Britain’s offshore oil and gas industry has called on new Prime Minister Liz Truss to expedite the approval of more exploration licenses to help boost domestic fuel supplies.
The lobby group has identified a $30bn potential investment in the North Sea by the end of the decade that would allow the UK to meet almost half of its oil and gas demand from domestic supply. The group said that without these projects, the fuel demand would be met through imports.
The UK oil industry has a chance to halt its long-term decline as rising energy prices raise concerns about the security of supply. The situation threatens to devastate homes and businesses this winter, and has already dominated Truss’s agenda for just one day under his leadership. Tying the future of the North Sea to an exit from the current crisis could revive the fossil fuel industry, even as the country looks to transition to clean energy.
“We need the new government to announce the next round of oil and gas exploration licenses and accelerate production approvals,” said Mike Tholen, interim chief executive of Offshore Energy UK. “Our North Sea reserves mean the UK can protect itself, as long as we invest, as well as build low carbon systems for the future.”
In its annual economic report released on Wednesday, the industry group acknowledged that the new investment will not provide a short-term solution to the energy crisis. The new fields currently under development will not start production until the end of 2026 and will have maximum production a year later. This is roughly in line with Shell plc’s plan to open the Jackdaw gas field in mid-2020 after making a final investment decision on the project earlier this year.
The UK domestic oil and gas boost follows a long period in which the main focus of energy policy was on climate goals and the question of whether investment in new sectors should also be allowed. The country has committed to achieving net zero emissions by 2050 and the Climate Change Committee expects oil demand to drop by up to 98% if this commitment is met.
Offshore Energies said oil and gas will play an important role in Britain’s energy mix, even as the country moves towards this target.
“We must expand our supply of low-carbon energy, including wind and hydrogen, but scaling up will take time,” Tholen said. “UK gas will provide us with a reliable energy base during the transition and reduce our dependence on imports.”