energy

North Sea oil producers push UK to back 18 new projects


Oil & Gas industry updates

North Sea oil and gas producers are pushing the government to back up to 18 new fossil fuel projects in a major test of the UK’s commitment to reduce greenhouse gas emissions to net zero by 2050.

OGUK, the industry body, argued that without supporting new fields ministers risked a “cliff edge” approach to domestic supply as existing production declines, leaving the UK dependent on imports.

If all were approved, then as much as £21bn would be spent on developing the new fields and extending the life of existing reservoirs, over the next five years, boosting UK production by 2.7bn barrels of oil equivalent, it added.

The details were laid out in a report by OGUK as it steps up its own campaign to sustain the North Sea sector while UK ministers come under intense pressure to halt all new oil and gas developments in British waters.

The battle has recently focused on the controversial Cambo oil project 125km north-west of the Shetland Islands, which is one of the 18 projects.

The UK government, which will host the UN’s COP26 climate summit later this year, must decide whether to sanction Cambo’s development. Climate change experts say its approval is inconsistent with the country’s 2050 net zero emissions target.

Protesters in Trafalgar Square against Cambo’s development
Protesters in Trafalgar Square against Cambo’s development © Vuk Valcic/Alamy

The Paris-based International Energy Agency has also said energy groups globally must stop all new oil and gas exploration projects from this year if global warming is to be kept in check.

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But the OGUK said that a failure to invest in new oil and gasfields to replace those in decline “would mean the UK could meet only a third of its future needs, leaving the nation more reliant on imports”.

It said that oil and gas still met 73 per cent of the UK’s primary energy consumption last year. Gas imports surged to a record high between January and March as households turned up their heating during the cold winter.

The UK started producing oil and gas in 1967 but the industry peaked around the turn of the century and is now in long-term decline. UK production, which fell 5 per cent in 2020 to about 1.6m barrels of oil equivalent a day, accounts for roughly 1 per cent of global demand.

Even so, OGUK said production from UK waters was sufficient to meet 95 per cent of domestic oil demand and 54 per cent of gas demand last year and UK ministers should pursue a “managed transition”.

“Such an approach will ensure that for as long as the UK continues to use oil and gas, as much as possible can be met by indigenous production,” said OGUK chief executive Deirdre Michie, adding that while North Sea companies have pledged to reduce emissions from the extraction of hydrocarbons, Britain has no control over emissions linked to imports.

She dismissed a “cliff edge approach” to ending UK oil and gas extraction “being suggested by some” as a “symbolic gesture that would do little to address the UK’s ongoing demand for energy”.

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The Climate Change Committee, the government’s advisory panel, has forecast that demand for oil products will drop 85 per cent by 2050 and gas consumption will be more than 70 per cent lower.

But OGUK said hydrocarbons would still be needed in 2050 in certain manufacturing processes, as well as to potentially support new industries such as the production of low-carbon hydrogen.

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