Oil & gas player under scrutiny for potential license breach

Oil & gas firm under scrutiny over potential North Sea license breach

Amid ongoing flaring and venting crackdown, the UK’s regulator, North Sea Transition Authority (NSTA), has launched a probe to look into an undisclosed oil and gas company suspected of breaching one of its North Sea license conditions.

For illustration purposes; Source: NSTA

While announcing this on Wednesday, the NSTA explained that its investigation into an oil and gas company for flaring and venting in the North Sea without consent could result in action being taken, including a fine for the company or the relevant licence could be taken away.

While venting is defined as the discharging of gases into the atmosphere, flaring refers to burning the gases before they are discharged and mainly results in CO2 emissions. Even though flaring and venting of gases are required for safety and operational reasons, the UK regulator believes that more can be done to reduce the amount.

The UK watchdog underscores that monitoring flaring and venting and reducing emissions are vital parts of its work to help the UK government meet its net-zero target. In addition, these processes waste gas which could otherwise be used to boost the UK’s energy security.

As licensees have an obligation under the NSTA’s strategy to assist the Secretary of State to meet the UK’s net-zero target, while optimising oil and gas production to bolster the security of supply, “unauthorised flaring and venting go against this obligation.”

As pointed out by the regulator, compliance with consents is “both an indicator of good management of fields by licensees and a vital pillar of a company’s social licence to operate.” The UK’s North Sea Transition Deal commits the industry to reduce emissions from production operations by at least 50 per cent by 2030, against a 2018 baseline, on the path to net-zero by 2050.

Moreover, flaring and venting made up 26 per cent of emissions from oil and gas production activities in the UK North Sea between 2018-20, thus, reducing them will help to meet reduction targets outlined in the North Sea Transition Deal and lower gas waste.

After revising its strategy, the UK regulator introduced a net-zero stewardship expectation in March 2021, requiring operators to show their commitment to reducing greenhouse gases throughout the project lifecycle.

This was followed by a tougher approach to flaring and venting as set out in updated guidance, providing details of the NSTA’s intent to use its consenting regime to drive reductions and, where possible, eliminate both processes. 

Jane de Lozey, NSTA Interim Director of Regulation, remarked: “With our support, North Sea operators cut flaring by 20 per cent and venting by 22 per cent last year. The NSTA is committed to holding industry to account on emissions to ensure progress continues and is prepared to take action where we suspect a company’s actions risk compromising efforts to meet and surpass agreed targets.”

In September 2022, the NSTA said that the oil and gas industry was making progress on emission reduction targets.

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However, the regulator underlined that more action would be required to halve emissions by 2030 as agreed in the North Sea Transition Deal.