Taking what it calls “further steps to support the UK’s transition to net zero”, the government has confirmed new licensing opportunities for North Sea oil and gas.
As part of the King’s Speech, the Offshore Petroleum Licensing Bill was announced, requiring the North Sea Transition Authority (NSTA) to invite applications for new production licenses on an annual basis – so long as two key tests are met. These are that the UK is projected to remain a net importer of both oil and gas and that the carbon emissions associated with the production of UK gas are lower than the average equivalent emissions from imported liquefied natural gas (LNG).
It means that announcements such as the one made days prior by the North Sea Transition Authority on 27 new licenses being offered through the 33rd Oil and Gas Licensing Round are likely a sign of things to come. Situated in areas in the Centra and Northern North Sea and West of Shetland, they are the first to be awarded from 115 applications due to their potential to go into production faster than the others.
Encouraging domestic production, according to the government, instead of importing higher carbon emitting liquefied natural gas from other countries will ensure lower carbon fuels for the UK. It claims that the carbon footprint of domestic gas production is around a quarter of the carbon footprint of producing then importing LNG. It also claimed that even with continued licensing, production from the UK Continental Shelf is set to decline by 7% annually, which is faster than the global decline required to align the Intergovernmental Panel on Climate Change’s pathway for 1.5°C.
In reaction, Opergy Group commented: “It is of course preferable to ensure UK energy security through indigenous production rather than being at the mercy of greater foreign imports, but we still need to urgently speed up the transition to a low carbon energy future. This means more renewables, onshore and offshore wind, solar, more nuclear, carbon capture and storage, green hydrogen and sustainable alternative fuels, and more energy efficiency.
“Something we would be keen to see is an independent third party being responsible for overseeing the net zero tests on new oil and gas licenses to ensure maximum transparency and a process which fully complements the aims of energy security and supporting a transition to net zero.”
The news came as Prime Minister, Rishi Sunak, visited the Bacton Gas Terminal in North Norfolk. Sunak described the new licensing approach as one that fell under the “right type of long-term decisions” that will see the UK change for the better and help to save families money.
Sunak also spoke on the potential hydrogen hub future awaiting Bacton, talking up its “enormous potential”. Sunak said: “It’s already the hidden hero of our energy sector, given how important it is to keeping the lights on in our country. I’ve been speaking to the team about exciting opportunities, particularly in hydrogen and I think that’s exciting because it means new jobs and new skills for local people.”
