Pipedream

Since the Conservative Party came to power in May 2010, government and regulators have handed out hundreds of new offshore oil and gas licences in six licensing rounds.

So, what has all this effort to licence new drilling done to boost UK energy security?

To date, it has delivered just five new discoveries in the North Sea, which together contain 74 million barrels of oil and gas. That’s enough to provide the UK with just three weeks of oil and five weeks of gas over the lifetime of these fields. 

At the moment, though, only three of these discoveries are producing any oil and gas. So far, they have produced the equivalent of just 11 days of oil and 15 days of gas.

Licensing rounds award ‘blocks’ in the North Sea to oil and gas companies, enabling them to explore for resources and develop plans for extraction. But as well as allowing firms to explore for new oil and gas, licensing rounds also enable companies to develop previously known fields, where companies have given up the licences. 

The last thirteen years of licensing rounds have seen seven of these previously known fields go into development, which altogether are expected to produce 178 million barrels of oil and gas by 2050. That’s the equivalent of 25 days of gas and 12 weeks of oil. 

Three of these fields are currently producing and, to date, they have provided a single day’s worth of gas and five weeks’ worth of oil.

Added all together, these 12 newly discovered and re-licenced fields from the last six licensing rounds contain just nine weeks of gas and 16 weeks of oil. The six fields already in production have collectively contributed 16 days' worth of gas – half of which is produced by a cross-border field that exports directly to the Netherlands – and 47 days' worth of oil. 

Official projections show that future licensing rounds would deliver an average of just three weeks’ worth of gas a year

The oil and gas regulator that oversees and issues new licences, the North Sea Transition Authority, is not optimistic that future licensing rounds will be any different from the past thirteen years. Uplift’s analysis of its projections for production stemming from planned future licensing rounds, shows that these would deliver an average of just three weeks’ worth of gas a year¹.

This has not, however, stopped successive energy secretaries and the government from championing new licensing and its role in UK energy security^2,3.

The former head of the North Sea Transition Authority has admitted that new licences will only make a difference “around the edges”, given that the North Sea is one of the world’s oldest offshore production regions. “I think it’s unlikely, given it’s a mature basin and the geology is well-known, that we’re suddenly going to have a situation where we are significantly growing production again,” he told the Financial Times.⁴

Given the poor record of new licensing over the past 13 years to boost UK energy security, politicians' energy would be better focused on getting the UK off oil and gas by reducing demand through better insulation and more renewables, rather than hoping – or wishing – exploration would deliver more of it.

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Methodology

This analysis by Uplift was conducted in October 2023.

Using publicly available data from the North Sea Transition Authority (NSTA) relating to offshore blocks, wells, and licence relinquishments, Uplift created a database of new and previously discovered fields with licences in offshore rounds launched since May 2010 (Rounds 27 to 32). These fields were linked to Rystad Energy production estimates (or to other sources in the limited cases these were not available) and split into two time periods: 2010-2023 and 2024-2050. The NSTA’s production and expenditure projections from March 2023 were used to calculate the volumes that the regulator projects new licensing rounds will deliver. 

Field production volumes and future licensing volumes were converted to days of demand using the CCC Balanced Net Zero pathway’s estimates for gas demand and petroleum demand in 2023, as published in the Sixth Carbon Budget. 

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