Investing in new North Sea gas resources is essential for the UK to avoid shortages, price shocks, and rising import costs, industry body OGUK has warned, adding that, without fresh investment, North Sea gas production will plummet by 75% by 2030.
"The global gas shortage that sent prices surging again this week is a powerful reminder of the UK’s need to maintain its own North Sea supplies, according to OGUK, which represents the nation’s offshore gas and oil industry," OGUK said.
On Tuesday wholesale gas prices soared 37% in one day, hitting £4 per therm in short-term global markets (equivalent to £1.41 per cubic meter). This is a 700% increase compared with more typical levels at the start of 2021, OGUK said.
"Factors causing the latest surge include Russia making a 70% reduction in the amount of gas delivered to the EU via its Belarussian pipelines, plus surging global demand for Liquefied Natural Gas (LNG) shipments, especially from Asia," OGUK said.
"The UK’s own gas fields in the North Sea and Irish Sea have served the nation well – but their output is falling, partly because too few new fields have been developed. From self-sufficiency in 2004 the UK can now meet only half its own gas needs," OGUK added.
It means, OGUK said, the UK is increasingly reliant on imports.
According to OGUK, in 2020 the UK consumed 74 billion cubic meters of gas – about 1,100 cubic meters per person. Half had to be imported from other countries, including Norway, Qatar Russia, Trinidad and Tobago, Egypt, and Nigeria.
"OGUK’s Energy Transition Outlook, to be published later this month, will warn that such reliance will increase – unless the UK invests in the new resources known to lie under its continental shelf. Without such investment UK gas output will plummet another 75% by 2030," OGUK said.
Deirdre Michie, chief executive of OGUK said: “The gas resources off our own shores can boost our energy security and protect jobs. The UK industry’s own greenhouse gas emissions, generated during production from these new fields, would also be a lot lower than those generated by liquefied natural gas imports.”
“The UK, and our industry are on a journey to achieve net-zero emissions by 2050. We fully support this goal but 23m UK homes are still heated by gas which also generates 40% of our electricity, so we will need gas to power us through this green transition. It would be far better to get as much of that gas as possible from sources we can control rather than rely on other countries.”