UK kicks off long-awaited oil and gas licensing round
The UK announced the launch of its latest offshore oil and gas licensing round on October 7 – the first in three years – as the government scrambles to demonstrate its commitment to bolstering energy security.
In a statement, the North Sea Transition Authority (NSTA) invited companies to bid for 898 blocks and part-blocks across the North Sea, the East Irish Sea and West of Shetland. This compares with 768 blocks and part-blocks offered in the 2019 licensing round, and 1,766 in the 2018 contest. Bids will be accepted until January 12, 2023, and the first licences will be awarded in the second quarter of 2023.
The NSTA, previously known as the Oil and Gas Authority (OGA), introduced a pause on licensing rounds in 2019, stating it needed to assess whether its policies aligned with the UK's climate goals. Since then, though, oil and gas prices have soared and there is a risk of energy shortages this winter as tensions between the West and Russia continue to escalate.
NSTA CEO Andy Samuel noted that the UK was forecast to continue importing gas during the transition to a fully renewable power system, and that North Sea gas had less than half the carbon footprint as imported LNG.
"This licensing round includes gas discoveries in the south North Sea which can be rapidly tied back to existing infrastructure," Samuel said.
He added that all developments would undergo environmental and emissions assessments.
"Security of supply and net zero should not be in conflict," Samuel said. "The industry has committed to halving upstream emissions by 2030 and investing heavily in electrification, carbon storage and hydrogen. Signs are promising so far - our first carbon storage round closed last month with 26 applications from 19 companies across all the areas we offered," he said.
The NSTA is looking to fast-track development by identifying four priority cluster areas in the south North Sea with known hydrocarbons close to infrastructure that can be potentially put on stream quickly. Licences will be issued for these sites ahead of others.
The oil and gas sector hailed the resumption of licensing, with association Offshore Energies UK (OEUK) stating the move would "boost British gas supplies, sustain the UK's energy industry and strengthen plans for a low carbon future."
“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," OEUK's acting CEO Mike Tholen commented. "But this is a journey that will take decades during which we will still need gas and oil."
The UK consumed 78bn m3 of gas in 2021, but produced only 29bn m3, although output rose by 27% in the first half of this year on the back of new project launches and efficiency drives. But the OEUK warns that without new domestic supply, the UK will be importing four-fifths of its gas by the end of this decade.