Alok Sharma: North sea gas extraction won’t solve energy crisis
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A trade body for the fossil fuel industry has hailed the news that 115 bids have been put in for new oil and gas exploration licences in the North Sea. It comes as the UK scambles to keep energy flowing amid an energy security crisis and the looming threat of potential winter supply shortages. The fossil fuel industry called for more oil and gas exploration in the North Sea to boost homegrown supplies and slash reliance on expensive imports.
The West has scrambled to cut its energy ties with Russia as the war in Ukraine continues. The major energy producer has had a tight grip on European energy and sent prices soaring by “weaponising energy” with supply cuts over the last year.
This has been sending shockwaves down the volatile wholesale markets – will billpayers paying an ultimate price. But, to “boost security”, the North Sea Transition Authority (NSTA) launched its 33rd licensing round for companies to explore oil and gas following a request from the then Business Secretary Jacob Rees-Mogg late last year.
It was claimed that 898 North Sea blocks and part-blocks could be developed while over over 100 licenses could be issued.For those supporting the continued exploration of oil and gas emid the energy crisis, it was argued that the vast wealth of hydrocarbons which lie in the waters can be exploited by firms to ease the supply and price crisis.
Now, The NSTA has now confirmed that it received 115 bids spread across 258 blocks and part-blocks submitted by 76 companies in the round, which closed just last week.
Currently, Britain gets around 75 percent of its total energy from oil and gas, according to an economic report by Offshore Energies UK (OEUK), a trade industry body.
However, Britain is somewhat reliant on imports. In 2021, the country had to import just over 60 percent of its gas. Across the UK, about 24 million homes (85 percent of the total) also rely on gas boilers for heat.
The UK also depends on gas for its power supplies as gas-fired power stations normally produce 42 percent of the country’s electricity. Meanwhile, oil powers the bulk of the UK’s transport, with 32 million vehicles running on petrol and diesel, OEUK claims.
Mark Wilson, director of HSE and operations at OEUK said: “These license applications could potentially help the nation safeguard its supplies of oil and gas and support the UK during its transition to low-carbon energy. These applications reflect long-term thinking by companies which will invest many millions of pounds in the North Sea to search for new reserves, with no guarantee of success.
“The aim of issuing these new licences is simply to support the UK while it builds the infrastructure needed for a low-carbon future. As some of our older reserves are becoming depleted new finds will help us replace lost production of oil and gas and positively contribute to UK’s energy transition and energy security. This is why new licences are so important.
“All new developments will have lower emissions than older fields, helping the industry meet it’s target of halving emissions by 2030 and net zero emissions by 2050. Our industry has already reduced the emissions from UK oil and gas production by 20 percent since 2018. New developments will be subject to checks by the industry regulators to ensure that the production is consistent with our binding commitments on climate change.”
However, climate activists and campaigners have argued that new oil should be kept in the ground due to the urgent climate crisis, while more gas supplies may not necessarily ease prices either in the short-term.
For instance, Philip Evans, energy transition campaigner for Greenpeace UK, has previously said: “This Government’s energy policy benefits fossil fuel companies and no one else.
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“Supporting the oil and gas giants profiteering from the energy and climate crises ignores the speedy solutions that are best for the economy, for lowering bills and for the climate. New oil and gas licences won’t lower energy bills for struggling families this winter or any winter soon nor provide energy security in the medium term.”
Meanwhile, experts have said that because gas producers still sell to wholesale supplies to providers on international markets, household bills would be unlikely to decrease if prices remain high.
But, with gas prices plummeting to pre-Ukraine levels in recent weeks, forecasters have predicted that bills could drop from as early as July.
Analysis by the Carbon Brief revealed that, last January, the Government the cost of generating electricity via offshore wind was nine times cheaper than the £446/MWh cost of running gas-fired power stations during that period.
The UK still has a target of phasing out gas and oil altogether as it scrambles to reach net zero by 2050.
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