Launch of the UK’s first ever carbon storage licensing round 

United Kingdom

A key plank in the North Sea Transition Deal and the Government’s plans to reach its Net Zero target is the development at pace of Carbon Capture and Storage (CCS) Projects, in which the oil & gas industry is seen as having a central role.   With momentum and investment in these projects gathering, Andy Samuel, the NSTA’s CEO, has marked today (14 June) as an “important day” as the NTSA has now launched the first ever round of UKCS seabed carbon storage sites.

As licensing authority, the North Sea Transition Authority (NSTA) is responsible for the licensing, permitting and stewarding of offshore carbon storage sites.  Most recently, two licences were issued in May this year comprising four separate CCS sites in the Southern North Sea, bringing the total number of current offshore carbon storage licences on the UKCS to six.   Each licence to date has been issued on an ‘ad hoc’ basis.

CCS involves the capture of CO2 emissions from industrial processes, which are then transported and stored offshore.  “CO₂Stored” estimates that there is over 70 billion tonnes of storage capacity under the UK seabed and therefore the launch of this CCS licensing round will allow for appraisal of this capacity to help inform policy and investment decisions further.

Thirteen areas are on offer under the new licensing round, which consist of sites off the coast of Aberdeen, Teesside, Liverpool and Lincolnshire in the Southern North Sea, Central North Sea, Northern North Sea, and East Irish Sea. The areas on offer were selected following a nomination process, which recently closed on 17 May 2022.   

The NSTA considered the following issues when choosing suitable CCS sites:

  • co-location with offshore wind;

  • environmental issues;

  • potential overlap with existing or future petroleum licences; and

  • other activities to ensure key technologies can be taken forward.

Today’s launch by the NSTA is said to be in response unprecedented levels of interest from companies eager to enter the CCS market and the NSTA has confirmed that a high level of interest has been expressed, which it hopes suggests that there will be strong competition.  As result, the NSTA expects that securing a licence will require a high-quality bid from any prospective licensee. However, it may be some time before it is clear whether those expectations are met – it is anticipated that any new licences will be awarded early 2023, with the first injection of CO2 being some 4-6 years after the licence awards.

The regulatory framework within which these projects are developed is not straightforward. Any prospective CCS licensees are also required to apply in the first place for a storage agreement for lease, and ultimately for a lease, which is granted by The Crown Estate or Crown Estate Scotland respectively -  the body responsible for leasing the seabed.  Approvals from BEIS (OPRED) in respect of environmental aspects will also be required and (once relevant legislation comes into effect) it is anticipated that OFGEM will have a role in issuing economic licences to CCS Transport and Storage (“T&S”) companies.

In respect of the process launched today, the application window is open for 90 days, closing at noon on 13 September. Applications will be evaluated by the NSTA on technical and financial criteria – following the process used in respect of licence applications for oil and gas exploration.

More information on how to apply can be found here.