Ongoing energy shortages and net zero targets loom over the UK. Yet, the UK government’s approach to fossil fuels and carbon emissions is becoming increasingly unclear.
The government is exploring carbon capture projects while also handing out new UK oil and gas licenses in the North Sea.
Rishi Sunak’s government is balancing the pressure to push forward with net zero targets with the need to secure the UK’s energy supply and support struggling families.
Sunak has made the bold decision to open up North Sea fossil fuel exploration to help bolster future supply of UK oil and gas.
As one would expect, many of the companies working in the North Sea on oil and gas extraction, as well as U.K. government officials, have received multiple complaints over its reluctance to reduce high-emission projects.
PM Rishi Sunak has made his concern over low domestic oil and gas production known and has been supportive of North Sea fossil fuel projects.
Last week, the PM commented on Rosebank – a 24 billion GBP North Sea oil project that was approved earlier this week- by saying that it will create jobs and pump billions into the U.K. economy. He also pitched the idea it would make the UK less reliant on foreign powers.
Some often seem to agree with Sunak on the point that international import of oil and gas from countries such as Russia, is extremely unreliable.
Rosebank is to produce 69,000 barrels of oil and 44 million cubic feet of gas daily, according to Equinor, the Norwegian firm in charge of the Rosebank project.
Sunak also argued that domestic fossil fuel extraction sites -such as Rosebank- are better for the environment, as imports generate a higher carbon footprint.
There was a significant international backlash after the Rosebank launch announcement. However, Rosebank is just one of many new potential oil fields in the North Sea.
At the end of July, over a hundred oil and gas licenses were granted to companies drilling in the North Sea.
Commenting on the reopening of the North Sea for exploration, Himani Pant Pandey, Oil and Gas Analyst at GlobalData, said::
“A number of oil and gas projects are slated for development in shallow waters of the North Sea during 2023–2027. The shallow waters of the North Sea still have an important role to play in promoting UK energy security, especially in the context of weaning away from the Russian oil and gas supplies.”
The measures implemented by Saudi Arabia and Russia recently to reduce exports support the case for the UK bolstering domestic supply.
Stefano Grasso, the senior portfolio manager at 8VantEdge, Singapore, further commented on Britain´s overall energy situation by saying that:
“The oil market is quickly coming to terms with the fact that the OPEC+ cuts announced in the summer are having a deep effect on crude availability.”
“Stocks are drawing while demand keeps growing. We are still far away from a price level causing demand destruction,” he added.
ExxonMobil is currently partnering with Shell in the North Sea in their efforts of rolling out more Carbon Capturing and Storage platforms (CCS). CCSs are a proven way to capture carbon produced by the industry sector. It is then stored underground in the North Sea.
Although CCSs are costly projects and there are currently none operating in the North Sea, the U.K. government has previously announced its plans to capture more than 50 million metric tons of carbon annually by 2050.
ExxonMobil is planning to invest 17 billion USD in the years of 2022-2027 into its lower emission initiatives, such as CCSs. On their website, the company writes of its hopes to help capture not only carbon produced by their drilling stations, but also by others.
Not surprisingly, a growing narrative of the need to invest in more Carbon Capturing units in the North Sea contrasts the PM Sunak’s recent announcement of his plan to water down on UK’s sustainability policies.
It has been estimated that more than 100 CCS will be needed in order to capture all of the U.K.´s greenhouse gas emissions (given the current rate of oil and gas production).
Although Rishi Sunak´s exact position on investing into carbon capturing in the North Sea remains unclear, the PM has previously said that he expects a quarter of Britain’s energy to come from the non-renewable energy sector in 2050.
