OEUK news

North Sea licences and carbon capture projects boost energy security and the drive to net zero

31 July 2023

Offshore Energies UK, the leading trade association for energy firms from oil and gas to carbon capture, offshore wind and hydrogen, has greeted the government’s commitment to the 33rd licencing round and its carbon capture announcements as important steps forward for long-term energy security and jobs.  

Today’s go-ahead for the ACORN and Viking carbon capture projects, respectively in Aberdeenshire and Humberside, is welcome news for firms that need an attractive environment to invest in energy production and to establish new technologies and jobs across the UK.

Unlocking private sector capital is the key to making the transition to a low carbon world, and companies across the energy mix are keen to see long-term, stable energy policies that help them build that future.

In addition, HM Treasury has announced a review of the oil and gas fiscal regime “to ensure the regime delivers predictability and certainty, supporting investment, jobs and the country’s energy security.”

David Whitehouse, OEUK CEO comments: 

“Domestic production is the best pathway to net zero and the UK Government’s commitment to licences is a welcome boost for energy security and jobs.

“Oil and gas fields decline naturally over time. The UK needs the churn of new licences to manage production decline in-line with the maturing basin. There are currently 283 active oil and gas fields in the North Sea, by 2030 around 180 of those will have ceased production due to natural decline. If we do not replace maturing oil and gas fields with new ones, the rate of production will decline much faster than we can replace them with low carbon alternatives.  

“Developing our new carbon capture industry and its high-value jobs needs significant investment from our energy producing companies. This means that the bedrock to success and delivering growth in the economy can only be collaboration between private and public capital.

“The UK’s skilled offshore workforce, its engineering expertise and its geology have given our nation a unique opportunity to lead the way in building a net zero world building on the expertise of our sector in Scotland and around the UK.

“OEUK members share the vision and ambition of all parties on delivering a home-grown energy transition and net zero with potential to spend almost £200 billion over the decade. The majority of this could be spent in offshore wind, carbon capture and storage and hydrogen in the right investment environment. To deliver net zero, an unprecedented amount of private investment needs to be unlocked.  

“These announcements, taken together with the launch of the fiscal review by HM Treasury, should help to foster much needed confidence in the UK’s energy sector.” 

The Viking CCS project, run by OEUK members Harbour Energy alongside partner bp, and The Acorn Project, set up by Storegga, Shell UK, Harbour Energy and North Sea Midstream Partners, were selected as the next projects to receive government support from the £20 billion CCS fund announced in this year’s Spring Budget.  

Together, the chosen projects will help to decarbonise industrial clusters in England, Wales and Scotland by capturing CO2 from heavy-emitting sectors, like oil and gas refining and steel manufacturing, and transporting the carbon via ships or pipelines to be permanently stored under the North Sea.  

Combined, the projects could capture and store tonnes of carbon per year and generate up to £100bn worth of work for UK manufacturing companies by 2050. Some of the clusters will also supply hard-to-decarbonise sectors with hydrogen to power operations as a low-carbon alternative to fossil fuels.  

Commenting, OEUK sustainability and policy director Mike Tholen said:  

“Carbon capture and storage will be a key tool in the global fight against climate change, and developing this technology is now a matter of national interest to our economy and our environment.  

“This is a solution that can allow the UK to maintain reliable supplies of energy while cutting emissions, generating jobs and creating huge export opportunities. Deploying CCS at scale in the UK can help energy intensive industries to decarbonise at pace, generating jobs and creating huge export opportunities. 

“We have the capabilities necessary to make this a success – large industrial clusters, millions of tonnes worth of storage capacity, and thousands of skilled people from the offshore energy industry with transferrable expertise.  

“But to really kickstart the UK’s CCUS economy, we need to maintain momentum. That means continued, targeted and urgent progress from government and industry alike.”  

Fast facts:

  • UK targets to store 20-30 million tonnes pa of CO2 by 2030 – meeting this target needs four clusters to be operational before 2030 
  • The Climate Change Committee estimate the UK will need up to 100 million tonnes of CO2 per annum being captured and stored by the 2040s 
  • UK has 78 billion tonnes of CO2 geological storage capacity under the seas around the UK in depleted oil and gas fields and saline aquifers 
  • The first Carbon Storage licence round was announced by the North Sea Transition Authority in Q3 2022, with results expected in Q4 2023, as many as 100 CO2 stores will be needed by 2050 
  • The UK has a target to generate 10 GW of low carbon hydrogen by 2030 which will require CCUS clusters to be commissioned and in operations

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