Energy security

New oil & gas licences will help avoid blackouts

BP Clair Ridge
OIl and gas will be needed for decades to come

A new oil and gas licensing round for the North Sea announced today will be crucially important in meeting Britain’s energy demands and avoiding blackouts in the future, says the industry body.

Prime minister Liz Truss said that she hopes more than 100 licences will be awarded some of the 898 blocks will be fast-tracked so that oil and gas can be developed rapidly and provide greater security of supply.

The announcement coincides with the National Grid’s Winter Outlook, which warns that the UK’s growing reliance on imported gas has left it exposed to global shortages that could cause rolling blackouts over the coming months.

National Grid said a shortage of gas was “unlikely” but warned that even if gas supplies were adequate, household electricity supplies could still be at risk if temperatures plummeted, if there was insufficient wind and if there were no power imports from mainland Europe. This could lead to three-hour power cuts in some areas.

Ms Truss, who is in Prague discussing the energy crisis with European governments, has insisted that Britain had a “good supply” and was in a “much better position than many other countries” but refused to guarantee that blackouts could be avoided.

Offshore Energies UK (OEUK) says gas produced in Scottish and other UK waters is under the UK’s control and so is a bulwark against such threats.

Four key areas in the Southern North Sea, off Norfolk, Lincolnshire and Yorkshire, have been identified by the North Sea Transition Authority as priorities for licensing. This is because the southern North Sea is richer in gas and has known reserves near existing infrastructure. It means they can be brought into production quickly to boost the UK’s energy security.

The UK’s offshore industry produced 38% of the nation’s gas and the equivalent of 75% of its oil in 2021. This year the industry has boosted gas production to support the nation through shortages caused by the Ukraine conflict, but OEUK says new licences are vital to maintain this supply.

This is because many of the gas and oil fields around the UK are ageing – so production is declining. Exploration licenses give the industry a way to replace at least part of that lost production with new fields.

Licensing rounds are usually annual events but the last (32nd) licensing round was launched in July 2019 and released in Sept 2020 with 113 licences awarded to 65 companies. The process has been on hold since then, pending consultations on the environmental impacts of further oil and gas exploration.

That delay, plus other factors such as the pandemic, mean that just five exploration wells were drilled in 2021 – the lowest number ever – according to OEUK’s Economic Report 2022, published last month.

OEUK says counters the anti-oil lobby by stating that the greenhouse gas emissions generated in producing oil and gas from newer fields will be far smaller than in older ones. This is because new installations will be designed to minimise leakage of gas, and avoid routine flaring or venting. The UK’s North Sea gas already has less than half the carbon footprint of imported Liquefied Natural Gas.

Oil and gas protest in Edinburgh (pic: Terry Murden)

Any new oil and gas production resulting from new licences would be aligned with the UK’s climate objective of reaching Net Zero by 2050. The Climate Change Committee’s ‘Balanced Pathway’ estimates that the UK will consume gas and oil equivalent to eight billion barrels of oil by 2030.

OEUK’s research suggests the North Sea could produce only about half this amount even if all planned developments went ahead. The rest would be imported.

It means that, if new resources were discovered, especially of gas, they could reduce UK imports but would make little difference to the UK’s energy consumption or its production of greenhouse gases.

Such emissions are driven largely by the UK’s infrastructure such as the 24 million homes heated by gas boilers, the 32 million cars running on petrol and diesel, or the 30-plus power gas-fired power stations that produce two-fifths of our electricity.

Mike Tholen, OEUK’s acting chief executive, said: “The UK gets 75% 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 gas fields 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.

“The success of this and the next licensing rounds will be vital for our nation’s long-term energy security and to ensure we deliver on the UK’s commitment to reach net zero by 2050.”

Scotland’s energy potential

The SNP has welcomed a report suggesting renewable energy and green technology could create up to 385,000 jobs and boost Scotland’s economy by up to £34 billion a year by 2050.

Ian Blackford MP said the report by Dr David Skilling, director of Landfall Strategy Group, shows “independence is the key to unleashing Scotland’s potential as the European renewable energy powerhouse of the 21st century” and could see Scotland benefit from “the green prosperity equivalent of a new oil boom for Scotland”.

The SNP Westminster Leader said the report showed Westminster control is holding Scotland back, and that Scotland “must grasp the opportunity” of independence to permanently lower energy bills, create jobs, increase prosperity and enhance energy security by maximising renewable energy production and exports.

‘The Economic Opportunity for Scotland from Renewable and Green Technology‘ – Dr David Skilling: Download

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