UK Energy Reserves Could Cut Imports and Boost Growth

Half of the 13-15 billion barrels of oil and gas that the UK requires by 2050 can be produced domestically under the right business conditions, the Offshore Energies UK said in a new flagship “2025 Business Outlook” report said.

The report, which was released on Tuesday, said that this would add up to $194.15 billion of gross value to the UK economy on top of the $258.87 billion from planned production, safeguarding energy security, jobs and lower carbon emissions alongside an acceleration of renewables.

The independent Climate Change Committee estimates the UK requires between 13 billion and 15 billion barrels of oil and gas by 2050, the target date for the economy to achieve net zero. The UK is on track to produce 4 billion of these barrels.

Despite the huge gap, the report said that with the right polices to encourage oil and gas firms to invest, another 3 billion barrels could be produced at home to meet half of the UK’s needs rather than increasing its reliance on imports.

The report also finds that by 2050, when UK electricity demand has more than doubled, oil and gas will still form a fifth of UK energy needs. The cost of energy is critical to wider industrial strategy and economic success. Maintaining home-grown gas supplies is key for the UK’s industrial base.

The report’s release coincided with the government consultations with industry on the future of the North Sea and the oil and gas fiscal regime. In the coming months interlinked decisions are also expected on the UK Government’s Comprehensive Spending Review and new Industrial Strategy as well as updated environmental guidelines for oil and gas projects.

In launching its consultations, the government committed to meaningful engagement with industry, the report noted.

OEUK said this continued engagement is critical to creating the globally competitive business environment needed to anchor high value jobs and investment in the UK. The spending review is critical for key projects including those in the Track-2 of carbon capture and storage projects, which can help futureproof UK heavy industry by stripping out and locking away its carbon emissions.

The report also showed that by making most of home-grown oil and gas while accelerating renewables and low-carbon solutions, the UK can carefully manage its reliance on imports.

OEUK said that this pragmatic approach will enable the UK to retain its world class energy supply chain, following a survey by OEUK showing nine out of ten such companies are looking for investment opportunities outside the UK in countries with more favourable business environments.

As the geopolitical outlook remains uncertain, the report detailed how the UK’s total energy production hit a record low last year and the government had to import over 40% of total energy needs from abroad.

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OEUK chief executive David Whitehouse said: “The future of the North Sea is in our hands. Our report shows as we work together to accelerate renewables, the UK must make the most of its own oil and gas – or choose to increase reliance on imports. We are fully engaged with asking policy makers to choose a pragmatic path to the low carbon, high-growth and secure economy we all want to see.”

He also said that energy security is national security and in an increasingly volatile world the widening gap between the energy that the UK produced and what it imported matters. Secure home-grown oil and gas alongside renewables pays taxes, supports jobs and safeguards the supply chains the nation need to build its energy future.