Article Republished By Javier Troconis
The UK’s Energy Security Strategy and plans to reduce reliance on energy imports, as well as operational and development outlooks for oil and gas fields featured in the UK North Sea oil and gas sector in the past month.
The UK government unveiled in early April its Energy Security Strategy, following rising global energy prices and volatility in international markets after Russia invaded Ukraine. The strategy includes fully utilising the oil and gas resources in the UK North Sea and accelerating the deployment of new nuclear power generation, wind, solar, and hydrogen.
“The government’s British Energy Security Strategy sets out how Great Britain will accelerate the deployment of wind, new nuclear, solar and hydrogen, whilst supporting the production of domestic oil and gas in the nearer term – which could see 95% of electricity by 2030 being low carbon,” the government said.
Plans in the new strategy include a new ambition of up to 50 GW of offshore wind by 2030 – more than enough to power every home in the UK – of which the government would like to see up to 5 GW from floating offshore wind in deeper seas. In oil and gas, the UK plans to launch in the autumn a licensing round for new North Sea oil and gas projects.
“Currently around half of our demand for gas is met through domestic supplies. In meeting net-zero by 2050 we may still use a quarter of the gas that we use now. So to reduce our reliance on imported fossil fuels, we must fully utilise our great North Sea reserve, use the empty caverns for CO2 storage, bring through hydrogen to use as an alternative to natural gas and use our offshore expertise to support our offshore wind sector,” the energy strategy says.
“As a result of our plans, the North Sea will still be a foundation of our energy security but we will have reduced our gas consumption by over 40% by 2030,” the government noted.
While maintaining production in the North Sea, the UK will aim to reduce emissions from offshore oil and gas further, by driving rapid industry investment in electrifying offshore production, to ensure UK gas remains the low-carbon choice.
The North Sea Transition Authority (NSTA) welcomed the Energy Strategy.
“The energy trilemma of security of supply, affordability and sustainability must finally be solved and this strategy is a welcome step forward,” said NSTA chief executive Andy Samuel.
“Oil and gas currently supply around 3/4 of our energy needs and will continue to be essential for decades to come. That is why we plan to hold a licensing round later this year – taking into account the government’s Climate Compatibility Checkpoint – and steward new oil and gas developments into production – bolstering energy security and resilience. Equally we expect capital to be reinvested in energy transition projects from electrification through to carbon capture and clean hydrogen,” Samuel added.
The UK’s big ambitions can be realised but need long-term planning and political consensus, Offshore Energies UK said, welcoming the announcement of a licensing round for new oil and gas projects.
“OEUK has been consistently pushing for a policy of supporting UK oil and gas while simultaneously expanding offshore wind, and other low-carbon energies, to provide an ever-increasing proportion of future energy needs,” the offshore industry’s association said.
OEUK also called on the government to back UK companies and workers to construct the nation’s low-carbon future.
“Many companies involved in UK oil and gas are already expanding into offshore wind, creating the infrastructure for mass hydrogen production, and building carbon capture and storage systems,” Deirdre Michie, chief executive of OEUK, said a day before the government unveiled the strategy.
“They have the expertise not just in engineering but also in financing and managing these huge projects. Those companies and their workforces are the bedrock on which the UK should build its new low carbon energy infrastructure,” Michie added.
Following an NSTA investigation into Esso’s sale to NEO of interests in 13 producing fields – including the Elgin Franklin fields, operated by TotalEnergies – the Regulator has reminded licensees of the obligation to collaborate effectively and ensure transactions are completed promptly, to support investment in the UK Continental Shelf (UKCS), NSTA said in mid-April. The NSTA launched the investigation amid concerns that negotiations were progressing too slowly and the possible chilling effect this could have on investment. The regulator observed that the parties did collaborate, however, at times communication was lacking, and these shortcomings may have delayed the transaction.
In company and field-specific news, the NSTA extended the licences containing the Cambo oil and gas field which were due to expire at the end of March. OEUK welcomed the decision to extend the licence, with sustainability director Mike Tholen saying that “Last year the UK had to import 62% of its gas and this could reach 80% by 2030 – so investment in exploration, new fields and wells is important to protecting the UK’s future energy security whilst meeting our climate targets.”
Ithaca Energy announced in early April that it had reached an agreement to buy Siccar Point Energy, the developer of Cambo, for nearly US$1.5 billion.
“The Cambo field on its own is anticipated to deliver up to 170 million barrels of oil equivalent during its 25-year operational life, materially helping to reduce the need for the import of more carbon intensive alternatives and increasing the UK’s energy independence through the energy transition,” Ithaca Energy said.
Commenting on the deal, Friends of the Earth Scotland’s Climate and Energy Campaigner Caroline Rance said:
“The new owners of Cambo will be desperate to profit from their billion pound gamble meaning that they will be hellbent on selling any oil they might extract to the highest international bidder.”
As part of the efforts to reduce reliance on foreign gas imports, the UK government commissioned in early April the British Geological Survey to advise on the latest scientific evidence around shale gas extraction.
“In light of Putin’s criminal invasion of Ukraine, it is absolutely right that we explore all possible domestic energy sources,” Business and Energy Secretary Kwasi Kwarteng said. However, Kwarteng noted that “It remains the case that fracking in England would take years of exploration and development before commercial quantities of gas could be produced for the market, and would certainly have no effect on prices in the near term.”
Commenting on the government’s request for a report on shale gas, Cuadrilla’s CEO Francis Egan said, “The Government clearly recognises the huge potential that shale gas offers this country, and this review may be a tentative first step towards overturning the moratorium and exploiting that potential.”
INEOS has written to the UK government offering to safely develop a fully functioning Shale test site to demonstrate that the technology can be safe and secure in the UK.
“The UK is right to be re-examining its energy policy and to look again at the North Sea as part of the answer to our energy needs. But, as the US has shown, shale gas from home could make us self-sufficient in ten years and we need to re-examine this too,” said Sir Jim Ratcliffe, INEOS founder and chairman.
Ping Petroleum Limited, a subsidiary of Dagang NeXchange Berhad (DNeX), has received a letter of “no objection” from the NSTA in relation to its proposed development concept for the Avalon discovery in the Central North Sea offshore the UK. The company will now finalise conceptual development planning and begin Front End Engineering works in preparation to submit the Avalon Field Development Plan, with Final Investment Decision expected later this year. Subject to availability of key materials and equipment, production from the oilfield is scheduled to begin between mid-2024 and mid-2025.
Repsol Sinopec Resources UK announced that the Golden Eagle, Piper and Claymore field owners had executed new agreements reaffirming their commitment to export produced oil to the Flotta Terminal until end of field life in the 2030s.
Neptune Energy has received an improved environmental, social and governance rating from Sustainalytics of 23.2, putting it in the top 3% of all oil and gas companies rated by the organisation, the energy firm said on 20 April.
i3 Energy plc has executed a Farm-in Agreement with Europa Oil & Gas Limited, following Europa’s completion of its equity fundraising to fund its share of the upcoming Serenity appraisal well. The companies will now launch the detailed planning and permitting process for the Serenity appraisal well, which they currently expect to spud in late Q3 this year, i3 Energy CEO Majid Shafiq said.
Serica Energy slightly revised down its production guidance range for 2022 to 26,000 boe/d-30,000 boe/d from 27,100- 33,600 boe/d, to reflect lower Columbus production rates and current supply chain limitations causing 2022 programme delays.
Deltic Energy said on 22 April it is preparing for the drilling of the Pensacola site, which its joint venture partner Shell has indicated could start towards the end of the third quarter of 2022.
Australia-based Finder Energy Holdings is expanding its UK North Sea portfolio after entering into an agreement with Talon Energy to buy a 100% interest in the Seaward Production Licence P2527 adjacent to the giant Buzzard Oil Field in the central North Sea.
“Finder’s prospects are attractive to operators of nearby infrastructure because they open up the potential for low cost and rapid tie-backs to achieve early production by utilising capacity in their existing infrastructure. These factors greatly improve the farmout potential of Finder’s prospects, which is the central pillar of Finder’s Infrastructure-Led Exploration Strategy,” Finder CEO Damon Neaves said.
Egdon Resources plc announced on 26 April that Shell U.K. Limited had informed Egdon and the North Sea Transition Authority of its intention to withdraw from licences P1929 and P2304 containing the Resolution and Endeavour gas discoveries. Egdon will now consider its options, including its ongoing commitment to the licences and will discuss this with the NSTA, the company said.
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