Denmark kicks off mini oil & gas licensing round in North Sea
The Danish Energy Agency (DEA) has opened a mini oil and gas licensing round for exploration and extraction in a defined area in the Danish sector of the North Sea, where a gas discovery was previously made. The energy players, interested in getting more acreage, can now apply for a new oil and gas permit.
According to the Danish Energy Agency, the area offered in the upcoming mini-round of licensing includes the Elly-Luke gas discovery in the Danish part of the North Sea. Oil and gas players interested in getting a new concession can apply for a permit until 15 October 2023. This mini-round is being launched due to the Danish Energy Agency receiving an unsolicited application in this area.
As a result, the Minister of Climate, Energy, and Utilities has decided – after consulting the Committee on Climate, Energy, and Utilities – to launch a mini-round in accordance with Denmark’s rules on mini-rounds and the North Sea Agreement of December 2020.
While Nordsøfonden will participate in the new concession on behalf of the country with a 20 per cent stake, the other companies will be bidding for the remaining 80 per cent stake. The tender has been published in the Official Gazette and in the Official Journal of the European Union as well as on the Danish Energy Agency’s website and on the tender portal.
Furthermore, the award of the concession will be decided on the basis of criteria such as technical and financial capacity, the work programme the applicant offers to carry out, and the timeframe for this. If sufficient technical and financial capacity is available, the criteria for selecting the company, which will be awarded the concession, will be chosen on the basis of the quality of the work programme offered and its timeframe.
This announcement comes after BlueNord (former Noreco) revealed in April 2023 that it had submitted a licence application for acreage containing the Elly-Luke gas discovery to participate in the Danish Ministry of Climate, Energy and Utilities’ upcoming mini-round of licensing.
The Elly-Luke area, which is located in blocks 5504/6 and 5504/10, is said to contain primarily gas and a smaller proportion of condensate. The Danish Energy Agency’s average estimate for the discovery’s gas volume is 5.2 billion m3.
Based on the DEA’s data for 2022, the consumption of natural gas fell by 29 per cent, contributing to the actual energy consumption drop of 1.5 per cent compared to 2021. On the other hand, solar and wind power covered almost 60 per cent of the electricity supply in 2022 against 47 per cent the year before.
Denmark is putting the wheels into motion to speed up decarbonisation with carbon capture and storage (CCS). To this end, the Danish Ministry of Climate, Energy and Supply granted the country’s first-ever permits for full-scale CO2 storage in the North Sea in February 2023.
This came after the Danish Energy Agency granted the first-ever permit for a CO2 storage project at the end of 2022 to INEOS E&P and Wintershall Dea for the Greensand Pilot Injection Project. The following month, INEOS and Wintershall Dea carried out the first-ever injection of CO2 in the North Sea as part of Project Greensand.
Currently, the backup capacity of Denmark’s power system comes from oil or gas and a bit of coal, however, the plan is for hydrogen and energy storage to take this over, once the country reaches its 2030 target of being fully powered by renewables.