Wood Mackenzie analysis reveals that North Sea production can remain within IPCC net zero emissions targets even if commercial reserves were increased by 50%

The UK could boost North Sea oil and gas production while remaining within the strictest international climate pathways, according to new Wood Mackenzie analysis. The research comes as the government mulls the basin's future following a consultation process.

Wood Mackenzie's research shows the UK Continental Shelf (UKCS) production value chain emissions outperform the Intergovernmental Panel on Climate Change's global net zero emissions pathway by 25 to 50 MtCO2e per annum through to 2050.

This creates theoretical headroom for the UKCS to produce an additional 2.6 billion barrels of oil equivalent by 2050. The surplus remains within climate science requirements whilst delivering substantial economic and environmental benefits.

"The North Sea stands at a crossroads, but our analysis shows a clear pathway balancing climate science with energy security," said Gail Anderson, Research Director, North Sea Upstream at Wood Mackenzie. "Encouraging domestic production, including a smart licensing policy targeting known discoveries, would extend critical infrastructure life, whilst delivering substantial emissions and cost benefits over importing alternatives."

The findings emerge as the government weighs whether to ban new exploration licences under its "science-aligned approach" to future UKCS production. Wood Mackenzie's analysis reveals compelling advantages of maximising domestic production over imports. Every additional trillion cubic feet of UKCS gas produced would save 15 MtCO2e of scope 1&2 emissions when displacing US LNG imports.

“The more the UKCS produces, said Anderson, the less emissions will be released, and the less the UK will spend on imports.  Such an approach will ensure production for decades to come and support the North Sea’s energy future.”

Exploration activity collapses to historic low

North Sea exploration has plummeted to unprecedented lows. Due to recent fiscal turmoil, 2025 is set to become the first year since 1960 without a single exploration well.

The Wood Mackenzie analysis advocates targeted licensing focused on existing discovered resources that could tieback to existing infrastructure. A ban on all new licencing would ignore the strategic value of selective development.  “Licence awards could be considered if they hold discovered resources or “old fields” which could be tied-back to host platforms” adds Anderson. 

Wood Mackenzie identifies 2.3 billion barrels of oil equivalent across 7,634 open and relinquished blocks, with gas comprising over one-third. Only 34 blocks contain resources exceeding 20 million barrels of oil equivalent. However, these blocks hold a total of 1.4 billion barrels of oil equivalent and offer crucial tie-back opportunities to maintain host infrastructure viability.

Import dependency threatens emissions targets

The UK faces a stark energy transition challenge as import dependency grows. By 2035, the country will rely on US LNG for over 60% of its gas supply as Norwegian piped imports decline. This shift will triple the emissions intensity of UK gas supply from 3.7 to 11.3 gCO₂e/MJ by 2035.

The emissions impact proves severe: 90% of scope 1&2 emissions from UK gas supply sources will come from US LNG by 2050. Wood Mackenzie's analysis demonstrates that an additional 1 trillion cubic feet of UKCS gas production could deliver scope 1&2 emissions savings of 14.6 MtCO₂e. This potentially exceeds the North Sea Transition Authority's mid-range platform electrification scenario savings of 13.4 MtCO2e to 2050.

Economic benefits compound the environmental case. The short-run cost of UKCS gas supply runs at almost half that of US LNG, highlighting dual advantages of domestic production.

European integration maintains supply security

Critics argue that UKCS crude contributes little to energy security because most gets exported. The reality proves more nuanced. Whilst less than 20% of crude refined in the UK comes from the UKCS – down from over 40% in 2010 – the country remains central to integrated European markets.

In 2024, three-quarters of UKCS crude exports flowed to the Netherlands (48%), Germany (11%), Poland (8%) and Sweden (8%). The UK imports refined products back from these countries in complex commodity flows. This integration secures supply for both the UK and its neighbours through sophisticated trading relationships.

Other European countries increasingly recognise domestic supply value. The Netherlands' minister for climate and green growth in April agreed to maximise North Sea gas production to reduce import dependency and mitigate climate impacts.

Balanced transition approach recommended

UKCS emissions account for just 3% of net UK territorial emissions, yet the industry faces disproportionate pressure compared to other economic sectors. Wood Mackenzie argues for a balanced approach encouraging hydrocarbons, carbon capture and storage, hydrogen and wind from the North Sea. Even under a net zero scenario, the UK will consume around 500,000 barrels of oil equivalent per day and remain a net importer of oil and gas.

"The government faces pressure to restrict North Sea production, but risks undermining both climate goals and energy security," added Anderson. "The UK needs all types of energy and should encourage more hydrocarbons, carbon capture and storage, hydrogen and wind from the North Sea. This balanced approach would deliver the promised fair energy transition, support climate objectives and reduce UK energy costs whilst strengthening supply security."

The outcome of the government's consultation on "Building the North Sea's Energy Future" will soon be published. Decisions made will shape the basin's trajectory for decades to come.