September 28, 2023 The 50th anniversary of SPE Offshore Europe saw over 30,000 attendees from industry and the UK and Scottish governments gather to plot the path to a sustainable energy future for Europe. Over four days, we heard how the offshore energy industry will now need to navigate structural uncertainty, shore up its future talent base and engage in unprecedented cross-sector collaboration to accelerate the energy transition.

Continued role of the North Sea as an energy hub

The North Sea represents a key frontier for Europe’s energy transition ambitions with nine European countries recently pledging to build 300 GW of offshore wind by 2050, which would make a major contribution to its ambitious decarbonization targets. According to data from McKinsey Energy Solutions’ Global Operations Benchmark, North Sea oil and gas production also has a lower emission intensity that the rest of the world on average and has a key role to play in providing a domestic source of energy for Europe during the energy transition.

Structural uncertainty

Achieving the energy transition will involve the challenge of navigating uncharted and turbulent waters. The industry faces the energy trilemma of balancing sustainability with energy security and affordability amidst geopolitical instability and price volatility. Bram Smeets, Partner at McKinsey said: “The industry must also navigate the transition to renewable energy amidst rising supply chain costs, labor and skills shortages, continued increases in total energy demand, uncertainty over final investment decisions, geopolitical turmoil and shortages of materials critical to renewable technologies. For example, McKinsey projects that we could see imminent shortages of 20-50% for many rare-earth metals essential to offshore wind.”

Future of Talent

The energy transition is reshaping markets and creating a dramatic shift in required job skills from wind manufacturing to green hydrogen that is creating a green skills gap. The ‘Future of Talent’ hub discussed everything from employee engagement, empowerment, and culture as a driver of change to emerging trends and approaches adopted by companies to meet their talent needs. Hege Nordahl, Associate Partner at McKinsey said: “Talent for the energy transition is a story of two interacting needs: meeting the demand of fast-growing new energy businesses and maintaining core talent for traditional upstream. The overlap in skills between new and existing energy businesses is high, and creates opportunities for people. Upstream oil and gas will require talent for the coming decades, however it is getting harder to recruit and retain into many core roles. Striking the balance and solving for both will require collaboration and creativity across industry and academia.”

Cross-value chain collaboration

Many attendees agreed that the tectonic shifts in the energy market will require unprecedented collaboration across the offshore energy value chain. This will involve alignment and coordination between all stakeholders including governments, regulators, operators, suppliers, and investors. Adam Davey, Associate Partner at McKinsey said: “The speed and scale of the energy transition will mean all stakeholders need to be partners on the journey and it needs to work for all parties. This could involve streamlining and alignment of project approvals and regulatory consenting, harmonization of standards, ‘sector coupling’ such as offshore wind-to-hydrogen and consortia spanning separate industries from oil and gas to wind and power.“

Just as the world transitioned from coal to oil and gas as its primary energy source in the midst of the 1973 oil embargo, offshore energy is now spearheading Europe’s energy transition amidst another energy flux. The pace of the new transition will require international cross-sector alignment of everything from permitting processes to standards and collaboration across the value chain. Offshore Europe showed the North Sea will be at the forefront of this change.

Reference: https://www.mckinsey.com/industries/oil-and-gas/our-insights/oil-and-gas-blog/offshore-europe-an-energy-industry-in-flux