OIL and gas giants are “nervous” about taking on some of the new North Sea drilling licences over a declining demand in fossil fuels in the coming decades.
Liz Truss’s government has launched a new round of drilling licences with up to 100 available across the North Sea, despite climate concerns.
The International Energy Agency has warned that no new fossil fuels developments should go ahead while the UN secretary general Antonio Guterres has insisted a “global addiction to fossil fuels” must end and a “renewables revolution” should be accelerated.
The UK Government, which last year as hosts of COP26, called on the developing world to stop burning fossil fuels, is pressing ahead with expanding North Sea drilling.
The Scottish Government’s Just Transition Minister, Richard Lochhead, who is responsible for ensuring oil and gas workers are moved into renewable industries, has warned that some fossil fuels giants have been put off bidding for licences for “commercial reasons” due to the future declining demand for oil and gas.
Some operations of the newly-opened licences are due to expire after Scotland’s 2045 net zero date.
READ MORE: Scottish Government's delayed energy strategy to tackle demand for oil and gas
Speaking to The Herald, Mr Lochhead said he was “very concerned” by the UK Government’s strategy of “unlimited oil and gas extraction”.
He said: “New extraction, which can take years to come on stream, as in decades, have to go through the most rigorous of climate change impact assessments before any green light is given. That just is not happening at the moment.
“This is the same UK Government only last year at COP26 said to everyone undertaking the climate challenge seriously. Now what we are getting appears to be uncontrolled oil and gas licences just to grab headlines.”
Mr Lochhead added: “I understand that speaking to some people in the oil and gas industry that their concern is some of those licences, even if they are taken up, the fields concerned do not perhaps come on stream for decades, by which time the demand for oil will have reduced dramatically.
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“Therefore there are commercial reasons why the oil and gas industry are perhaps not going to be as enthusiastic as the UK Government thinks."
“I think the UK Government would be best spending its time on working with the oil and gas industry on the energy transition.”
One energy company has told The Herald that some in the industry are “nervous” about some of the timescales of the licences, adding that “a lot of the North Sea investment will be diverted to renewables and emerging technologies”.
Guidance published by the North Sea Transition Authority suggests that three terms of the licences could last up to 30 years, by which time domestic demand for oil and gas will have dwindled dramatically.
The Scottish Government has pledged to become net zero by 2045 while UK ministers have made a 2050 commitment.
According to analysis by the North Sea Transition Authority, the time between discovery and first production of fossil fuels is around five years, while priority blocks set out in the latest round could be in production in just one or two years.
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Climate campaigners have backed Mr Lochhead’s argument.
Friends of the Earth Scotland’s just transition campaigner, Ryan Morrison, said: “If the Scottish Government recognises the science on oil and gas, they need to stand against those trying to lock us into fossil fuels for decades to come.
“They must say clearly that there can be no climate compatible oil and gas and use every tool at their disposal to stop these projects going ahead. Fossil fuel executives have shown that they can’t be trusted to just stop themselves.”
Ross Dornan, Offshore Energies UK market intelligence manager, has insisted that “nobody is pushing for unlimited extraction”.
He added: “Our industry is one of the most highly regulated sectors in the country, with all new projects going through even stricter environmental scrutiny to ensure we deliver the 2050 net zero emissions target.
“Most of the opportunities that can be developed quickly will be relatively small and will have project timelines which mean that they can go into production and then will go on to be decommissioned well before 2050.”
A UK Government spokesperson said: “We have identified priority areas with the potential for rapid development and are also exploring ways to reduce the time from licence application to production as much as possible.
“At the same time, the UK Government remains fully committed to the legally binding target of achieving net zero greenhouse gas emissions by 2050, recognising that producing gas in the UK has a lower carbon footprint than importing from abroad.”
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