Exploration Insight 2022 - OEUK

has seen four exploration and two appraisal wells spudded. The UK is still some way off the 29 exploration and appraisal wells drilled in 2019. OEUK can attribute a large proportion of this decline to project delivery lag caused by the pandemic. However, without sustained or increased investment into exploration, OEUK could see a cycle whereby declining exploration leads to a wider production gap and increased reliance on imported oil and gas. This would put the UK at a higher risk of external energy supply shocks and more volatile domestic fuel prices. The current rate of exploration activity will not meet the recovery required of reserves and the production gap. Therefore, only if there is an upturn through upcoming licensing rounds will the UK see a recovery in reserves replacement rates in future. UKCS emissions overview As noted by the Committee for Climate Change, UK production of oil and gas has lower carbon intensity than many other countries. The UK can still meet its carbon budget and develop new fields if it accelerates efforts to cut emissions from production. New assets brought on stream because of successful exploration and appraisal will replace high emitting assets, naturally leading to reduced emissions, please refer to OEUK 2022 Emissions Report (see appendix for further reading).

The accompanying graphic ( Figure 12 ) shows that newer and smaller facilities tend to be the least carbon intensive. The primary differentiator is the hub’s age rather than its size. The UKCS could reduce emissions over time as new hub developments have a lower carbon intensity. The opportunity for exploration will likely be focused upon expanding cleaner existing hubs or utilising latest technology to develop new low emission developments such as those proposed at Rosebank and Avalon. UK hub emissions profiles In 2020, the NSTA identified that the UKCS’ average emissions intensity of 22 kg CO 2 / boe was roughly three times lower than imported LNG, 59 kg CO2e/boe. At present, the UK’s least carbon-intensive form of natural gas is imported pipeline gas from Norway at 18 kg CO2e/boe. However, with the EU’s increased reliance on Norway for gas, the UK’s imports face competition. As a whole gas imports (LNG and pipeline) have a carbon intensity of 35 kg CO 2 /boe - around 60% higher than domestically produced gas. Early cessation of domestic exploration would result in declining production, a wider production gap and an increased reliance on imported gas. With pipeline gas from Norway constrained by capacity and increasing demand for gas from EU member



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