UK government looks for fossil fuels in the North Sea

UK regulators are set to begin a new round of licences enabling companies to explore for oil and gas in the North Sea, as climate campaigners signalled they would aim to mount a legal challenge.

The North Sea Transition Authority is expected to award more than 100 permits to companies by the end of June, while the exact number of new licences is still to be confirmed, but it could be as many as 130. 

As the government seeks to bolster Britain’s self-sufficiency in energy following Russia’s invasion of Ukraine, partly by extracting more fossil fuels from the North Sea.

The environmental group Greenpeace claimed the new licensing round was potentially “unlawful” and indicated it would aim to mount a legal challenge. Climate campaigners have said the government’s efforts to secure more oil and gas from the North Sea conflicts with its commitment for the UK to have net zero carbon emissions by 2050.

In the new licensing round, the NSTA is prioritising four areas in the southern part of the North Sea, where gas has already been discovered.

Business secretary Jacob Rees-Mogg said the licences would boost “both [the UK’s] energy security and our economy”. Licensing rounds used to be a near annual event, but paused in 2019 as the government promised a “climate compatibility check” to ensure that the award of new permits was “consistent with the UK’s wider climate objectives”. The check was published last month but was criticised as “meaningless” by climate groups as it is only advisory and does not bind ministers to a particular outcome.

Currently, the UK produces around a million barrels of oil a day, primarily from the North Sea, the rest is imported to meet consumption. Norway is the main supplier of crude oil to the UK, in 2020 11.7 million metric tonnes of were imported.

The UK’s overall gas production is expected to average some 106 million cubic meters a day this year, up from 90 million in 2021, according to energy consultant Wood Mackenzie Ltd. The additional volumes equate to roughly 7.5% of UK’s yearly demand on average.

Philip Evans, energy transition campaigner for Greenpeace UK, said new oil and gas licences would not lower energy bills for struggling families “this winter or any winter soon nor provide energy security in the medium term”.

“New licences — and more importantly more fossil fuels — solve neither of those problems but will make the climate crisis even worse,” he added.

“They are possibly unlawful and we will be carefully examining opportunities to take action.”

When asked about the potential for legal challenges last week, Andy Samuel, the NSTA’s outgoing chief executive, said that everything the NSTA does, is to a "very high standard.”

The licensing round has also attracted criticism because of the length of time it can take for any oil and gas discovery to reach production.There is concern that the licencing round will not offer any short term relief to energy bills as it typically takes between five to 10 years from initial exploration until oil and gas is produced from a field.

According to the NSTA, the average is five years, although it hopes the fast-tracked licences could yield results in as little as 12 to 18 months from the time of their award.

Samuel said last week that given the “unusual” situation facing western Europe after Russia in August cut off gas exports via the Nord Stream 1 pipeline, it was right to do “anything we can do to bolster domestic production”.

He also admitted new licensing rounds would not change Britain’s overall dependence on imports. Last year UK oil and gas accounted for only 39 per cent of the country’s overall supply mix, according to a government assessment.

Pipeline imports from Norway, the Netherlands and Belgium accounted for 44 per cent, liquefied natural gas shipped from destinations including the US, Qatar and Russia making up the remainder. The UK government is seeking to strike long-term gas contracts with countries including Norway and Qatar.