Cygnus field in the UK North Sea

UK confirms new oil & gas licensing round and lifts shale ban

As part of its efforts to boost domestic energy production and bolster energy security, the UK government has lifted the moratorium on shale gas production in England and confirmed its support for a new oil and gas licensing round.

Cygnus field in the UK North Sea (for illustration purposes); Source: Neptune Energy

The licensing round is expected to be launched by the UK regulator, the North Sea Transition Authority (NSTA), in early October, the UK government revealed on Thursday.

In light of Putin’s invasion of Ukraine and the weaponisation of energy, the UK government is taking concrete steps to increase home-grown sources of energy, reduce the UK’s reliance on foreign imports, and explore all possible options to boost domestic energy security. To do so, it is appropriate to pursue all means for increasing UK oil and gas production, including through new oil and gas licences and shale gas extraction, the government explained.

Business and Energy Secretary, Jacob Rees-Mogg, said: “In light of Putin’s illegal invasion of Ukraine and weaponisation of energy, strengthening our energy security is an absolute priority, and – as the Prime Minister said – we are going to ensure the UK is a net energy exporter by 2040. To get there we will need to explore all avenues available to us through solar, wind, oil and gas production – so it’s right that we’ve lifted the pause to realise any potential sources of domestic gas.”

The new licensing round is expected to lead to over 100 new licences, as previously announced by the Prime Minister, forming part of the government’s plans to accelerate domestic energy supply.

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Under the new licensing round, which follows the outcome of the Climate Compatibility Checkpoint, the NSTA is expected to make a number of new ‘blocks’ of the UK Continental Shelf available, for applicants to bid for licences, which will enable developers to search for commercially viable oil and gas sources within the areas of their licences. Developers will still need to seek regulatory approval for any activities conducted within their licensed area, such as drilling or construction of infrastructure.

Lifting the shale ban

Furthermore, the government is today formally lifting the pause on shale gas extraction and will consider future applications for Hydraulic Fracturing Consent with the domestic and global need for gas in mind and where there is local support. Developers will need to have the necessary licences, permissions and consents in place before they can begin operations.

According to the government, the decision comes alongside the publication of the British Geological Survey’s scientific review into shale gas extraction, which was commissioned earlier this year, which recognised there is a limited current understanding of UK geology and onshore shale resources, and the challenges of modelling geological activity in relatively complex geology sometimes found in UK shale locations.

“There have only been three test wells which have been hydraulically fractured in the UK to date. It is clear that we need more sites drilled in order to gather better data and improve the evidence base and we are aware that some developers are keen to assist with this process,” the government said.

Lifting the pause on shale gas extraction will enable drilling to gather this further data, building an understanding of UK shale gas resources.

“We are scaling up renewables, nuclear, and lower carbon energy sources, to boost Britain’s energy security in the long term and reduce our exposure to high fossil fuel prices set by global markets outside our control. However, there will continue to be ongoing demand for oil and gas over the coming years during this transition, with oil and gas needed to maintain the security of the UK’s energy supply.

“Making the most of our own domestic resources under the North Sea will make us less dependent on foreign imports,” the government concluded.