In a speech made at the Good Growth Foundation’s National Growth Debate this week, UK Energy Secretary Ed Miliband said the North Sea is an “important resource” for the UK, “which we will continue to use for decades to come”.
“I do not agree with those who say we should ‘turn off the taps’ overnight,” Miliband said in the speech, which was transcribed on the UK government website.
Miliband added in the speech, however, that he also does not agree “with those who suggest that somehow ‘drilling every last drop’ will take a penny off bills or give us energy security”.
“Indeed, an answer to this crisis that rejects clean energy and doubles down on fossil fuels is a recipe for energy insecurity in perpetuity,” he said, noting that “you can’t solve a fossil fuel crisis by doubling down on fossil fuels”.
The UK Energy Secretary went on to state that, “faced with the two positions of ‘every last drop’ and ‘turn off the taps’, we will maintain our pragmatic, sensible position for a managed transition in the North Sea”.
“As Britain grapples with a more uncertain and insecure world there are two paths opening up in this debate: between doubling down on a future built on the rock of clean power and electrification or retreating to the comfort of false solutions that would do nothing for our security and leave us brutally exposed,” he added.
In his speech, Miliband stated that production from the North Sea “is an important and valuable resource”, noting that “its workforce is a vital asset for this country”.
“That is why we are harnessing our domestic supply by keeping existing fields open for their lifetime, decades into the future and, as announced in our North Sea Future Plan last year, enabling tiebacks for these fields through our Transitional Energy Certificates,” he said.
“And … in advance of legislation, we are publishing further details on Transitional Energy Certificates to provide greater certainty and clarity for industry looking to invest in already-explored areas near existing licensed fields, supporting a fair and managed transition,” he continued.
Miliband highlighted that the world is facing “the second fossil fuel shock of this decade”, alluding to the ongoing conflict in the Middle East.
“The most important objective remains working for a permanent ceasefire and getting shipping flowing through the Strait of Hormuz,” he said.
Miliband pointed out in the speech that Russia’s invasion of Ukraine “caused global energy prices to surge and did huge damage to family finances, business finances, and the public finances, frankly from which we are still seeking to recover”.
A notice published on the UK government website on April 21 highlighted that, as part of its North Sea Future Plan, the government committed to introducing Transitional Energy Certificates (TECs) “to support the management of existing fields for their lifetime”.
“We set out that a Transitional Energy Certificate could be granted where any eventual development on that site: will not undertake any exploration; is for a block of acreage which is part of, or adjacent to, an existing field (linked by a tieback); and the activity is necessary for a managed, prosperous and orderly transition,” the notice stated.
“We are introducing TECs as a practical step so industry can have certainty to invest in oil and gas production in already-explored areas near existing licensed fields, supporting a managed transition in the North Sea,” it added.
That notice went on to state that the government is engaging with industry on “the core criteria”, which it pointed out currently comprises four points; “no new exploration”, “close proximity”, “tieback infrastructure”, and “supporting the management of existing fields”.
“In the North Sea Future Plan we committed to ban new licenses to explore for new oil and gas. Our intention is for TECs to fulfil this criteria by only being granted for areas where petroleum has already been found,” the notice said.
“Our intention is to allow TECs to include acreage that is either adjacent or in close proximity to an existing field,” it added.
The notice also highlighted that tiebacks connect offshore oil and gas fields to existing infrastructure via pipelines and other infrastructure. It went on to state that the government is introducing TECs “to support the transition in the North Sea by supporting the management of existing fields for their lifespan”.
“Our intention is for TECs to be granted where they can demonstrate that they support the management of existing fields,” it said.
The notice went on to state that, “following the conclusion of the legislative process to introduce TECs”, the North Sea Transition Authority (NSTA) “will set out further guidance explaining how each criteria should be considered during any application for a TEC”.
In a statement sent to Rigzone on April 21, which was responding to Miliband’s speech at the Good Growth Foundation, industry body Offshore Energies UK (OEUK) highlighted that the speech “outlined lessons learned from the recent geopolitical crises in Ukraine and the Middle East”.
OEUK added in the statement that the industry body “has been clear that the lesson of successive geopolitical crises is that true energy security can only be underpinned by homegrown energy, including oil, gas, and renewables, and a focus on domestic resilience”.
OEUK went on to state that the UK Energy Secretary “rightly acknowledged that the North Sea is an important and valuable resource and does not agree with those calling for the UK to ‘turn off the taps’ overnight”. It noted, however, that “current policies continue to leave the UK increasingly exposed to over-reliance on energy imports, particularly LNG, and growing geopolitical risk”.
“The solution is a focus on domestic energy production – domestic oil and gas alongside renewable energy,” it said.
OEUK highlighted in the statement that around 75 percent of the UK’s energy comes from oil and gas and pointed out that the government has recognized it is needed for decades to come.
“The UK can make the most of its own resources or choose to ramp up imports,” OEUK said.
“Domestic production supports jobs, economic value, and communities while reducing reliance on insecure and carbon-intensive imports,” it added.
In the statement, OEUK Chief Executive David Whitehouse said, “the solution is clear; the government must support valuable North Sea oil and gas production alongside the build out of domestic renewable energy”.
“The lesson from events in the Middle East and Ukraine is that resilient countries consistently support domestic energy production and value domestic manufacturing over imports,” he added.
“In a volatile world, homegrown energy production supporting jobs, communities, and value in our economy, must be prioritized over imports,” he continued.
Whitehouse went on to state that further clarity on Transitional Energy Certificates to support existing fields and infrastructure is a step forward. He added, however, that “to benefit fully from the oil and gas resources in our existing fields and licenses, we need favorable fiscal policies and enabling regulation”.
“The solution exists today in the form of the early implementation of the Oil and Gas Price Mechanism (OGPM), a permanent windfall tax, which will ensure a fair return for the Treasury when prices are unusually high, but provide the necessary certainty for industry to invest,” he said.
Whitehouse went on to warn that “there can be no energy security without homegrown production”.
“A modern industrial Britain needs a diverse, secure, and affordable energy mix. This is not a choice between oil and gas and renewable energy; we must produce both at home to build a secure and resilient energy future,” he said.
To contact the author, email andreas.exarheas@rigzone.com