Boost for North Sea as new oil and gas licenses awarded

30/10/2023

NEW exploration licences in the North Sea are being hailed as “a boost for UK energy security”, after the North Sea Transition Authority (NSTA) confirmed it has offered 27 new licences.

Shell has been awarded the most new licenses, while bp, Equinor, Aker BP, Ithaca and TotalEnergies are among others to benefit.

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The areas chosen for exploration have the best potential for rapid production, with NSTA chief executive Stuart Payne saying he expects companies awarded new licences to “get down to work immediately”.

He added: “Ensuring the UK has broad options for energy security is at the heart of our work.

“These licences were awarded in the expectation that the licensees will get down to work immediately.

“The NSTA will work with the licensees to make sure that where production can be achieved it happens as quickly as possible.”

The decision, which will support 200,000 jobs in the sector, has been welcomed by industry as a “boost for national security”.

The round saw the highest number of applications (115) since 2016/17, with 76 companies submitting bids.

“These are the very people we need to deliver reliable supplies of homegrown energy produced in the UK, for the UK,” according to Offshore Energies UK (OEUK) chief executive David Whitehouse.

Continuing, he said: “We all recognise that our energy system must change, and our industry includes companies that are expanding into renewables while using their expertise to pioneer ever cleaner energy production. 

“The reality of the energy transition is that we need both oil and gas and renewables in an integrated system to protect the UK’s energy needs over the coming years.”

“Last year filling the fuel import gap cost the UK £117billion. That’s a lot of money spent supporting the economic growth of other producing countries. 

“With careful management and collaboration, the UK can become the gold standard of energy transitions. We can drive economic growth, reach our climate goals and avoid a future where we increasingly import our energy and export our jobs.

“Energy security is national security. We need pragmatic policy and political consensus if we are to realise £200billon potential company investment in UK wind, hydrogen and carbon capture, and oil and gas production over this decade, with all the jobs and work for our supply chains this will bring.”

The new licences cover 55 blocks, though more will be offered subject to environmental checks.

Ryan Crighton, Policy Director at Aberdeen & Grampian Chamber of Commerce, also welcomed the announcement.

“This is a welcome boost for the UK oil and gas industry, which currently supports 215,000 jobs, including 90,000 in Scotland and 45,000 in the Aberdeen region alone,” he said.

“UK oil production fell to an all-time low of 38million tonnes in 2022, and it will plummet to 22million tonnes in 2030 unless new wells are drilled. 

“To put that in context, the UK consumes about 61million tonnes of oil annually, so if you ‘Just Stop Oil’ you ‘Just Import More’.

“Where the alternative is importing oil or gas at a greater carbon cost, then we must favour domestic production – it’s better for jobs, it’s better for our economy, and it commits us to sourcing the fossil fuels we need in a manner which minimises emissions and secures tens of thousands of Scottish jobs.”

Today’s announcement comes just months after Rishi Sunak vowed to “max out” oil and gas reserves in the UK, a statement that was condemned by some MPs within his party.

It’s also just a month since Rosebank was approved by regulators, supporting nearly 2,000 jobs itself.

While a potential legal challenge from environmentalists awaits, the UK’s Energy Security Secretary Claire Coutinho says approving the new licenses is “common sense”.

“We’ll continue to need oil and gas over the coming decades as we deliver net-zero. It’s common sense to reduce our reliance on foreign imports and use our own supply.

“It’s better for our economy, the environment and our energy security.

“These new licences are a welcome boost for the UK industry, which already supports around 200,000 jobs and contributes £16billion to the economy each year – while advancing our transition to low-carbon technologies, on which our future prosperity depends.”

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