UK plans first North Sea oil and gas licensing round since 2020

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

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

Issuing new licenses to drill for oil and gas in UK waters will be highly controversial; Climate activists argue that the fossil fuel industry in the North Sea should be phased out and that investments should be prioritized in clean energy technologies.

But Prime Minister Boris Johnson hopes fossil fuel companies can increase indigenous production as he prepares to publish an updated energy strategy later this month aimed at bolstering the UK’s domestic energy resources.

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

The OGA, which on Monday changes its name to the North Sea Transition Authority (NSTA), has been unable to hold a permit round since 2020, when the government assessed whether its policies were compatible with climate goals.

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Ministers have since been in the process of drafting a ‘climate compatibility checkpoint’ against which they promised all future permitting rounds would be tested. The draft text for those controls was hastily rewritten last week with clauses allowing the government to circumvent environmental concerns in the event of pressing national security concerns.

When asked when he thought the regulator might resume licensing, Samuel replied: “Certainly this year.”

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

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

But he insisted he didn’t believe the two were working “oppositely”, given the UK’s reliance on overseas imports of oil and gas, which are often produced at higher environmental costs. Last year, the UK met 40 percent 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,” said Samuel.

Andy Samuel, chief executive of the Oil and Gas Authority: The team [at the NSTA] are preparing a number of license packs with discoveries that are almost ready to use” © Ross Johnston/Newsline Media

Climate groups and some academics have questioned Johnson’s courtship with fossil fuel producers, as the North Sea is one of the most mature oil and gas basins in the world and is currently projected to decline by 5-7 percent annually. They have also pointed out that it can take years after a reservoir is discovered to produce oil or gas.

Samuel accepted that the North Sea was a “descending basin,” but argued that regulators’ work to improve production efficiency since its creation in 2015 had helped slow the rate of decline.

His teams again explored a “range of possibilities,” such as looking at older fields to see if some wells stopped producing when more barrels could be squeezed out, or if new wells could be drilled in those areas, he said.

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This post UK plans first North Sea oil and gas licensing round since 2020

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