The Role of North Sea Gas for UK National Security

The Arab Oil Embargo of 1973 showed the Western World just how dependent they had become on a globalized energy market, and how easily this dependence could be weaponized. With oil prices having increased 300%, entire populations faced blackouts, extending even to the White House Christmas Tree whose lights remained unlit. Fifty years on, the world is facing a similar scenario. Energy has again been weaponized on both the demand- and supply-side: Russia has limited gas exports to Europe, and Europe has banned the import of Russian oil and coal. The developing conflict in the Middle East could bring further disruption to global markets.

In the fifty years since the Embargo, policymakers have understood the need to prevent history from repeating itself. In 1973, Nixon launched Project Independence, a commitment to develop “the potential to meet our own energy needs without depending on any foreign energy sources.”¹ In a similar move, Britain started drilling oil and gas from the UK Continental Shelf in the North Sea, becoming a net exporter of energy in the 1980s. However, tighter regulation, higher taxes, and political pressure resulted in production peaking in 1999 and falling precipitously since. By 2005, Britain had again become a net importer of both oil and gas.²

This trend has had, and will continue to have, grave impacts for national defense. A reliable source of energy is required to keep inflation and the economy stable, the bedrock of political power. Oil and gas have very few substitutes: while electricity can be generated through other means, oil has a virtual monopoly as fuel for transportation, whilst gas dominates in heating and boiling. This makes a nation’s individual economy highly vulnerable to energy shocks, placing importers at the mercy of nations able to inflict one. Given that over half the world’s gas reserves are located in Russia, Iran, and Qatar, this is not a position any Western country wants to be in.³ Moreover, beyond protecting one’s economy, reliable sources of oil and gas in defense contexts are necessary for projecting hard power. Domestic manufacturing requires large amounts of energy, as does military deployment. Gilbert Metcalf’s study on the Economics of Energy Security plainly stated that “energy is an integral part of military readiness and a critical military input,” looking to the wars in Iraq and Afghanistan as clear indicators of the importance of maintaining fuel supply.⁴

Energy security is therefore vital for national security. Following the International Energy Agency, this article will treat it as the product of short-term and long-term security. In the short term, an energy system must be able to respond quickly to changes in supply and demand, avoiding shortages. In the long term, a country must have sufficient investment and capacity to meet its energy needs. The UK, as has been made clear over the last two years, has neither. Following the Russian invasion of Ukraine, energy prices soared whilst oil and gas production continued to fall. There is an obvious argument to be made that the best way of reaching energy security, whilst also being able to pursue climate goals, is through investment in renewables and nuclear. Indeed, these already constitute 35.8% of total electricity generation, projected to rise to half by 2025. However, over the next decade, relying on renewables and nuclear is infeasible: they take many years to install, electric vehicles are far from being ubiquitous, and gas still predominates in electricity and heating. To be clear, climate goals are of paramount importance. The UK should absolutely seek to phase out coal and limit oil as quickly as possible, and the gradual phasing out of natural gas should also take place eventually. However, to safeguard national security in the short-term, the UK needs to promote North Sea gas, as there are currently no better substitutes.

Crucially, this article does not advocate becoming self-sufficient in oil. Given oil is a fungible commodity whose price is determined in global markets, self-sufficiency in oil does virtually nothing for energy security—oil can always be bought from other countries, and supplying more North Sea oil would do nothing to lower prices as it constitutes such a small portion of total supply. To illustrate: in 2008, the UK was self-sufficient in petroleum products but was still affected by a global spike in prices, resulting in protests against the high costs of petrol. Achieving energy security with oil thus depends on breaking oil’s monopoly as a fuel source through the adoption of electric vehicles, and ensuring a multitude of suppliers so that none can create disruption. Back in 1913, Winston Churchill recognised that “safety and certainty in oil lie in variety, and variety alone.” Having an adequate stockpile of oil and petroleum products is also important, as it can be used to alleviate shortages in the very short term. Nonetheless, there is still no need for increased oil production as stockpiles can be accumulated through buying oil on open markets.

In contrast, the economics of natural gas are markedly different. Liquified Natural Gas (LNG) is a fungible commodity as it can be shipped around the world, with most of the UK’s LNG coming from the US and Qatar. However, the majority of gas into the UK comes via European interconnectors and pipelines from the North Sea, where the quantities and prices are agreed in long-term contracts and cannot be diverted. Whilst this arrangement makes supply immune to fluctuations in global markets, it makes natural gas especially vulnerable to hostile states restricting supply, as happened with Russia. Even relying on gas from the EU carries its own security problems. The UK is in a worse negotiating position post-Brexit, with a weak pound making imports costlier, and the EU have restarted stockpiling gas, which restricts supplies to the UK. Furthermore, the EU faces accusations that its three major energy companies (EDF, E.ON and RWE) do not respond to market forces, which resulted in acute gas shortages in the UK in 2006.⁵ By increasing gas production in the North Sea, the UK can ensure future supply at low prices that isn’t subject to interference by other states.

There are also environmental arguments for increasing the UK’s gas output. When faced with shortages of oil and gas, as in 1973, 2006, and 2022, or if cloudy weather and slow winds reduce output from renewables, as happened in 2021, the UK needs to find additional fuel elsewhere. When energy prices are high enough, the West often turns to coal—this was indeed the UK’s primary response in 2006 and Germany’s in 2022. Moreover, even with demand and supply unchanged, all the gas that the UK produces itself can displace the LNG that would otherwise be imported. This lowers carbon emissions as LNG’s Scope 1 and Scope 2 emissions (produced through drilling, refinement and transportation) are four times greater than those of North Sea gas, making total emissions from North Sea gas 18% lower overall. In addition, depleted oil and gas fields in the North Sea make perfect sites for Carbon Capture and Storage (CCS), and the revenue earned from issuing gas licenses and taxing energy companies can be invested in the green transition. From 2008 to 2012, the UK government earned roughly £10bn a year from North Sea oil and gas. This stands in stark contrast to the 2023 offshore wind auctions which did not have a single bidder and thus made a loss.

In summary, the UK government should promote North Sea gas to strengthen national security and help the environment. Expanded licensing, less punitive taxes, and fewer regulatory hurdles to drilling would all boost the UK’s gas output with the aim of once again making the UK a net exporter of energy. By ending dependence on gas from abroad and reducing reliance on oil, the UK insulates its economy from shocks and safeguards national defense. Moreover, since North Sea gas has fewer emissions than LNG, oil, or coal, can kickstart CCS, and generates revenue that can be invested in the green transition, this shift has positive environmental benefits. In the long run, the UK must transition to a zero-carbon economy powered by nuclear energy and renewables, but this utopian ideal is far off. Over the next decade, whilst green energy is built up and transport is electrified, we still need to meet our demand for energy whilst limiting emissions as far as possible. Self-sufficiency in natural gas is the solution.

References

Featured/Headline Image Caption and Citation: Photo of the Troll A platform taken from the SouthEast. The Troll gas field is the largest gas discovery made in the North Sea, Photo by Øyvind Knoph Askeland | Image sourced from Wikimedia Commons | CC License, no changes made

1. Quoted in Metcalf, Gilbert E. 2014. “The Economics of Energy Security.” Annual Review of Resource Economics 6: 155-174. https://doi.org/10.1146/annurev-resource-100913-012333. ↩︎
2. Abdo, Hafez, and Reza Kouhy. 2016. “Readings in the UK Energy Security.” Energy Sources, Part B: Economics, Planning, and Policy 11, no. 1: 18-25. doi:10.1080/15567249.2011.588669. ↩︎
3. Bird, Jenny. 2007. “Energy Security in the UK: An ippr FactFile.” Institute for Public Policy Research. Accessed May 3^rd 2024. https://pmt.physicsandmathstutor.com/download/Geography/A-level/Notes/WJEC/Energy-Challenges-and-Dilemmas/Energy%20Report.pdf. ↩︎
4. Metcalf. “The Economics of Energy Security.” ↩︎
5. Bird. “Energy Security in the UK: An ippr FactFile.” ↩︎