UK Prime Minister Rishi Sunak used a trip to Scotland at the start of this week to confirm that hundreds of oil and gas licences will be granted in future North Sea 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’, noted the government.

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 says it ‘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,’ it adds.

The North Sea Transition Authority (NSTA) – responsible for regulating the UK’s oil, gas and carbon storage industries – is currently assessing the 115 bids received for licences in the 33rd offshore oil and gas licensing round. It expects 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 (CCUS) and hydrogen opportunities – building truly integrated offshore energy hubs that make the best use of the established infrastructure,’ says the UK government.

The news was decried by environmental campaigners. Philip Evans, Greenpeace UK Climate, said: ‘Relying on fossil fuels is terrible for our energy security, the cost of living, and the climate. Our sky-high bills and recent extreme weather have demonstrated that. Rishi Sunak knows that any oil and gas from the North Sea will just be sold on the international market, making oil companies even richer at the expense of the rest of us. How will this help our bills exactly? If Sunak were serious about boosting our energy security while keeping energy bills down, he’d remove the absurd barriers holding back cheap, homegrown renewables and launch a nationwide insulation programme to tackle energy waste in our homes.’

North Sea gas claimed to be cleaner than imports
The oil and gas licences announcement came as new analysis released by the NSTA claims that the carbon footprint of domestic gas production is around one-quarter of the carbon footprint of imported LNG. This is because of both the way the gas is transferred and, in some cases, the methods of extraction.

The analysis shows that Norway has the lowest carbon intensity of all LNG imports at 33 kgCO₂/boe, and Peru the highest at 90, with the average coming to 79, while UK gas has a carbon intensity of only 21 kgCO₂/boe.

Around 63% of UK gas supply is imported into the UK, according to the NSTA, 187mn boe via pipeline and 156mn boe from LNG. The UK produced 38% of its gas supply in 2022, a total of 206mn boe. That 38% was responsible for only 24% of total emissions associated with gas supply, whereas LNG from the US was responsible for 35% of the emissions, despite being only 14% of the supply, says the report.

Acorn and Viking confirmed as UK carbon capture clusters
Meanwhile, the government also confirmed that the Acorn project in north-east Scotland and Viking in the Humber have been chosen as the third and fourth CCUS clusters in the UK.

The government had 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 region – and another further two clusters by 2030 – now confirmed as Acorn and Viking. The ambition is to capture 20–30mn t/y of CO₂ by 2030.

‘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,’ states the government. It has committed to provide up to £20bn in funding for early deployment of CCUS.

Call for take on taxes
A call for evidence was also launched by the UK government this week, ‘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’.

Will Labour pull back on green aspirations?
Meanwhile, some political observers question if the Labour Party’s stance on green energy policies may falter following its failure to secure the keenly targeted Uxbridge and South Ruislip, the former Prime Minister Boris Johnson’s seat, in last week’s byelection. Labour leader Keir Starmer was reported to have blamed London Mayor Sadiq Khan’s planned extension of the ultra-low emissions zone (ULEZ) as the reason for the failure to take the seat.