UK plans first round of North Sea oil and gas licenses since 2020

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Britain’s North Sea regulator plans to hold the first round of oil and gas licensing since 2020 this year as the country races to secure more domestic energy supplies in the wake of war in Ukraine.

Andy Samuel, chief executive of the Oil and Gas Authority, told the Financial Times that the regulator was preparing licenses that included existing discoveries, which would be “almost ready to go” if oil and gas companies were willing to exploit them. .

Issuance of new licenses to drill for oil and gas in UK waters will be highly controversial; Climate campaigners argue that the North Sea fossil fuel industry should be scaled back and investments should be prioritized in clean energy technologies.

But Prime Minister Boris Johnson hopes fossil fuel companies will be able to boost indigenous production as he prepares to release an updated energy strategy later this month aimed at bolstering energy sources UK domestics.

The UK, along with its European allies, is racing to phase out Russian oil and gas and reduce its exposure to highly volatile international oil and gas markets, which are driving national energy bills to record highs and exacerbating the cost of living crisis.

The OGA, which changes its name to the North Sea Transition Authority (NSTA) on Monday, has not been able to organize a licensing round since 2020, when the government undertook a review of the compatibility of its policies with climate objectives.

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Ministers have since drawn up a “climate compatibility checkpoint” against which they have promised all future rounds of licenses will be tested. The draft text of these controls was hastily rewritten last week to include clauses allowing the government to circumvent environmental considerations in the event of urgent national security concerns.

When asked when he thought the regulator would be able to resume licensing, Samuel replied: “Certainly this year.”

“The team [at the NSTA] are preparing licensing packages that have discoveries that are pretty much ready to go,” he said.

Samuel insisted that the content of the climate compatibility test and whether energy security concerns should trump emissions targets was a “political matter” for the government.

But he insisted he did not believe the two were working ‘in opposition’ given the UK’s dependence on foreign imports of oil and gas, which are often produced at a cost higher for the environment. Last year, the UK met 40% of its gas needs from domestic supplies.

“We know that our good developments [in the North Sea] have a lower carbon footprint and we need that,” Samuel said.

Andy Samuel, CEO of the Oil and Gas Authority: The team [at the NSTA] are preparing licensing packages that have discoveries that are pretty much ready to go” © Ross Johnston/Newsline Media

Climate groups and some academics have questioned Johnson’s courting of fossil fuel producers, given that the North Sea is one of the most mature oil and gas basins in the world and is currently expected to decline at a annual rate of 5 to 7%. They also pointed out that it can take years after the discovery of a reservoir to produce oil or gas.

Samuel admitted that the North Sea was a “declining basin”, but he argued that the regulator’s work to improve production efficiency since its inception in 2015 had helped slow the rate of decline.

His teams were again looking at a “range of opportunities,” such as looking at older fields to see if some wells were no longer producing when more barrels could be mined, or if new wells in those areas could be drilled, a- he declared.

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