Britain must kickstart a drilling race to extract the billions of barrels of oil and gas that remain offshore, says the chief executive of the North Sea Transition Authority (NSTA).
Stuart Payne is clearing the way for producers to exploit the oil and gas that still lie under the UK’s continental shelf, which he says will help maintain the country’s energy security for decades to come.
Within the next few weeks, his organisation is expected to issue up to 88 new oil and gas licences – which will mark a jump on the 27 issued in October.
The move is likely to infuriate environmentalists fighting to end new drilling but will delight many in the energy industry.
“I am a shameless optimist when it comes to the North Sea,” says Payne. “Being candid, there’s a race to get that oil and gas into production, in terms of the economics involved and in terms of the infrastructure.
“Oil and gas has clearly been a dominant part of the North Sea’s history for the last 50-60 years. And it’s going to be a significant part of its next 25-40 years.”
The UK’s offshore operators have produced 47 billion barrels of oil from the North Sea, Irish Sea and Atlantic waters over the last five decades.
However, Payne says that 15 billion barrels of oil and gas remain in unmapped areas of the UK’s surrounding oceans, plus a further nine billion in parts already explored or drilled.
Payne’s comments come as Parliament prepares for Monday’s second reading of the Offshore Petroleum Licensing Bill which would require the NSTA to hold oil and gas licensing rounds every year instead of irregularly, as happens now.
Energy Secretary Claire Coutinho has argued that the domestic oil and gas industry is vital to the UK’s energy security and economy so accelerating licensing for exploration would increase investor confidence and make the UK more energy independent.
The fact that Payne shares this view will prove controversial given that Labour, the Liberal Democrats and the SNP have all vowed to halt new drilling.
Many banks have also said they will not lend money for new oil and gas projects, while just a few weeks ago the UK signed up to the Cop28 pledge to “transition away” from fossil fuels.
However, Payne believes there is no contradiction between approving new oil and gas developments and working towards net zero.
He says that while the UK’s oil and gas sector may be in long-term decline, it will remain essential for years to come – both for energy security and for the development of low-carbon energies such as mass hydrogen production, CO2 capture and storage, and offshore wind.
“I’m passionate that the North Sea is the crown jewel of the UK’s energy systems,” he says. “Oil and gas is going to be part of a balanced diet. It’s going to be part of an increasingly mixed energy system.
“Some of the oil and gas projects we’ve approved this year will continue producing through the 2050s. This is very far from turning the [North Sea’s] lights off. What we are saying is that the offshore industry is going to change and mature.
“Places like the North Sea are going to get crowded with new technologies like CO2 capture and storage, hydrogen production, offshore wind and, potentially, tidal and wave energy plus gas storage.”
Payne’s key point is that such low-carbon technologies are not alternatives to oil and gas but are part of the same offshore industry. The supply chains, the workers, their skills and the investors who once built the oil and gas industry will be largely the same ones behind those new technologies.
That vision also includes the drilling platforms and hundreds of miles of pipes that stretch across the seabed, as well as all other infrastructure required to produce oil and gas.
Many of those structures, he believes, will one day drive the low-carbon industries of the future.
Pipes that once carried gas ashore to heat homes will instead carry hydrogen generated by offshore turbines. Others may take waste CO2 from gas-fired onshore power stations or cement works back offshore to be pumped into rocks deep under the sea for permanent storage.
“We’ve sunk an absolute fortune, both in terms of money, people and carbon into building this amazing network,” he says. “It shouldn’t just be for oil and gas, we should be able to save for the next generation of energy technologies.
“Some people will say that the energy transition will be the death of the oil and gas industry but the sector has to find its place in that transition. And it really can.
“We need to make sure we get the kit, the capability and the capital out of the sector. If we want to build carbon capture that’s not going to come from the chocolate industry. That’s going to come from oil and gas.”
Environmentalists may argue that such views are just what to expect from a lifelong oil industry executive, whose career started at energy giant Shell.
He subsequently spent time in Aberdeen with Korean-owned Dana Petroleum, a major North Sea operator, before moving to the NSTA as an HR director in 2015.
By 2020, he had added supply chain and decommissioning to his brief and was effectively overseeing much of the NSTA’s work.
When Andy Samuel exited as chief executive in 2022, Payne was the obvious successor.
However, Payne’s rise to become the UK’s top offshore energy regulator has coincided with a huge shift in attitudes towards oil and gas.
With coal production largely disappearing, those fossil fuels have since become the environmental movements’ new targets.
That makes Payne’s plan to issue new oil and gas licences highly political – especially with a general election looming.
Is he ready for the coming storm? Payne hopes to turn the shouting match over energy into a measured conversation – one which takes account of the fact that the UK still gets three-quarters of its energy from oil and gas.
Gas, he points out, provides 40pc of the nation’s electricity and heats 25 million homes. Similarly, around 32 million vehicles still rely on petrol or diesel.
“We have not been served well by much of the debate around the energy transition,” he says. “Shouting at each other from either end of the argument is a fairly unappealing approach. I think what is always really powerful is where people have actual conversations.
“We live in a world where 75pc of our energy comes from oil and gas so where do we want them to be produced? Do we want them to be produced as much as we can in a place where we can control safety, human rights and emissions? And where we can generate hundreds of thousands of well-paid, highly skilled jobs? Or do we no longer care about that as a society?”
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