New UK oil and gas projects must pass the net zero test


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The UK will still allow the development of new oil and gas fields in the North Sea if they pass a so-called net zero test, the government said on Monday when a consultation to secure comments on a new climate compatibility checkpoint for petroleum. and the gas industry.

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

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

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

The intention of the checkpoint is to assess the compatibility of future licenses with UK climate change targets and will not impact the approval process of proposed developments that fall under licenses that have already been allocated to licensees.

“These proposals are subject to a number of additional checks, including by the OGA as part of its revised strategy, which is in effect a net zero test,” the government said.

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

The climate test does not apply to projects such as Cambo, which has already been the subject of the initial authorization but could be re-examined by the authorities now that Shell has withdrawn from the development of the project and that the operator Siccar Point Energy has suspended the development plan.

“Our industry welcomes the transparency that a checkpoint provides for future BEIS licensing decisions. It is essential that this checkpoint is robust and ensures that future licensing cycles are compatible with the UK’s climate change ambitions, while maintaining investor confidence in the UK continental shelf ”, said Katy Heidenreich, director of supply chain and operations at OGUK, the UK’s leading offshore oil and gas industry organization.

By Tsvetana Paraskova for Oil Octobers

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