Will the Offshore Petroleum Licensing Bill improve energy security?

Does the government’s claim that the Offshore Petroleum Licensing Bill will improve energy security actually stack up? Thomas Perrett reports.

Sea kayakers pass an oil rig on September 8, 2020 in Cromarty, Scotland. Credit: Getty Images/Peter Summers.

The government has claimed that its Offshore Petroleum Licensing Bill aims to “make the UK more energy independent,” and will “safeguard domestic energy supplies”, but this has been met with criticism from scientists, environmental campaign groups and NGOs, and some Conservative MPs, who dispute that prolonged fossil fuel extraction will improve energy security.

Indeed, the Bill has created a rift within the Conservative Party. MP Chris Skidmore, who, in 2023, published an independent review into the government’s net zero policies, resigned following what he described as “the government's decision to prioritise and politicise new oil and gas licences above a sensible investment plan for the future”. 

New tests for oil and gas licensing applications

Under the new Bill, the North Sea Transition Authority (NSTA) will apply two tests to new oil and gas licensing applications, firstly to determine if the carbon intensity of domestically produced gas is lower than imported gas, and secondly a test to determine if Britain will be a net importer of oil and gas over a 15-year period.

Despite government claims that the Offshore Petroleum Licensing Bill will “require annual oil and gas licensing rounds subject to stringent new emissions and imports tests”, these climate compatibility criteria have been criticised for using misleading data.

Beth Walker, senior policy advisor at think tank E3G, disputed that domestically produced gas was four times cleaner than imported gas, telling ENDS that “this figure comes from comparing UK gas production to the very dirtiest kind of gas imported into the UK (LNG)”. 

Norwegian gas versus UK gas production

“The focus on LNG obscures the fact that the main source of UK gas imports, Norwegian gas, is actually two times cleaner than UK gas production,” Walker argued.

“Even if we limit the comparison to LNG imports, taking into account all of the emissions from UK gas, those imports are only 17% more polluting, not 400% more polluting,” she added.

“UK gas is in the bottom half of the global league table for overall cleanliness, and [it] is twice as polluting as Norwegian gas, which is the major source of our imports”.

Richard Collett-White, an analyst at Carbon Tracker, observed that government estimates had failed to account for the total emissions from domestically produced gas. 

Collett-White told ENDS that “LNG does have higher operational emissions than North Sea gas, but the vast majority of the lifecycle emissions of gas come from burning it”, and added: “when you factor in those end-use emissions, the difference is slim. More drilling means higher global supply and more emissions.”

Indeed, Neil Verlander, of Friends of the Earth, told ENDS that: “Over 90% of the emissions from gas come from burning it at the end, not from extracting and transporting it”.

“Where we get our oil and gas will not make a significant difference on emissions. What matters is extracting and burning fewer fossil fuels,” Verlander added.

Energy bills and security

The extraction of new oil and gas is also unlikely to reduce energy bills or to establish domestic energy security.

Beth Walker observed that “most of what’s left in the UK North Sea (around 70%) is oil”, which campaigners have warned will have to be exported due to its incompatibility with British refineries. 

Meanwhile, North Sea gas production has declined by two thirds since 2000, according to the NSTA’s figures, issuing that new licences would result in a 95% decline by 2050, as opposed to a 97% decline otherwise. 

Damaging the UK’s international green credentials

Walker argued that the Bill will “further damage the UK’s international green credentials, following the recent global agreement to transition away from fossil fuels at COP”, and “sends confusing signals to investors as the government is propping up a declining industry”.

Indeed, as the production of new North Sea infrastructure can take around 18 years, investors risk stranded assets, owing to the stringency of international decarbonisation obligations and the availability of alternative, cheaper sources of energy.

Furthermore, Richard Collett-White stated that “further developments will have no meaningful impact on our energy bills because the oil and gas will be sold on the open market”. 

“The North Sea is in terminal decline and the government would bolster energy security far more by accelerating the shift away from oil and gas – with renewables, energy efficiency, electric vehicles and heat pumps,” he added.

“Even the sector’s regulator has said this bill is unnecessary.