Oil Majors Swoop for UK Carbon Storage Licenses

The North Sea Transition Authority (NSTA) has confirmed that 14 companies, including Shell, Eni and BP have been awarded 21 licenses after taking part in the UK's first carbon storage licensing round.

The new licenses cover a combined area of around 12,000 square kilometers and could store up to 30 million tons of CO2 a year by 2030.

That is equivalent to roughly 10% of UK annual emissions, which amounted to 342 million tons in 2021.

The licensing round was held earlier this year, but the final results were subject to formal acceptance of awards by participating companies and the names of the successful bidders had not previously been disclosed.

The list of companies that won licenses also includes independents such as Harbour Energy and Neptune Energy (recently acquired by Eni), as well as specialized carbon capture and storage (CCS) companies.

Shell and Exxon Mobil (bidding jointly) and Eni were awarded licenses off the coast of Norfolk in eastern England.

Those storage sites could form part of the proposed Bacton Energy Hub — a carbon storage, hydrogen and offshore wind power project, which could provide low-carbon energy for London and southeast England in the future.

Other such hub locations include sites off the coasts of Aberdeen, Teesside and Liverpool.

“Carbon storage will play a crucial role in the energy transition, storing carbon dioxide deep under the seabed and playing a key role in hydrogen production and energy hubs,” said NSTA CEO Stuart Payne. 

“Our teams will support the licensees to bring about first injection of carbon dioxide as soon as possible,” he added.

“We will also continue to work with industry and government to enable further licensing activity and back the UK’s drive to net-zero emissions.”

It’s estimated that the UK will need as many as 100 storage licenses to meet its goal of achieving net-zero carbon emissions by 2050.

The NSTA had already awarded six licenses prior to its first licensing round and the government has recently pledged £20 billion in funding to support early-stage CCS projects.

The government has prioritized the Hynet North West and East Coast Cluster projects as “Track 1” carbon storage, hydrogen and wind power hubs. The Acorn and Viking projects have been designated as “Track 2” hubs.

Eni Expands CCS Activities

 Eni — the CO2 transport and storage operator for the HyNet North West project — picked up its second carbon storage license in the UK’s recent licensing round.

This new license includes the depleted Hewett gas field offshore Bacton in the mature Southern North Sea area.

Hewett has a total storage capacity of about 300 million tons of CO2, and there is also the potential to use some of the field’s existing infrastructure.

Eni was awarded an initial carbon storage license in 2020 in the Liverpool Bay Area as part of the planned Hynet hub.

Martin Currie, Eni UK’s energy transition manager, said earlier this month that a final investment decision on the Hynet project is expected in 2024.

He also told the SPE Offshore Conference in Aberdeen that Eni is working with insurance underwrites to develop a new market for carbon containment insurance.

“This is quite critical to relieving the government of future contingent liabilities and ensuring necessary securities,” Currie said.

“More will emerge on this, but great progress is being made and quantitative risk assessment has played a key role in giving confidence to the insurance market.”

Currie said he envisaged a future in which the government would play a smaller role in the development of CCS in the UK, while companies would be able to “get on with delivering projects.”

“CCS developers should be able to absorb more risk as experience grows. What is required from government is an appropriate carbon policy that drives decarbonization without deindustrialization,” he said.

“At Eni, we do want to expand our CCS activities. We see a massive demand for CCS services that can be provided by emerging dedicated CCS companies,” Currie said.