HomeBlogFinanceNorth Sea gasfield permits to be fast-tracked to boost UK production

North Sea gasfield permits to be fast-tracked to boost UK production

New North Sea gasfields will be prioritised during a licensing round that the UK regulator is expected to announce later this week, aimed at boosting domestic production in the short term as the government attempts to tackle the energy crisis.

Andy Samuel, the outgoing chief executive of the North Sea Transition Authority (NSTA), told the Financial Times that he would fast-track applications for discoveries in the southern North Sea, as part of a process that would grant more than 100 permits largely focused on exploration.

The government has promised to increase North Sea production as it seeks to secure more UK energy supplies in response to Russia’s squeeze on natural gas exports to Europe, with Moscow putting pressure on western nations over their military support for Ukraine.

“[In] these unusual times, security of supply is a concern,” said Samuel, adding that the regulator would do “anything we can do to bolster domestic production”.

But he warned that the new permits, which will be awarded in the first licensing round in nearly three years, would do little to alter Britain’s overall dependence on imports, which is expected to grow over the next three decades even as demand for hydrocarbons is falling.

Samuel, who will step down from the regulator in December after nearly eight years, said the permits were only likely to make a difference “around the edges”, given that the North Sea was one of the oldest oil and gas production regions in the world. “I think it’s unlikely, given it’s a mature basin and the geology is well-known, that we’re suddenly going to have a situation where we are significantly growing production again.”

He added that some of the discoveries that would get licences could be producing gas in as little 12 to 18 months, including the Pegasus West field, which was discovered off the North Yorkshire coast in the early part of the last decade.

The UK North Sea at present produces enough gas to meet the equivalent of about 40 per cent of the country’s demand. The NSTA is forecasting that this will fall to 30 per cent by 2030. In 2021, domestic oil and gas production fell 17 per cent year on year to 45mn tonnes of oil and 29bn cubic metres of gas.

The decision to push ahead with the licensing round has drawn criticism from climate groups. The government’s climate advisers warned earlier this year that further oil and gas exploration would undermine the credibility of the UK’s global leadership on climate change.

But Samuel insisted a new licensing round was not incompatible with the UK’s 2050 net zero emissions target, as new domestic production would replace liquefied natural gas imports from destinations such as Qatar and the US, which are more carbon intensive given that they are shipped over large distances. “We are not suddenly going to bust the carbon budget,” he added.

But Tessa Khan, executive director of climate group Uplift, said “when it comes to energy security, new licensing of oil and gasfields [was] an illusion”, adding: “All the government is doing is signalling to the oil and gas industry that it’s business as usual and to hell with the climate crisis.”

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