Hundreds of new oil and gas licenses will be granted in the UK, PM confirms
- Prime Minister commits to future oil and gas licensing rounds, as new analysis shows domestic gas production has around one-quarter the carbon footprint of imported liquified natural gas
- North East Scotland and the Humber chosen as locations for two new carbon capture usage and storage clusters – building a thriving clean industry in the North Sea which could support up to 50,000 jobs
- Investment in the North Sea will continue to unlock new projects, protect jobs, reduce emissions and boost UK energy independence
Hundreds of new oil and gas licences will be granted in the UK, the Prime Minister has confirmed today (Monday 31 July), as the UK Government continues to back the North Sea oil and gas industry as part of drive to make Britain more energy independent.
The Government and the North Sea Transition Authority (NSTA) are today announcing a joint commitment to undertake future licensing rounds, which will continue to be subject to a climate compatibility test.
By adopting a more flexible application process, licences could also be offered near to currently licensed areas – unlocking vital reserves which can be brought online faster due to existing infrastructure and previous relevant assessments.
With the independent Climate Change Committee predicting around a quarter of the UK’s energy demand will still be met by oil and gas when the UK reaches net zero in 2050, the Government is taking steps to slow the rapid decline in domestic production of oil and gas, which will secure our domestic energy supply and reduce reliance on hostile states.
This will increase the UK’s energy security and reduce dependence on higher-emission imports, whilst protecting more than 200,000 jobs in a vital industry as we grow the UK economy.
As part of a visit to a critical energy infrastructure site in Aberdeenshire today, the Prime Minister will highlight the central role the region will play in strengthening the UK’s energy independence and meet the next generation of skilled apprentices key to driving this work forward.
The NSTA – responsible for regulating the oil, gas and carbon storage industries – is currently running the 33rd offshore oil and gas licensing round. They expect the first of the new licences to be awarded in the autumn, with the round expected to award over 100 licences in total.
Future licences will be critical to providing energy security options, unlocking carbon capture usage and storage and hydrogen opportunities – building truly integrated offshore energy hubs that make the best use of the established infrastructure.
This comes as new analysis released by the NSTA today shows that the carbon footprint of domestic gas production is around one-quarter of the carbon footprint of imported liquified natural gas.
As the UK is a rapidly declining producer of oil and gas, new oil and gas licences 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.
UK Prime Minister Rishi Sunak said: “We have all witnessed how Putin has manipulated and weaponised energy – disrupting supply and stalling growth in countries around the world.
“Now more than ever, it’s vital that we bolster our energy security and capitalise on that independence to deliver more affordable, clean energy to British homes and businesses.
“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.
“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.”
The UK’s oil and gas industry are also vital to driving forward and investing in clean technologies that we need to realise 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.
Today, the Government has confirmed 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.
The Government 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 – and another further two clusters by 2030 – now confirmed as Acorn and Viking.
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 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. The Government has committed to provide up to £20 billion in funding for early deployment of CCUS, unlocking private investment and job creation.
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.
“Today’s commitment to power ahead with new oil and gas licences 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.
“Our next steps to develop carbon capture and storage, in Scotland and the Humber, will also help to build a thriving new industry for our North Sea that could support as many as 50,000 jobs, as we deliver on our priority of growing the economy.”
The Prime Minister has also tasked the relevant Government departments and regulators to work collaboratively and report back by the end of the year on how we can make the best use of our offshore resources in a truly integrated way as we unlock CCUS and hydrogen opportunities in the North Sea.
A call for evidence has also been launched by Government today, seeking views on the evolving context for taxes for the oil and gas sector to design a long-term fiscal regime which delivers predictability and certainty, supports investment, protects jobs and the country’s energy security.
CAMPAIGNERS FURY OVER NEW LICENSES
‘Rishi Sunak is gleefully encouraging the arsonists to go and put more fuel on the fire‘
Climate campaigners are furious that the Prime Minister is ‘doing the bidding’ of the oil industry after he re-affirmed that the UK Government will issue over 100 new licences for oil and gas exploration this Autumn.
Rishi Sunak also said that the Acorn project was chosen as the third of four carbon capture and storage clusters in the UK. Climate campaigners regard carbon capture and storage (CCS) as an attempt to ‘greenwash’ the oil industry and pointed to the long history of failure of the technology.
Campaigners say that instead of giving more public money to oil firms it should be invested in climate solution that work today and can improve people’s lives such as public transport and home insulation.
Friends of the Earth Scotland head of campaign Mary Church said: “Burning oil and gas is driving extreme weather and killing people on every continent yet Rishi Sunak is gleefully encouraging the arsonists to go and put more fuel on the fire.”
“By ignoring the huge harm caused by fossil fuel company greed and doing bidding of the industry, the UK Government is blatantly in denial about climate breakdown.”
“By committing to future licensing rounds on the same day, it’s clear to see that carbon capture is little more than a greenwashing tactic by big oil to try and keep their climate-wrecking industry in business.”
“CCS has a long history of over-promising and under-delivering yet both the Scottish and UK Governments have fallen for the snake oil salesmen rather than face reality that the only solution to the climate crisis is a fast and fair phase out of oil and gas.
“Funding for the Acorn project is yet another massive public subsidy to oil companies like Shell who have been making billions in profits, while ordinary people are struggling to pay the bills.
“Instead of handing more money to polluters, it is time to redirect that investment to climate solutions that we know can deliver emissions cuts and improve peoples’ lives today – such as improving public transport and insulating people’s homes to help with energy bills.”
Commenting on the UK Government’s citation of analysis showing domestic gas production has a lower carbon footprint than imported gas, Ms Church continued: “It’s pure spin to try to sell more climate wrecking extraction as lower carbon when every nation needs to phase fossil fuels out with rich nations like the UK going first and fastest.
“What’s more, the Prime Minister is comparing apples and pears as most of what’s left in the North Sea is heavy oil, that we don’t even use domestically, not gas, so it has to be exported anyway.”
Unsurprisingly, ‘stakeholder’ comments have been overwhelmingly positive:
David Whitehouse, CEO Offshore Energies UK said: “Domestic production is the best pathway to net zero and the UK Government’s commitment to licences is a 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. 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 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.
“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.”
Tom Glover, RWE UK, Country Chair said: “RWE is delighted that Viking CCS has been awarded Track 2 status for the Government’s Cluster Sequencing Process.
“RWE is a long-term cluster partner of Viking CCS and is developing two projects that could use this facility, providing firm, secure and flexible low carbon power generation to support our transition to a net zero economy.”
Will Gardiner, Drax Group CEO, said: “We welcome the Government’s decision to designate Viking as a Track 2 carbon capture utilisation and storage cluster (CCUS). Progressing a CO2 transport and storage network in the Humber represents a significant step toward helping the region meet its Net Zero ambitions and ensuring that it remains a source of high-skilled jobs and energy security for decades to come.
“The announcement shows the importance of CCUS to the Humber and, along with the East Coast Cluster, creates an additional pathway to support our plans for bioenergy with carbon capture and storage (BECCS) at Drax Power Station.
“We are currently engaged in formal discussions with the UK Government on this project and hope to invest billions in its development and deploy this critical, carbon removals technology by 2030.”
Dr Nick Cooper, CEO of Acorn lead developer Storegga, said: “We are thrilled that the Acorn Project has advanced directly into Track-2. Acorn has been progressed by the development partners as the Track-1 reserve since late 2021 and is ready to move promptly to support the decarbonisation of Scotland and the wider UK.
“Today’s news is a defining milestone for us, and the Scottish Cluster. Acorn will be a major contributor towards meeting the UK and Scotland’s carbon reduction targets, able to serve emitters connected by pipeline and ship.
“As Lead Developer, Storegga thanks Acorn partners and Scottish Cluster participants for their support and we look forward to working with Government to deliver the multiple benefits of creating and future-proofing jobs, bringing inward economic investment, developing green-tech industries and, crucially helping decarbonise Scotland and the UK.”
Harbour Energy’s Executive Vice President of Net Zero and CCS Steve Cox said: The successful award of Track 2 status to Harbour’s Viking CCS project in the Humber as well as Acorn in northeast Scotland is another demonstration of how we are well positioned to use our existing skills and infrastructure to help develop the burgeoning CCS industry in the UK.
“More widely, the announcement today shows the key role the North Sea oil and gas sector will play in helping to deliver the UK’s carbon capture goals.”
Ruth Herbert, Chief Executive at the CCSA, said: “We are pleased to see the UK Government pushing ahead with its CCUS deployment programme and selecting the next two CCUS clusters, as time is running out to meet 2030 targets.
“This CO2 infrastructure is critical to safeguarding the UK’s supply chain security, enabling local industries to continue to thrive whilst reducing their emissions as we transition to a net zero economy.
“It is therefore vital that the Government urgently sets out clarity on the process and timeline for selecting carbon capture sites within these ‘Track-2’ clusters and within the previously announced Track-1 cluster expansion.
Billions of pounds of investment is waiting to be deployed to decarbonise these industrial regions, but firm plans are required to secure it.
“There are a number of other clusters under development across the country, which is why last year we asked government for visibility of the longer-term CCUS deployment plan.
“Collectively, CCUS clusters could protect 77,000 current jobs and create a further 70,000 jobs across the UK. Government’s forthcoming vision for the UK CCUS sector needs to be published as soon as possible, to avoid investment flight in those regions that have not been selected today.”
Simon Roddy, Senior Vice President of Shell UK‘s Upstream business, said: “This is an important step forward for one of the UK’s leading CCS clusters. The Acorn Project is a central part of plans to decarbonise North Sea operations, and to store emissions from other parts of Scottish industry.
“As Technical Developer, we bring Shell’s global experience of CCS and the delivery of major projects. T
“o stimulate investment in this and other CCS clusters, continued co-operation with governments will be key to finding the most innovative approaches and business models to allow CCS to reach the scale needed to help the UK achieve net zero.”
Alistair Phillips-Davies, Chief Executive of SSE, said: “Carbon capture will play a critical role not only in decarbonising the UK’s power system but also in unlocking economic growth and boosting our energy security, and today’s announcement marks a major step forward in its deployment.
“We know how important it is that the north-east of Scotland and Humber are decarbonised and the decision to support the Scottish Cluster and Viking Cluster shows that there is commitment to doing so.
“Time remains of the essence. Now, we must move quickly to deploy the transport and storage infrastructure which will underpin the rollout of CCS across the chosen clusters. Doing so will allow crucial low-carbon projects – such as our carbon capture project at Peterhead – to be brought forward, supporting the energy transition while providing good, green jobs and enhancing regional economies.
“The UK has a real opportunity to lead the world on carbon capture if we can accelerate progress and today’s announcement provides welcome impetus.”
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