NSTA launches 33rd Offshore Oil and Gas Licensing Round

[escveritas]

7 October 2022

UK energy security will be significantly boosted with the launch of the 33rd oil and gas licensing round later today.

The North Sea Transition Authority (NSTA) is inviting applications for licences to explore and potentially develop 898 blocks and part-blocks in the North Sea which may lead to over 100 licences being awarded.

To encourage production as quickly as possible, the NSTA has identified four priority cluster areas in the Southern North Sea, which have known hydrocarbons, are close to infrastructure and have the potential to be developed quickly - ­and will seek to license these ahead of others. Applicants will be encouraged to bid for these areas so they can go into production as soon as possible.

The average time between discovery and first production is close to five years and falling, according to NSTA analysis.

The round is the latest element in the NSTA’s ongoing work with industry to ensure security of supply. Earlier this year leading operators were asked to supply details of their production and investment plans and to look at how they might go further and faster wherever possible.

Other measures include licensing the Rough gas storage facility and encouraging operators to look again at reopening closed wells.

Oil and gas currently contribute around three quarters of domestic energy needs and official forecasts show that, even as demand is reduced, they will continue to play an important role. As we transition, maintaining a clean domestic supply to meet that demand can support energy security, jobs and the UK’s world class supply chain.

The drive to reach net zero greenhouse gas emissions by 2050 continues alongside the drive for energy security and they support each other. New developments tend to be significantly lower emitting. Production emissions have been cut by more than a fifth between 2018 and 2021. Projections indicate the sector is on track to meet reduction targets of 10% by 2025 and 25% by 2027 – agreed in the North Sea Transition Deal in 2021. Crucially, the industry can play a key role in areas like carbon storage and hydrogen development.

Since February last year, NSTA interventions have prevented the lifetime emission of 1.2 million tonnes of CO2e, equivalent to taking 500,000 cars off the road for a year.

Acreage will be offered in the West of Shetland, Northern North Sea, Central North Sea, Southern North Sea and East Irish Sea. To support bids, the NSTA is publishing data packs with summaries of key prospects and discoveries to stimulate exploration and encourage new opportunities.

The opening of the licensing round follows the publication of the Climate Compatibility Checkpoint and the Strategic Environmental Assessment (OESEA4).

The application period will run until 14:00 hrs GMT on Thursday 12th January 2023, during which time applicants will be able to assess the opportunities and make applications from early October. It is expected that the first licences will be awarded from the second quarter of 2023.

The NSTA intends to award blocks in tranches with those that have the potential to produce quickly taking precedence, subject to any requirement for further environmental appropriate assessments.

The blocks offered have been agreed following consultation with other relevant public bodies regarding other activities and plans for the area.

Dr Andy Samuel, NSTA Chief Executive, said:

“The NSTA is working closely with industry and government to meet UK needs with North Sea supplies produced as cleanly as possible. The UK is forecast to continue importing natural gas as we transition to a fully renewables system and our North Sea gas has less than half the footprint of imported LNG. This licensing round includes gas discoveries in the Southern North Sea which can be rapidly tied back to existing infrastructure.

“All developments undergo environmental and emissions assessments. As with good safety leadership, good environmental performance is good business. For example, we worked with industry to cut flaring again in 2021 by 20%, saving enough gas for 130,000 UK homes.

“Security of supply and net zero should not be in conflict. The industry has committed to halving upstream emissions by 2030 and investing heavily in electrification, carbon storage and hydrogen. Signs are promising so far – our first carbon storage round closed last month with 26 applications from 19 companies across all the areas we offered.”

Business and Energy Secretary Jacob Rees-Mogg said:

“Putin’s illegal invasion of Ukraine means it is now more important than ever that we make the most of sovereign energy resources, strengthening our energy security now and into the future.

“Ensuring our energy independence means exploiting the full potential of our North Sea assets to boost domestic production – recognising that producing gas in the UK has a lower carbon footprint than importing from abroad.

“That is why we welcome the launch of the NSTA’s new licensing round, which will help support highly skilled jobs across the UK’s energy industry, boosting both our energy security and our economy.”