The UK’s North Sea Transition Authority (NSTA) has revealed that a first batch of 27 licenses have been offered as part of the 33rd Oil and Gas Licensing Round.
In a release posted on its site, the NSTA highlighted that the licenses were the first to be awarded from 115 applications, which it noted is the highest number since the 2016/17 29th Licensing Round. The licenses are in prioritized areas because they have the potential to go into production more quickly than others, the NSTA outlined in the release, adding that more blocks will be offered subject to additional environmental checks.
The 33rd Oil and Gas Licensing Round was launched on October 7, 2022, with 931 blocks and part-blocks made available for application. In total, the NSTA received 115 applications from 76 companies for 258 blocks/part-blocks, the organization highlighted in the release.
All of the 258 Blocks that have been applied for have been through the initial Habitat Regulation Assessment (HRA) and the blocks already being awarded have been identified as not requiring further assessment, the NSTA outlined in the release.
These licenses in the Central and Northern North Sea and West of Shetland were awarded first to let operators press ahead with their plans to explore and develop oil and gas resources, the NSTA noted in the release. In recent years, the average time from license award to production is around five years, the organization added.
“[This] announcement is part of the NSTA’s wider efforts to support the UK’s energy security options, which includes the licensing of offshore gas stores and engagement with industry on opportunities to reopen closed wells,” the NSTA stated in the release.
“There are currently 284 offshore fields in production in the UK North Sea and an estimated 5.25 billion barrels of oil equivalent in total projected production to 2050,” the NSTA added.
“Oil and gas currently contribute around three quarters of domestic energy needs and official forecasts show that, as we transition, they will continue to play a role in our energy mix for decades to come,” it continued.
In the release, Stuart Payne, the NSTA’s Chief Executive, said, “ensuring that the UK has broad options for energy security is at the heart of our work and these licenses were awarded in the expectation that the licensees will get down to work immediately”.
“The NSTA will work with the licensees to make sure that where production can be achieved it happens as quickly as possible,” he added.
UK Energy Security Secretary Claire Coutinho said in the release, “as recognized by the independent Climate Change Committee – we’ll continue to need oil and gas over the coming decades as we deliver net zero”.
“It’s common sense to reduce our reliance on foreign imports and use our own supply – it’s better for our economy, the environment, and our energy security,” Coutinho added.
“These new licenses are a welcome boost for the UK industry, which already supports around 200,000 jobs and contributes GBP 16 billion ($19.4 million) to the economy each year – while advancing our transition to low-carbon technologies, on which our future prosperity depends,” Coutinho continued.
In a statement posted on its website, Offshore Energies UK (OEUK), which describes itself as the leading trade body for the sector, said the award of new oil and gas licenses by the NSTA will strengthen homegrown energy security as the sector continues its expansion in wind, hydrogen, and carbon capture and storage.
“Oil and gas production supports 200,000 jobs in the UK today,” OEUK said in the statement.
“A recent report from Robert Gordon University found the wider offshore energy workforce could increase further if the UK delivers a managed transition that avoids a rapid decline in the domestic production of oil and gas before offshore wind and other projects are delivered at the scale required to deliver a net zero economy by 2050,” it added.
“Licensing is the first step taken by energy production companies with the regulator to find and produce homegrown supplies, managing the nation’s reliance on imports and safeguarding its world-class energy workforce,” OEUK continued.
In the statement, OEUK Chief Executive David Whitehouse said the NSTA’s announcement “is a boost for UK energy security and for the 200,000 people in jobs supported by the offshore energy sector”.
“These are the very people we need to deliver reliable supplies of homegrown energy produced in the UK, for the UK,” he added.
“We all recognize that our energy system must change, and our industry includes companies that are expanding into renewables while using their expertise to pioneer ever cleaner energy production. The reality of the energy transition is that we need both oil and gas and renewables in an integrated system to protect the UK’s energy needs over the coming years,” Whitehouse continued.
In the statement, Whitehouse noted that, last year, filling the fuel import gap cost the UK GBP 117 billion ($141.8 billion).
“That’s a lot of money spent supporting the economic growth of other producing countries,” he added.
“With careful management and collaboration, the UK can become the gold standard of energy transitions. We can drive economic growth, reach our climate goals, and avoid a future where we increasingly import our energy and export our jobs,” he continued.
“Energy security is national security. We need pragmatic policy and political consensus if we are to realize GBP 200 billon ($242.4 billion) potential company investment in UK wind, hydrogen and carbon capture, and oil and gas production over this decade, with all the jobs and work for our supply chains this will bring,” Whitehouse went on to state.
In its statement, OEUK noted that, today, 75 percent of the UK’s energy needs are provided by oil and gas and added that the UK is a net importer of oil and gas, meaning it consumes more than it produces domestically.
“There are currently 284 active oil and gas fields in the North Sea and by 2030 around 180 of those will have ceased production due to natural decline,” OEUK said in the statement.
“The industry needs the churn of new licenses to ensure no cliff edge in domestic production. OEUK has warned that without fresh investment the UK will be reliant on oil and gas imports for 80 percent of its needs by 2030,” it added.
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