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UK launches new offshore licencing round while new report says North Sea oil and gas development is at odds with climate goals
12/10/2022
The UK’s North Sea Transition Authority (NSTA) has launched a new offshore licensing round as part of government plans to boost security of energy supplies. However, a new report from Global Energy Monitor claims that emissions from new oil and gas development in the North Sea could contribute to the UK exceeding its carbon budget for 2023–2037 by a factor of two.
A total of 898 blocks and part-blocks in the North Sea have been opened to bids in the 33rd licensing round, which could lead to over 100 licences being awarded. Acreage is being offered in the West of Shetland, Northern North Sea, Central North Sea, Southern North Sea and East Irish Sea.
To encourage production as quickly as possible, the NSTA has identified four priority cluster areas in the Southern North Sea, which have known hydrocarbons, are close to infrastructure and have the potential to be developed quickly. It will seek to license these ahead of others.
The average time between discovery and first production is close to five years and falling, according to NSTA analysis.
The round is the latest element in the NSTA’s ongoing work with industry to ensure security of supply. Earlier this year leading operators were asked to supply details of their production and investment plans and to look at how they might go further and faster wherever possible. Other measures include licensing the Rough gas storage facility and encouraging operators to look again at reopening closed wells.
Oil and gas currently contribute around three quarters of domestic energy needs and official forecasts show that, even as demand is reduced, they will continue to play an important role.
The drive to reach net zero greenhouse gas (GHG) emissions by 2050 continues alongside the drive for energy security and they support each other, claims the NSTA, which notes that new developments tend to be significantly lower emitting. It reports that production emissions have been cut by more than a fifth between 2018 and 2021, and projections indicate the sector is on track to meet reduction targets of 10% by 2025 and 25% by 2027 – agreed in the North Sea Transition Deal in 2021. The industry is also set to play a key role in areas like carbon storage and hydrogen development.
The opening of the licensing round follows the publication of the Climate Compatibility Checkpoint and the Strategic Environmental Assessment (OESEA4).
The round will close on 12 January 2023. It is expected that the first licences will be awarded from 2Q2023.
North Sea oil and gas development at odds with climate goals
The licensing round announcement came as a new report was published by Global Energy Monitor (GEM), which claims North Sea oil and gas development is at odds with UK and global climate goals.
The report predicts that new oil and gas development in the North Sea could produce up to 984mn tonnes of CO2 equivalent and contribute to the UK exceeding its carbon budget for 2023–2037 by a factor of two.
The report analyses the potential production from the 21 largest undeveloped fields in the North Sea and finds that development of all or any of these fields would be incompatible with the UK’s and global climate goals to limit warming to 1.5°C.
The report also claims that the UK government’s Climate Compatibility Checkpoint system ‘does not account for the climate risks of further North Sea oil and gas development’ and states that development of North Sea fields ‘would not reduce energy prices for UK consumers during the immediate energy crisis in Europe – or in the long term, either’.
Commenting on publication of the report, Scott Zimmerman, Researcher for GEM, says: ‘The energy crisis in Europe is a chance for the UK to kick its fossil fuel dependency. But by leasing these new fields the UK is showing it’s still hooked on hydrocarbons.’
Neptune Energy extends higher gas supplies to UK for this winter
Meanwhile, in other news, Neptune Energy and its partners report that they are to further extend gas production from the Duva field in Norway, supplying enough gas to heat a further 550,000 UK homes per day.
In April this year the Norwegian authorities granted Neptune and the Duva licence partners a permit to temporarily increase gas production by 6,500 boe/d until September. Under the new permit, the higher production rate will be maintained until the end of 2022.
Duva’s overall production is around 40,000 boe/d, of which 15,000 boe/d is natural gas. Duva is tied back to the Neptune-operated Gjøa semi-submersible platform, and the gas is transported by pipeline to the UK’s St Fergus gas terminal.
Electrified with hydropower from shore, the Gjøa platform produces some 3 kg CO2/boe, less than half the average on the Norwegian Continental Shelf, reports Neptune Energy.
The Duva licence partners are Neptune Energy (30%, operator), Inpex Idemitsu (30%), PGNiG Upstream Norway (30%) and Sval Energi (10%). The Gjøa licence partners are Neptune Energy (30%, operator), Petoro (30%), Wintershall Dea Norge (28%) and OKEA (12%).
