LONDON – Surging gas prices underline the need to maintain investment in the UK’s North Sea domestic production, according to Oil and Gas UK (OGUK).
Since August, wholesale prices for gas have risen 70%, the association said, due to a combination of lower European gas stocks, declining supplies from Russia, and strong demand for LNG from Asia.
The UK is one of Europe’s largest consumers, requiring 44 bcm annually, mainly for domestic and industrial heating.
UK energy regulator Ofgem has warned of steep rises in home energy bills this winter. And two large UK fertilizer plants have shut due to the high prices.
Gas-fired power stations normally supply one-third of the UK’s power, but last Saturday National Grid data suggested more than half of electricity was coming from fossil fuels (gas and coal), with wind accounting for only 1.2% of power.
Another 9% was imported from the EU via interconnector cables, mostly generated from gas-fired power stations.
In the meantime, the debate continues on whether to sanction development of new gas fields in the UK North Sea to replace others that are depleting or becoming economically unviable to produce.
The OGUK predicts Britain’s North Sea production will roughly halve by 2027 unless new fields are opened.
OGUK Energy Policy Manager Will Webster said: “Letting production fall faster than we can reduce demand risks leaving us increasingly dependent on other countries, and at the mercy of global events over which we have no control.
“While the UK continues to use oil and gas, we should make the most of the resources in our control while working for a low-carbon future.”