Hundreds of new North Sea oil and gas licences to boost British energy independence and grow the economy

• Prime Minister commits to future oil and gas licensing rounds, as new analysis shows domestic gas production has around one-quarter the carbon footprint of imported liquified natural gas
• North East Scotland and the Humber chosen as locations for two new carbon capture usage and storage clusters – building a thriving clean industry in the North Sea which could support up to 50,000 jobs
• Investment in the North Sea will continue to unlock new projects, protect jobs, reduce emissions and boost UK energy independence

Hundreds of new oil and gas licences will be granted in the UK, the Prime Minister has confirmed today (Monday 31 July), as the UK Government continues to back the North Sea oil and gas industry as part of drive to make Britain more energy independent.  

The Government and the North Sea Transition Authority (NSTA) are today announcing a joint commitment to undertake future 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.  

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 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. As part of a visit to a critical energy infrastructure site in Aberdeenshire today, the Prime Minister will highlight the central role the region will play in strengthening the UK’s energy independence and meet the next generation of skilled apprentices key to driving this work forward.

The NSTA – responsible for regulating the oil, gas and carbon storage industries – is currently running the 33^rd offshore oil and gas licensing round. They expect 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 and hydrogen opportunities – building truly integrated offshore energy hubs that make the best use of the established infrastructure.

This comes as new analysis released by the NSTA today shows that the carbon footprint of domestic gas production is around one-quarter of the carbon footprint of imported liquified natural gas. As the UK is a rapidly declining producer of oil and gas, new oil and gas licences reduce the fall in UK supply in order to ensure vital energy security, rather than increase it above current levels – so that the UK remains on track to meet net zero by 2050.

UK Prime Minister Rishi Sunak said:

“We have all witnessed how Putin has manipulated and weaponised energy – disrupting supply and stalling growth in countries around the world.

“Now more than ever, it’s vital that we bolster our energy security and capitalise on that independence to deliver more affordable, clean energy to British homes and businesses. 

“Even when we’ve reached net zero in 2050, a quarter of our energy needs will come from oil and gas. But there are those who would rather that it come from hostile states than from the supplies we have here at home.

“We’re choosing to power up Britain from Britain and invest in crucial industries such as carbon capture and storage, rather than depend on more carbon intensive gas imports from overseas – which will support thousands of skilled jobs, unlock further opportunities for green technologies and grow the economy.”

The UK’s oil and gas industry are also vital to driving forward and investing in clean technologies that we need to realise our net zero target, like carbon capture usage and storage, by drawing from the sector’s existing supply chains, expertise and key skills whilst protecting jobs. 

Today, the Government has confirmed that projects Acorn in North East Scotland and Viking in the Humber have been chosen as the third and fourth carbon capture usage and storage clusters in the UK.

The Government has 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 – and another further two clusters by 2030 – now confirmed as Acorn and Viking.

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.

The UK has one of the largest potential carbon dioxide storage capacities in Europe, making the North Sea one of the most attractive business environments for CCUS technology. The Government has committed to provide up to £20 billion in funding for early deployment of CCUS, unlocking private investment and job creation.

Energy Security Secretary Grant Shapps said:

“In the wake of Putin’s barbaric invasion of Ukraine, our energy security is more important than ever. The North Sea is at the heart of our plan to power up Britain from Britain so that tyrants like Putin can never again use energy as a weapon to blackmail us.

“Today’s commitment to power ahead with new oil and gas licences will drive forward our energy independence and our economy for generations. Protecting critical jobs in every region of the UK, safeguarding energy bills for British families and providing a homegrown fuel for our economy that, for domestic gas production, has around one-quarter the carbon footprint of imported liquified natural gas.

“Our next steps to develop carbon capture and storage, in Scotland and the Humber, will also help to build a thriving new industry for our North Sea that could support as many as 50,000 jobs, as we deliver on our priority of growing the economy.”

The Prime Minister has also tasked the relevant Government departments and regulators to work collaboratively and report back by the end of the year on how we can make the best use of our offshore resources in a truly integrated way as we unlock CCUS and hydrogen opportunities in the North Sea.

A call for evidence has also been launched by Government today, 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.

Notes to Editors

• Since 2000, oil output from the North Sea has fallen by 67% - with 986,000 barrels produced in 2000 compared with 320,918 barrels in 2021.
• UKCS production of primary oils from 2002 to 2021 inclusive were 9,969 million barrels equivalent. (Digest of UK Energy Statistics, 2022, Table 3.1).
• Oil and gas tax receipts from 2002-3 to 2021-22 inclusive were £95 billion (OBR, Economic and fiscal outlook, March 2023).
• The Government’s independent advisors on climate change, the CCC, forecast that around one-quarter of energy will still derive from oil or gas in 2050 (DESNZ, CCC CB6 Balanced Pathway scenario - % of energy demand derived from oil and gas sources).
• At 21 kgCO2/boe, the carbon intensity of UK gas production is lower than the average carbon intensity of all sources of natural gas imported to the UK (except pipeline imports from Norway). The average carbon intensity of imported LNG (liquefied natural gas) is over three times the carbon intensity of UK production.
• The UK oil and gas sector is committed to cutting production emissions by 10% in 2025, 25% in 2027, and 50% in 2030 on the pathway to net zero by 2050. The NSTA estimates that total upstream greenhouse gas (GHG) emissions declined by 14.6% in 2021, resulting in an estimated overall reduction relative to 2018 of 21.5%.
• In a 2022 letter on future licencing rounds, the Chair of the CCC, Lord Deben said: “UK extraction has a relatively low carbon footprint (more clearly for gas than for oil) and the UK will continue to be a net importer of fossil fuels for the foreseeable future, implying there may be emissions advantages to UK production replacing imports.” (https://www.theccc.org.uk/publication/letter-climate-compatibility-of-new-oil-and-gas-fields/).
• The Government will publish its conclusions to the oil and gas fiscal review by the end of the year. This will provide industry and other stakeholders with the certainty they need to make decisions about future investment. The call for evidence will close on 11 September 2023.

Commenting on the Government’s announcement about over 100 new North Sea licenses and plans for carbon capture and storage today, Jess Ralston, Head of Energy at the Energy and Climate Intelligence Unit (ECIU) said: “Government is currently subsidising oil and gas companies to drill more in the North Sea. This will not bring down bills as there isn’t enough gas to move the dial on international market prices and the oil and gas industry’s own estimates show the North Sea will continue to decline no matter what the government policy is.

“Prioritising oil and gas over cheaper renewables and pushing back regulations on insulation in rental homes [2], both of which would bring down bills, is against advice from the International Energy Agency, United Nations and Climate Change Committee. And while carbon capture will be an important technology for some industries, like manufacturing, it’s yet to be seen how much it will cost or where it will be most useful.

“The OBR has warned the UK's heavy gas dependency could see the national debt go up by 13% of GDP as similar gas price crises happen in future. This decision and its timing will also be questioned internationally, as global warming continues to drive extreme weather like heatwaves and wildfires devastating Europe and Canada today.” 

Prospect, the UK's leading energy trade union, has commented on the government's announcement of new North Sea oil and gas licences and its carbon capture and storage plans. 

Prospect Senior Deputy General Secretary Sue Ferns said: “These announcements fail to recognise the scale of the response to the climate crisis that is needed.

“A proper plan would put delivering good green jobs at the absolute heart of a long-term plan to deliver on Net Zero and energy security.

“Notwithstanding this, Prospect has been a long-term supporter of carbon capture and storage and the news about the Acorn project is positive from both a climate change and just transition perspective."

Philip Evans, Greenpeace UK Climate, said: 

“This new announcement is nothing but a cynical political ploy to sow division, and the climate is collateral damage. Just as wildfires and floods wreck homes and lives around the world, Rishi Sunak’s government has decided to row back on key climate policies, attempted to toxify net zero, and recycled old myths about North Sea drilling. 

“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.”