Oil & Gas

22 Dec 2021

New Oil And Gas Projects In UK Need To Pass Net-Zero Test

22 Dec 2021  by   

The UK will still allow the development of new oil and gas oilfields in the North Sea if they pass a so-called net-zero test, the government said on Monday as it opened a consultation seeking input on a new climate compatibility checkpoint for the oil and gas industry.

The checkpoint will apply to any future oil and gas licenses to ensure they are aligned with the UK’s climate change commitments and net-zero by 2050 target, the government said.

The proposed climate compatibility checkpoint “sets out potential tests that could be used to assess new licenses, including domestic demand for oil and gas, the sector’s projected production levels, the increasing prevalence of clean technologies such as carbon capture and hydrogen generation, and the sector’s continued progress against emissions reduction targets,” the UK said.

“This new checkpoint will be key to our plans to support the oil and gas sector during its net zero transition. It helps safeguard the future of this vital UK industry as we create more opportunities for green jobs and investment across the country,” Energy and Climate Change Minister Greg Hands said.

The intention of the checkpoint is to assess the compatibility of future licensing with UK climate change objectives and will not impact the consenting process for proposed developments that come under licenses that have already been awarded to licensees.

“Such proposals are subject to a number of further checks including by the OGA under its revised Strategy, which is effectively a net zero test,” the government said.

This effectively means that the UK expects to award new licenses and allow new oil and gas developments, provided they meet the net-zero compatibility requirements.

The climate test doesn’t apply to projects such as Cambo, which has already undergone the initial licensing but could be reviewed by authorities again now that Shell has pulled out of the project development and the operator Siccar Point Energy put the development plan on hold.

“Our industry welcomes the transparency that a checkpoint for future BEIS licensing decisions provides. It is vital that this checkpoint is robust and ensures that future licensing rounds are compatible with the UK’s climate change ambitions, while maintaining investor confidence in the UK Continental Shelf,” said Katy Heidenreich, Supply Chain & Operations Director at OGUK, the leading body for the UK offshore oil and gas industry.

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