Page 11 - EurOil Week 41 2021

EurOil POLICY EurOil

More UK gas needs to be developed

to avoid steep output decline: OGUK

UK THE UK upstream industry has pointed to the and Irish Sea have served the nation well – but
gas price spike in Europe as evidence that more their output is falling, partly because too few
Output could fall 75% North Sea fields should be developed. new fields have been developed,” OGUK said.
by 2030 if investment “The global gas storage that sent prices surg- “Such reliance will increase – unless the UK
does not continue, the ing again this week is a powerful reminder of the invests in the new resources known to lie under
industry has warned. UK’s need to maintain its own North Sea sup- its continental shelf. Without such investment,
plies,” OGUK, which represents North Sea oil UK gas output will plummet another 75% by
and gas operators, said in a statement on Octo- 2030.
ber 6. OGUK CEO Deirdre Michie said that while
Gas prices spiked at above $1,900 per 1,000 the North Sea industry it represents supports the
cubic metres on October 6 – an unprecedented UK’s path towards net-zero emissions by 2050,
high at a time of year when prices are normally “we will need gas to power us through this green
subdued. Supply is constrained, while demand transition.”
has seen a strong rebound over recent months. “It would be far better to get as much of that
Russia has been blamed for withholding addi- gas as possible from sources we can control
tional supply beyond its contractual obliga- rather than rely on other countries,” she said.
tions, while a surge in Asian LNG demand has
diverted supplies of the super-cooled gas away 100% renewables by 2035
from Europe. Amid the energy crisis, which have caused a
The supply crunch is also in part a culmina- number of independent energy suppliers to go
tion of years of falling output in Europe, owing bankrupt in the UK in recent weeks, Prime Min-
to indigenous decline as well as upstream restric- ister Boris Johnson announced on October 4 that
tions. The wind-down and closure of the giant all of the UK’s electricity would be sourced from
Groningen field in the Netherlands has been renewables by 2025.
brought forward, while countries across Europe “We can get to complete clean energy produc-
are increasing their scrutiny of new upstream tion by 2035,” Johnson told reporters. “We can do
projects. for our entire energy production by 2035 what
Gas is a major part of the UK energy mix, we’re doing with internal combustion engine
covering 40% of the country’s electricity needs vehicles by 2030.”
and providing heating to 23mn homes. This The UK is striving to reduce its emissions by
helps explain why the country has been particu- 78% by 2035, representing one of the most ambi-
larly hard-hit by the gas crisis. Another factor tious climate goals of any nation in the world. But
has been low output at the UK’s offshore wind the government is yet to say how it will address
farms, which are the second-biggest source of its the issue of renewables’ intermittency. Hydro-
electricity. gen has been touted as a solution, although even
Yet while the UK has expanded gas use over the most bullish of projections do not envisage
the years, in part to fulfil its goal of phasing out enough of the fuel being produced to support a
coal burning by 2024, its domestic production of renewables-only grid.
the fuel has declined. The UK was self-sufficient Johnson did not specify how his plan
in gas in 2004, but now imports around half of its would affect the UK’s existing fleet of gas-
needs from other countries. fired power plants, nor the new stations under
“The UK’s own gas fields in the North Sea development.™

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