Government plans to increase North Sea oil production to reduce energy costs


The government plans to increase North Sea oil and gas production to counter rapidly rising energy prices, a minister has claimed.

Chief Treasury Secretary Simon Clarke told the BBC’s Newsnight that more oil and gas will be part of the government’s strategic energy strategy due to be released next week.

Mr Clarke said officials were considering proposals to approve additional oil and gas fields to wean Britain off Russian fossil fuels.

Chief Treasury Secretary Simon Clarke, pictured, said the government planned to increase North Sea oil and gas production to ease the current energy crisis and spiraling bills.

Chancellor Rishi Sunak slashed excise duty on petrol and diesel by 5p yesterday, but that hasn't thwarted dramatic increases in fuel prices over the past three months

Chancellor Rishi Sunak slashed excise duty on petrol and diesel by 5p yesterday, but that hasn’t thwarted dramatic increases in fuel prices over the past three months

He said: “We need to make this production work as much as possible.” It would simply not be fair to support Putin’s war in Ukraine by buying Russian oil and gas, but it comes at a cost. We are very frank about this.

“The government will define our broader energy security strategy in the coming weeks. But essentially it means doing more of all the things we know we need to do. So that means more new renewables, that means more new nuclear, and that means more North Sea oil and gas. And it’s all of those things in tandem.

Asked about the possibility of increasing production in the North Sea, Mr Clarke said: ‘I was at a summit with the Prime Minister and the Business Secretary last week, meeting with the sector.

“We are determined to unlock more production in the North Sea. I cannot commit to specific fields, but we certainly intend to unlock more production capacity in the North Sea.

There are currently around 4.4 billion barrels of oil under UK waters according to the North Sea Transition Authority with the possibility of over 10 billion in unproven reserves which could improve the country’s energy security, but will have little impact on prices as these are agreed internationally. .

Part of the government's strategy could be to open up new oil and gas fields in the North Sea, file photo

Part of the government’s strategy could be to open up new oil and gas fields in the North Sea, file photo

If other countries increase their production, it could have a much bigger impact on prices.

It is estimated that the Organization of the Petroleum Exporting Countries (OPEC) is in a position to increase oil production by around four million barrels per day, which would have a significant impact on prices.

The UK could also get more gas from the US and Gulf countries. Grain’s liquefied natural gas (LNG) terminal in Kent can in theory supply enough gas to meet 25% of UK demand.

But in reality, this can only happen if enough ships dock there. In a record set last April, the terminal supplied 15% of demand.

This means that there is sufficient capacity to increase the quantity passing through UK LNG terminals, which in turn could also be exported to Europe.

Oil giant Shell suspended work on the Cambo oilfield off the west coast of Shetland in December after admitting the economic case for the investment was “not strong enough”.

Industry body Offshore Energies UK – formerly Oil and Gas UK – has previously said blocking long-planned energy projects such as Cambo would risk leaving the UK at the mercy of global energy shortages.

But Greenpeace warned the proposed development would not solve high bills or improve energy security and urged the government to throw its weight behind renewables, insulation and heat pumps to exit the UK. United oil and gas.

Shell’s decision to pull out was announced just weeks after the UK hosted the UN COP26 climate summit in Glasgow, where countries pledged to try to limit global warming to 1, 5°C to avoid the worst impacts of an overheated planet.

The International Energy Agency has said that no new oil and gas exploration projects should be launched if the world is to meet the 1.5°C target.

In November, Scottish First Minister Nicola Sturgeon said the Cambo project should not go ahead, after months of pressure from opposition parties and campaigners for the Scottish government to clarify its position on Cambo.

And the Climate Change Advisory Board said high prices are being driven by global markets and increased fossil fuel extraction in the UK would have virtually no impact on bills, urging reductions in demand for oil and gas instead.

Philip Evans, an oil and gas transition campaigner for Greenpeace UK, said the Cambo project would produce heavy crude oil, for which the UK has very little refining capacity, and that it “wouldn’t do anything to make deal with high bills or increase energy security”.

He said: “Shell wasn’t interested in going ahead with this project when it was a bad look for them, but now that they can make billions amid wartime price hikes, they are interested again.”

“Meanwhile, our bills are skyrocketing and offshore workers are trapped in a volatile industry.

“Communities across the UK and the North Sea deserve better.

“With the Spring Declaration and a new energy strategy to come, the government must throw its full weight behind UK renewables, a proper home insulation system and the deployment of heat pumps, or our energy policy will be disrupted by the whims of the fossil fuel giants for decades. ‘

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