to cause injury and disturbance to noise-sensitive species such as cetaceans.
- Chemical or oil contamination: Causing contamination of water, sediments and fauna.
- Habitat changes: Construction, decommissioning and protection of infrastructure can result in the local loss of species and habitats. However, infrastructure can also provide substrate for colonisation and shelter for fish.
9.16 A shift in oil and gas activity to the west of Shetland raises new challenges for the industry due to the hostile waters and the environmental sensitivity. However, any significant offshore oil and gas exploration and development is subject to a requirement for an environmental impact assessment. Activities that could impact on the environment are subject to rigorous assessment and all significant activities are controlled through the issue of permits, consents or approval.
9.17 Offshore oil and gas activity is well established and subject to strict environmental regulations and considerations. The Offshore Petroleum Production and Pipelines (Assessment of Environmental Effects) Regulations 1999 require an Environmental Impact Assessment for most new offshore oil and gas developments.
9.18 DECC regulates the decommissioning of offshore oil and gas installations and pipelines using legislation under the Petroleum Act 1998. They are responsible for:
- Issuing licences for oil and gas exploration onshore and on the UK continental shelf (area of water around the UK where mineral rights are claimed).
- Regulating field development and oil and gas pipeline activities.
- Regulating the environmental aspects of the offshore oil and gas industry, including decommissioning.
9.19 The cessation of production from offshore fields will lead to decommissioning of facilities, and decommissioning and other legacy issues are areas that need attention. This represents a large technical and economic challenge for the industry.
9.20 As is recognised elsewhere in this chapter, the Scottish Government supports a transition to a low carbon economy which involves the move away from fossil fuel based energy consumption towards investment in renewable energy and increased energy efficiency in recognition that this is necessary to meet emissions targets.
9.21 Expanding energy services while simultaneously addressing the environmental impacts associated with energy use represents a critical challenge. Scotland' s transition towards a low carbon economy will require hydrocarbon sources until storage mechanisms for renewable energy sources are in place along with the establishment of alternative energy supplies for transportation. Until then Scotland's domestic hydrocarbon sources will be required to minimise overseas imports reducing its exposure to world market prices.
9.22 The oil and gas industry also works with regulators and stakeholders to minimise the environmental footprint of operations. There are two environmental safeguards in place - OSPAR Decisions and Recommendations, and EU Regulations and Directives. Both are intended to provide protection for the environment and their goals and targets are enshrined in UK legislation. Secondly, all operating companies involved in the exploration and production on the UK Continental Shelf are required to have an independently verified Environmental Management System in place. The Environmental Management System will ensure that, where necessary for a particular location or operation, appropriate control measures will be applied.
9.23 Climate change may lead to potential changes in extreme weather events and extreme water levels. These changes have the potential to lead to oil and gas operations being carried out in more hazardous environments and associated impacts on physical structures, operating windows and health and safety both on, and travelling to, platforms. However it is recognised that the offshore sector is currently operated under an established, robust and world-leading health and safety regime.
Part 4: The future
9.24 There are up to 24 billion BOE of oil and gas reserves remaining in the North Sea  . The industry view is that the North Sea will continue to produce oil and gas until 2050 at least, although production will decline over time  .
9.25 Over the next two decades, the process of decommissioning ageing oil and gas equipment will emerge as a new business activity. The decommissioning effort will ultimately cover 470 installations, more than 10,000 km of pipeline and 5,000 wells and the estimated cost is around £40.6 billion by 2040 (2013 prices).
9.26 Regulators will work together to encourage collaboration between asset owners to enable the industry to realise the full potential of the market and to ensure assets are not decommissioned prematurely.
9.27 It is possible that some elements of existing infrastructure may support carbon storage and sequestration. However, consideration must be given to associated degradation issues and ongoing or residual liability for monitoring, maintenance and navigational issues.