UK Prime Minister Rishi Sunak has confirmed that hundreds of new oil and gas licenses will be granted in the UK, the UK government revealed in a release posted on its website this week.
The government, which noted in the release that it continues to back the North Sea oil and gas industry “as part of drive to make Britain more energy independent”, highlighted that it and the North Sea Transition Authority (NSTA) were announcing a joint commitment to undertake future licensing rounds. These will continue to be subject to a climate compatibility test, the government outlined.
The NSTA is currently running the 33rd offshore oil and gas licensing round and expects the first of the new licenses to be awarded in the autumn, the government release pointed out, adding that future licenses “will be critical to providing energy security options, unlocking carbon capture usage, and storage and hydrogen opportunities”.
In the release, the government said it is taking steps to slow the rapid decline in domestic production of oil and gas, which it stated “will secure our domestic energy supply and reduce reliance on hostile states”. The government noted in the release that new oil and gas licenses reduce the fall in UK supply “in order to ensure vital energy security, rather than increase it above current levels, so that the UK remains on track to meet net zero by 2050”.
“Now more than ever, it’s vital that we bolster our energy security and capitalize on that independence to deliver more affordable, clean energy to British homes and businesses,” Sunak said in a government statement.
“Even when we’ve reached net zero in 2050, a quarter of our energy needs will come from oil and gas. But there are those who would rather that it come from hostile states than from the supplies we have here at home,” he added.
“We’re choosing to power up Britain from Britain and invest in crucial industries such as carbon capture and storage, rather than depend on more carbon intensive gas imports from overseas – which will support thousands of skilled jobs, unlock further opportunities for green technologies and grow the economy,” Sunak continued.
Energy Security Secretary Grant Shapps said, “in the wake of Putin’s barbaric invasion of Ukraine, our energy security is more important than ever”.
“The North Sea is at the heart of our plan to power up Britain from Britain so that tyrants like Putin can never again use energy as a weapon to blackmail us,” he added.
“[This] commitment to power ahead with new oil and gas licenses will drive forward our energy independence and our economy for generations. Protecting critical jobs in every region of the UK, safeguarding energy bills for British families and providing a homegrown fuel for our economy that, for domestic gas production, has around one-quarter the carbon footprint of imported liquified natural gas,” Shapps went on to state.
When Rigzone asked industry body Offshore Energies UK (OEUK) for comment on the UK government’s latest oil and gas announcement, the organization’s CEO, Dave Whitehouse, said, “domestic production is the best pathway to net zero and the UK government’s commitment to licences is welcome boost for energy security and jobs”.
“Oil and gas fields decline naturally over time. The UK needs the churn of new licences to manage production decline inline with the maturing basin,” he stated.
“There are currently 283 active oil and gas fields in the North Sea, by 2030 around 180 of those will have ceased production due to natural decline. If we do not manage to replace maturing oil and gas fields with new ones, the rate of production will decline much faster than we can replace them with low carbon alternatives,” Whitehouse added.
“Developing our new carbon capture industry and its high-value jobs needs significant investment from our energy producing companies. This means that the bedrock to success and delivering growth in the economy can only be collaboration between private and public capital. The UK’s skilled offshore workforce, its engineering expertise and its geology have given our nation a unique opportunity to lead the way in building a net zero world,” the OEUK CEO continued.
Clean Energy
In its release, the UK government stated that the UK’s oil and gas industry is vital to driving forward and investing in clean technologies “that we need to realize our net zero target, like carbon capture usage and storage, by drawing from the sector’s existing supply chains, expertise and key skills whilst protecting jobs”.
The government also confirmed in the release that projects Acorn in North East Scotland and Viking in the Humber have been chosen as the third and fourth carbon capture usage and storage clusters in the UK. It highlighted that it has already committed to deploy CCUS in two industrial clusters by the mid-2020s – the HyNet cluster in North West England and North Wales, and the East Coast Cluster in the Teesside and Humber.
“Together, these four clusters will build a new thriving carbon capture usage and storage industry, which could support up to 50,000 jobs in the UK by 2030,” the government said in the release.
“The UK has one of the largest potential carbon dioxide storage capacities in Europe, making the North Sea one of the most attractive business environments for CCUS technology,” it added.
“The government has committed to provide up to GBP 20 billion [$25.7 billion] in funding for early deployment of CCUS, unlocking private investment and job creation,” it continued.
On the same day the government’s release was published, the NSTA posted a statement on its website, in which it noted that North Sea gas is significantly cleaner and supports the drive to net zero greenhouse gas emissions far more than imports, according to analysis published by the organization.
“The research shows that domestically produced gas is on average almost four times cleaner than importing gas in LNG form,” the NSTA said in the statement.
“This is because of both the way the gas is transferred and, in some cases, the methods of extraction. Norway has the lowest carbon intensity of all LNG imports at 33 kgCO2/boe, and Peru the highest at 90, with the average coming to 79, while UK gas has a carbon intensity of only 21 kgCO2/boe,” the NSTA added.
“The primary causes for the stark difference in emissions are the process of liquefaction, turning the gas into liquid for transport, then transportation via shipping, and finally regasification, turning the liquid back into gas so it can be used,” the NSTA continued.
The report shows that around 63 percent of UK gas supply is imported into the country – 187 million barrels of oil equivalent via pipeline and 156 million barrels of oil equivalent from LNG, the NSTA highlighted in its statement.
The organization noted in the statement that the UK produced 38 percent of its gas supply last year, “a total of 206 million barrels of oil equivalent”.
“Yet that 38 percent was responsible for only 24 percent of total emissions associated with gas supply, whereas LNG from the United States was responsible for 35 percent of the emissions, despite being only 14 percent of the supply,” the NSTA added.
Helping to deliver UK energy security and the drive to reach net zero go hand in hand, the NSTA said in the statement.
“The analysis shows that domestically produced gas creates significantly fewer emissions than average imports, and that continuing to produce gas in the UK as cleanly as possible will assist in the drive to cut emissions,” the NSTA added.
In its statement, the NSTA outlined that it is currently assessing the 115 bids received for licenses in the 33rd oil and gas licensing round.
“These new licenses will help to ensure energy security and support the drive to cut emissions by reducing reliance on dirtier more carbon intensive gas imports,” the NSTA said in the statement.
“However, it is vital that emissions are tackled at home as well, so the NSTA has already offered 21 carbon storage licenses from the UK’s first-ever Carbon Storage Licensing Round, sites which could store up to 10 percent of total annual UK emissions,” it added.
The NSTA also noted in the statement that it has worked with industry to help it cut emissions from flaring and venting by 50 percent in the past five years and that it has published guidance that makes it clear that routine venting and flaring will be banned for all by 2030.
In addition, the NSTA stated that it is working with government and industry to support platform electrification, “setting out to industry our expectation that investments need to happen now”.
To contact the author, email andreas.exarheas@rigzone.com
