The UK government could award oil and gas companies more than 100 new ones licenses for drilling in the North Seaas it looks for ways to strengthen energy security in the midst of a global supply crisis.
Launched on Friday license round will not lead to new UK production for several years. And when the drilling begins, Britain will still be dependent on energy imports, according to the government and leaving vulnerable to skyrocketing prices and supply disruptions of the kind that threaten blackouts this winter.
The British utility company National Grid
(NGG) warned on Thursday that households and businesses could be without power for up to three hours at a time in a worst-case scenario of very cold weather, low wind level, gas shortage and the inability to import electricity from Europe. It said it would take steps to mitigate the risk, including bringing old coal-fired power plants back online if necessary.
From November 1, National Grid will also offer financial incentives to customers to reduce power consumption during peak periods.
Kathryn Porter, an energy consultant at Watt-Logic, told CNN Business that National Grid was still underestimating the risks of delivering, but that household blackouts were unlikely because it could cut off major energy users during peak periods if needed.
The latest licensing round will not improve immediate supply image and could face a legal challenge from environmental activists. Greenpeace said new oil and gas licenses were “potentially illegal” and would look for ways to act.
“New oil and gas licenses will not lower energy bills for families struggling this winter or any winter soon, nor provide energy security in the medium term,” Philip Evans, energy transition campaigner for Greenpeace UK, said in a statement.
“New licenses – and more importantly more fossil fuels – solve none of these problems, but will make the climate crisis even worse,” he added.
Analysis by the North Sea Transition Authority (NSTA), the regulator that grants licenses, shows the average time between discovery of oil and gas deposits and first production is close to five years, although the delay is “declining”.
In a statement on Friday, the NSTA said it will prioritize areas in the southern North Sea that can be developed quickly and where gas has already been discovered. Companies have until January 12 to apply for permits, when permits are expected to be issued already in the second quarter of 2023.
The NSTA said the licensing round has been subject to a “climate compatibility check” to ensure it is consistent with the UK government’s commitment to reach net zero CO2 emissions by 2050. It added that producing gas domestically has a much lower CO2 footprint than importing it from abroad.
The International Energy Agency said last year that investment in new fossil fuel supply projects, including drilling for oil and gas, must stop immediately if the world is to limit global warming to 1.5 degrees Celsius above pre-industrial levels.
The British government earlier this year set out plans to generate 95% of Britain’s electricity from low-carbon sources by 2030. The plan, which allows drilling for oil and gas, will also boost nuclear and wind power.