In positive developments regarding the gas supply situation, National Gas, the operator of the gas transmission network in the UK, announced on Monday that the nation will have enough gas to meet its demands throughout the summer months, despite the ongoing tensions in the Strait of Hormuz.
However, it is important to temper any relief. Historically, the summer season, characterized by lower gas consumption, has not posed significant stress on supply. The gas transported via pipelines from both the UK and Norwegian fields in the North Sea is capable of fulfilling nearly all of the UK’s needs, particularly when most of the 24 million households connected to the gas grid turn off their heating systems. During this time of year, reliance on liquefied natural gas (LNG), which is delivered by ship, remains minimal.
The real challenges regarding gas supply lie ahead—not just for the upcoming winter, but over the next several decades. The optimistic expectation that the swift expansion of renewable energy sources will render gas obsolete is largely unfounded. While the use of gas for electricity generation is declining in the long term, it still accounts for about a quarter of the UK’s total gas consumption. The largest share, projected at 37% in 2024, is attributed to residential use. Transitioning from gas boilers to heat pumps is not an expedient process, especially given the current slow pace of change in the UK.
Furthermore, renewable sources like wind and solar energy, along with battery storage, are unlikely to make gas-fired power plants redundant in the near future. The government’s Clean Power 2030 strategy mandates the retention of all 35 gigawatts of gas generation capacity as a backup. A broader analysis of data from the energy department, released just before Easter, indicated that gas demand has remained “broadly stable” for three consecutive years, constituting about half of the UK’s reliance on fossil fuels, consistent with figures from 2024. While transitioning to a cleaner energy future is crucial, it requires time.
A pressing question arises amid the ongoing debate surrounding increased drilling in the North Sea: where will future gas supplies originate?
Sir Dieter Helm, an energy economist at Oxford University, recently addressed this issue during a podcast hosted by the Chatham House think tank. He stated, “Gas accounts for 35% of our total energy supply. It’s significant. We will continue to utilize gas for at least the next decade or two, and likely beyond. This is a realistic perspective. The pertinent question is how to secure these supplies in the most environmentally friendly manner and at the lowest cost to consumers. A sensible approach would be to avoid LNG, which is considerably more polluting than pipeline gas.”
How much more polluting is LNG? Data from energy analysts Wood Mackenzie reveal that, in terms of emissions from production and supply (referred to as scope 1 and 2 emissions), pipeline gas from Norway’s modern North Sea platforms ranks as the least polluting. This is followed by gas from UK North Sea pipelines. In contrast, LNG, which incurs additional emissions during the liquefaction and regasification processes, is far less favorable, with US LNG being the least environmentally friendly due to methane emissions associated with shale gas extraction.
Looking ahead to 2045, Wood Mackenzie’s projections indicate that the UK is likely to become increasingly reliant on US LNG if domestic supplies decrease. This is due to the fact that Middle Eastern gas is primarily directed towards Asian markets, while US cargoes are more readily available to Europe. Additionally, Norway’s gas supplies are not limitless. According to Wood Mackenzie, by 2035, over 60% of the UK’s gas supply could be sourced from US LNG, highlighting the risks of dependence on a single country.
This scenario underscores the rationale for pursuing additional gas exploration in the UK North Sea. The goal is to reduce reliance on the US, particularly given the current administration’s use of energy as a geopolitical instrument. Moreover, increasing domestic production could help mitigate the higher emissions associated with LNG.
A common argument against North Sea drilling suggests that output is sold on the international market and, therefore, does not enhance energy security. However, two counterpoints can be made. First, pipeline gas that directly enters the UK gas network is inherently more secure than imported cargoes from across the Atlantic. Second, if concerns revolve around pricing, as Helm notes, the UK can negotiate long-term fixed-price contracts with producers when issuing new licenses. This was a common practice during the early years of North Sea production and may be beneficial as reserves dwindle.
This perspective does not undermine the importance of renewable energy and nuclear power. The long-term trajectory is towards greater electrification. Nevertheless, gas will continue to play a significant role for the next few decades. The industry body Offshore Energies UK believes that a more pragmatic approach to North Sea licensing could limit reliance on LNG to just 6% by 2035. While this estimate may be optimistic, it is preferable to becoming overly dependent on US LNG over the coming decades.
Once the current political deliberations conclude, it is anticipated that the Jackdaw gas field, which represents approximately 6% of current domestic production, will receive approval. This would prompt a more comprehensive discussion about UK North Sea gas policies, moving beyond the misleading dichotomy of “renewables versus gas” to consider a rational procurement strategy during the ongoing period of gas consumption in the UK.
Reflecting on the lessons learned from conflicts such as the one in Iran, the Prime Minister emphasized the necessity for enhanced national resilience, including the need for secure, domestically sourced energy. If this is indeed the government’s stance, two conclusions are evident: first, the push for electrification must continue to reduce gas consumption and optimize the use of renewables and nuclear energy; second, while gas remains part of the energy mix, the UK must avoid becoming overly reliant on US supplies. Beyond the advantages for taxation, balance of payments, and employment, there is a clear need for increased gas production from the North Sea.
