By William Mathis (Bloomberg) —
The UK will soon offer new licenses to explore areas of its seabed for oil and gas, but even if the drilling is successful it probably won’t boost supplies for at least a decade.
It’s an unhelpful timeline for British Prime Minister Liz Truss, whose plan to tackle the winter energy crisis relies largely on boosting supplies, in contrast to the European Union’s moves to cut demand. She has vowed to deliver more than 100 new licenses in a process that could open in the coming days, according to industry lobby Offshore Energies UK.
Yet UK licensing rounds are the first of many steps in the development of new oil and gas fields.
“In terms of finding new volumes, you’re probably looking toward a decade before we’d see any meaningful impact,” said Neivan Boroujerdi, analyst at Wood Mackenzie. “Even that’s likely to be minimal.”
It’s been three years since the launch of the last round, and that process hasn’t yet delivered a commitment to drill wells. The most recent leasing round that resulted in any commercial volumes of oil and gas took place in 2012. That has done little to slow the gradual decline of fossil fuels coming out of the North Sea.
“Any increases in UK extraction of oil and gas would have, at most, a marginal effect on the prices faced by UK consumers in future,” John Selwyn Gummer, chairman of the country’s Climate Change Committee, said in a letter earlier this year to then-Business Secretary Kwasi Kwarteng. “An end to UK exploration would send a clear signal to investors and consumers that the UK is committed to the 1.5°C global temperature goal.”
© 2022 Bloomberg L.P.
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