New North Sea projects targeting 1.3 billion barrels of oil and gas
The annual performance review for the UK’s top producers highlighted 33 new projects targeting 1.3 billion barrels of oil and gas, which will significantly bolster the country’s energy security, the country’s regulator has revealed.
The North Sea Transition Authority (NSTA) revealed on Thursday that a total of 890 million barrels of those resources could be sanctioned as early as next year and the regulator expects operators to rapidly deliver projects, in line with its effective net zero test, in the interest of UK supply resilience.
Furthermore, the regulator said that exploration and appraisal activity is expected to return to pre-pandemic levels, with 20 wells per year forecast from 2022-24. The appetite for exploration remains, and bodes well for NSTA’s plans to hold a new licensing round later this year, subject to the Climate Compatibility Checkpoint.
The NSTA also used the 28 April Tier Zero meeting to stress that an ongoing proactive approach is essential to surpass the emissions reduction targets agreed in the North Sea Transition Deal.
Held in Q2 every year, the Tier Zero gathers the managing directors of the sector’s 22 largest operators to review the performance of the basin.
Data, including from the annual UKCS Stewardship Survey, is used to show operators how they compare with peers across a series of benchmarking metrics, with a view to sharing best practice and driving improvement.
CO2 emissions for the UK upstream oil and gas industry fell 14 per cent to 12.1 megatonnes in 2021. Furthermore, flaring across the basin fell by 19 per cent year-on-year and venting was down by 24 per cent. The NSTA challenged industry chiefs to sustain these lower levels in 2022 when gas production is expected to rise.
Eighty per cent of Tier Zero operators have forward plans covering asset upgrades, emissions reduction and platform electrification, which will be crucial to meeting, and exceeding, Deal targets.
“Indeed, the sector already has well-developed proposals for electrification projects and a number of operators are involved in government-backed industrial decarbonisation clusters focused on carbon capture and storage (CCS) and hydrogen, currently being progressed,” the NSTA said.
As a reminder, the NSTA last March rebranded and changed its name from the Oil and Gas Authority (OGA) to reflect its expanding role in energy transition, including as the carbon storage licence and permitting authority, monitoring of emissions, assessing a net-zero test for new developments, and stewarding domestic production.
One of the areas highlighted in last year’s meeting was the need for a step-change in well decommissioning and highly positive signs are now evident, with campaign contracting models gaining traction and the NSTA Energy Pathfinder portal listing 470 wells awaiting decommissioning.
The discussion this year also covered opportunities to repurpose infrastructure for decarbonisation projects, such as CCS and H2, which are now a key area of focus. The NSTA will be launching a Carbon Storage licensing round shortly.
The NSTA urged companies to get production efficiency back on track, which slipped last year due to the large number of planned maintenance shutdowns on multiple installations, many of which were postponed the previous year due to Covid.
Following years of improvement in production efficiency, culminating in the 80 per cent target being met in 2019, the metric dropped to 73 per cent in 2021.
However, this indicator has long been a focus for the NSTA and industry and the managing directors confirmed their commitment to restore production efficiency to 80 per cent.
Dr Andy Samuel, NSTA Chief Executive, said: “This meeting once again provided a good platform for positive action, supported by our suite of benchmarks and data insights. I am encouraged by the open, frank and productive dialogue. Many best practices and learnings were shared across the different operators.
“Companies are now progressing new projects that will strengthen energy security while generating tax revenues, and creating and safeguarding thousands of UK jobs as part of an orderly transition to net zero. Importantly the industry reconfirmed commitment to halve production emissions by 2030 with progress well underway. The growing momentum on clean power to offshore installations, CCS and hydrogen was also very evident.”
As recently reported, Samuel will be leaving his role at the end of the year and the NSTA is looking to appoint a successor in the summer so that the appointee can take up the role in time to allow for a period of handover.