A ban on future exploration licences would “undermine the fragile confidence” within the oil and gas sector, an industry expert has warned.
Graham Hollis, senior partner at accountancy firm Deloitte in Aberdeen, said potential changes to permits currently being discussed by ministers would risk making the UK a net-importer of hydrocarbons.
He warned that, without domestic production, the UK could become a “hostage of fortune”, importing oil and gas from basins that don’t have as stringent net zero goals.
It’s been widely reported in the last week that the UK Government is mooting a potential ban on new North Sea exploration.
If approved, the move would be implemented ahead of the landmark COP26 climate conference in Glasgow, due to be held in November.
UK Government is currently carrying out a review of licensing rules for oil and gas exploration.
Mike Tholen, sustainability director at Oil and Gas UK (OGUK), said it could lead to the export of jobs and skills, while a senior source in the sector branded it as “virtue signalling”.
Addressing the speculation during an OGUK webinar yesterday, Mr Hollis said a ban on exploration licences would be the “wrong decision”, adding that he “shared the concerns” of the industry.
He said: “I think it would undermine the investment that we’re seeing into the UKCS at the moment. Anything that undermines the confidence and risks the UK becoming more of a significant oil and gas net importer will ultimately threaten our net zero ambitions.
“If we’re not producing it (oil and gas), then it’s going to come from elsewhere and, unfortunately, we then leave ourselves as a hostage of fortune as to where it comes from. Invariably, it will be from a jurisdiction that isn’t as committed and isn’t making the same inroads that we’re currently making to achieve net zero.
“That’s the simple choice policy makers have to make; they have to believe in us and that we’re serious about delivering our net zero ambitions.”
In order to head off calls for exploration licensing to be wrapped up, Mr Hollis said it’s “incumbent upon the industry” to showcase the work currently ongoing.
A number of avenues for axing operational emissions in the oil and gas sector are being explored, including platform electrification and carbon capture and storage, something that needs to be “celebrated”.
Mr Hollis added: “This is a transition over a period of time. Regardless of the views of some members of the public, we can’t leap to net zero overnight.”