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North Sea firms ‘stand ready’ to cut your fuel bills

support energy bills
Consumers are facing rocketing bills for their gas and electricity. Image: Shutterstock.

A conveyor belt of potential gas projects can plug a gap in UK supplies and may help tackle soaring household bills.

That was the message from the chairman of Deltic Energy today as the North Sea oil and gas explorer unveiled first half results

It came the same day trade body Offshore Energies UK revealed companies have stepped up to the plate in recent months to help the UK cut its dependence on imports.

Domestic production in the first half of 2022 was 26% higher than the same period in 2021.

Meanwhile, Neptune Energy has started a drilling campaign, on its Cygnus gasfield, which may unlock enough gas to heat an additional 200,000 UK homes this winter.

Mark Lappin, based in Monymusk, Aberdeenshire, is a veteran of the North Sea oil and gas industry.

He became part-time chairman at London-based Deltic – formerly Cluff Natural Resources – in May 2019, taking over the role from the company’s founder, North Sea pioneer Algy Cluff.

Prediction came true

Mr Cluff campaigned long and hard over many years to highlight the dangers of Britain’s growing dependency on foreign gas imports.

In March 2018 he warned of the potential for Russian president Vladimir Putin to choke off supplies from the east.

Events of 2022 have proved him right, with Russia’s invasion of Ukraine sparking a crisis over energy supplies.

Algy Cluff’s fears about energy supplies and Russia have come true.

In Deltic’s results statement today, Mr Lappin said: “In the last year the UK has become more aware of the importance of natural gas for heating of homes, businesses, hospitals and schools, and for cooking family meals, as well as being the single biggest source of UK electricity generation.

“Unfortunately, this realisation has come with ever-increasing costs and concerns over security of supply due to our dependence upon imports.

“Energy supplies and costs are presented in almost every news programme at present.”

Policy folly

He added: “The dependence upon imported gas and a global energy market are the result of policy decisions taken over the previous 15 to 20 years.

“Cheap sources of overseas’ volumes appeared attractive to an economy where oil and gas absolutely dominate the energy landscape of transport, heating and power generation.

“The growth of liquid natural gas (LNG) transportation increased diversity of suppliers around the globe but then fuelled demand as new markets accessed the growing supply.

“The USA had never exported natural gas before 2016. Today, it is the biggest exporter of LNG in the world, including to the UK.”

Deltic Energy chairman Mark Lappin.

The Dundee University-educated geologist continued: “This global competition, along with the economic rebound post-Covid and Russia’s invasion of Ukraine, have caused gas prices to the UK consumer to soar significantly.

“Imported LNG creates double the greenhouse gas emissions of our domestic supply.”

Mr Lappin said Deltic and other companies “stand ready to fill this gap” with a conveyor belt of potential gas fields ready or preparing for the first phase of exploration drilling.

The UK needs North Sea natural resources,” he said, adding: “Deltic has a portfolio of North Sea natural resources investments that are ready to be progressed.”

Deltic’s results showed a widening of pre-tax losses to just over £1 million in the first six months of 2022, from £691,754 a year earlier.

The firm said drilling on its “potentially transformational” Pensacola exploration well with Shell would likely start in October, targeting an estimated 309 billion cubic feet (bcf) of natural gas.

Pensacola lies north-west of Ineos’ Breagh gasfield, one of the largest natural gas fields developed in the southern UK North Sea.

Prospects deemed ‘enormously valuable’

Deltic recently committed to a second “potentially company-making exploration well” on the Selene prospect, also in the southern sector of the UK North Sea.

It contains an estimated 318bcf of P50 prospective resources of natural gas. P50 refers to a 50% probability the quantities recovered will equal or exceed the best estimate.

Pensacola and Selene are expected to be “enormously valuable” in the current environment of high energy prices and security of supply issues, Deltic said, adding its joint venture with Capricorn Energy across five southern North Sea licences was “making significant progress”.

Deltic has also completed the initial phase of geological work on the Syros prospect in the central North Sea, with a farm-out process under way.