As part of Liz Truss’ dash to new energy supplies, regulators are working to reduce red tape in the North Sea.
North Sea Transition Authority (NSTA), is looking at reducing the application time for its upcoming licensing round to a minimum of 90 days. This would be a drastic change from typical rounds that take around 120 days.
Companies looking to drill in the North Sea for oil or gas must apply for a license. There are 100 new areas that will be up for bidding. A company may be able to drill in the area after obtaining a license.
The North Sea Transition Authority is trying to find areas that can be developed quickly, as they have known reserves. They are also close to existing pipes.
Insiders point out the “urgency” of getting new supplies online in light of a renewed focus on energy supplies throughout Whitehall.
Russia’s war against Ukraine continues to cause chaos across the energy markets. This highlights how important it is to ensure future fuel supplies.
The Russian gas flow cuts to Europe have caused gas prices to rise for months. This forced the Government to subsidise electricity bills for homes and businesses at an estimated cost £60bn for the next six months.
Although it is becoming easier to find new oil and gas, the process can take up to five years before they are put into production. Although speeding up the licensing process might not make much difference, it is part of Whitehall’s other plans to reduce bureaucracy. It is also intended to signal to investors that the Government is committed to the basin.
Jacob Rees Mogg, the UK’s Business Secretary, confirmed Wednesday that the UK has completed its first North Sea licensing round since 2020. He lifted the ban against fracking for natural gas.
100 new licenses will be issued. This is expected to cover prospects west of Shetland as well as the northern North Sea. It is unclear if they will all be taken up and further developed.
The investment in the basin has dropped significantly in recent years. It was estimated that it will cost around £16bn to $42bn this year. Investment in the basin has fallen significantly in recent years, from around £16bn in 2014 to an expected £4bn this year. Supermajor oil companies are now looking for new opportunities elsewhere in the world. Investors have also moved away from the sector in favour of greener energy.
An industry source said that some people believe the round will be too full, while others think it will be less full. “There might be many companies taking protection acreage. However, just because you have a license doesn’t mean that you are committed to developing anything. It’s not going to be very indicative of any development.
The Treasury announced Friday five North Sea development projects as part of its new plan to grow. It also included 140 infrastructure projects that it anticipates will benefit from reductions in red tape. These include the controversial Cambo oilfield west of Shetland.
Friday’s statement by Kwasi Kwarteng, Chancellor, was that consenting for national projects takes longer and is not getting faster, as international rivals move ahead. This must be stopped.
“We will streamline a host of assessments and appraisals, consultations as well as endless duplications and regulations.”
According to industry sources, they feel encouraged by the recognition by the government of the necessity for domestic oil and natural gas supplies. This is despite the fact that the UK is moving towards a low-carbon economy with a push to net zero emission.
Ministers are keen to increase supplies and reduce prices by negotiating long-term agreements with power and gas producers. Maddy McTernan was the leader of the vaccine task force during covid and will be leading negotiations with gas producers.
Industry strongly resisted a May windfall tax, warning that it would discourage investment. Equinor submitted plans to develop its Rosebank field.
Mike Tholen, acting chief executive at Offshore Energies UK said that it supports policies that “help the economy grow and make the best use of its energy resources”.
He said: “We are committed to working with the government, all parties, to ensure that we have fully functioning markets for energy which will help us provide reliable and affordable energy. We continue to support and promote the UK’s energy security as a critical factor in driving productivity.
