UK opening new round for North Sea oil and gas licences amid blackout warnings

Plan launched to exploit potential resources and boost domestic energy production

A section of a BP oil platform in the North Sea, about 100 miles east of Aberdeen in Scotland. Reuters
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Britain is opening a new licensing round for oil and gas projects in the North Sea to strengthen energy security.

The government’s North Sea Transition Authority (NSTA) will accept applications to explore areas that could lead to more than 100 licences.

Such rounds happen regularly in the UK but officials are trying to quicken development amid a cost-of-living crisis driven by soaring natural gas prices.

It comes as the UK climate minister warned about the risk of blackouts this winter if Britain was not able to import enough energy.

Business and Energy Secretary Jacob Rees-Mogg said: “Putin’s illegal invasion of Ukraine means it is now more important than ever that we make the most of sovereign energy resources, strengthening our energy security now and into the future.

“Ensuring our energy independence means exploiting the full potential of our North Sea assets to boost domestic production.

"That is why we welcome the launch of the NSTA's new licensing round, which will help support highly skilled jobs across the UK's energy industry, boosting both our energy security and our economy."

Applicants are being encouraged to seek licences covering areas to the west of Shetland, in the northern, central and southern North Sea and the eastern Irish Sea.

The NSTA is publishing data packs with summaries of key prospects and discoveries, hoping this will "stimulate exploration and encourage new opportunities".

Almost 900 blocks and part blocks are being made available. But NSTA has identified four "priority cluster areas" in the southern North Sea in a bid to encourage production of new oil and gas supplies as quickly as possible.

The areas — off Norfolk, Lincolnshire and Yorkshire — are known to contain hydrocarbons and are close to existing infrastructure, giving them the potential to be developed quickly.

The NSTA has said it will seek to license these areas before others.

But meaningful production will probably take a decade to come online, according to recent analysis from Wood Mackenzie.

“New oil and gas licences won’t lower energy bills for struggling families this winter or any winter soon nor provide energy security in the medium term,” Philip Evans, a campaigner for Greenpeace UK, said in a statement.

NSTA's chief executive Andy Samuel insisted that security of supply should "not be in conflict with net zero" before a new round of licensing in the North Sea.

"The NSTA is working closely with industry and government to meet UK needs with North Sea supplies produced as cleanly as possible,” he said.

"The UK is forecast to continue importing natural gas as we transition to a fully renewables system and our North Sea gas has less than half the footprint of imported LNG [liquefied natural gas].

"This licensing round includes gas discoveries in the southern North Sea which can be rapidly tied back to existing infrastructure."

Mike Tholen, acting chief executive for industry body Offshore Energies UK, said: "The UK gets 75 per cent of its total energy from gas and oil so producing our own reduces our vulnerability to global shortages of the kind caused by the Ukraine conflict.

"There is no conflict between issuing new licences and reaching carbon neutrality.

"Our industry is committed to net zero and also to helping build the low-carbon energy systems of the future. But this is a journey that will take decades during which we will still need gas and oil.

"Many existing UK oil and gasfields are in decline so the risk is that production will drop much faster than demand, leaving us more dependent on imports. That is why new licences are so important.

"New licences also help maintain continuity for the energy operators and for our vital supply chain companies which, between them, employ over 200,000 people.”

Speaking on Sky News on Friday, Britain’s Minister for Climate Graham Stuart said the new licensing round was not at odds with the government’s policy on net zero.

“Absolutely not," he said. "What you have to remember is we have led the world on reducing emissions. We are the first major country to legislate for net zero.

“If you look at gas and oil, we will be burning gas, albeit at a quarter of what we do today, in 2050 under our net zero programme.”

He said the energy crisis means the UK was facing higher risks of blackouts than in previous winters. But he did not expect planned rationing or blackouts to occur.

“That’s not our expectation at all," he said. "But you have seen all sorts of things happening in recent weeks and we plan for all eventualities.

“The public should be confident we have a very strong and diverse supply, that we have taken all the steps to look after our needs this winter and we also of course taking, and the prime minister has been looking at this, to make sure we aren’t in as vulnerable a position again in the future.”

Updated: October 07, 2022, 7:20 AM