Can North Sea oil and gas really power Britain’s future?

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10 September 2025

For more than half a century, oil and gas extracted from the North Sea has been central to the UK’s energy system and acted as the bedrock of a power generation.

However, the outlook has changed as wind, solar and other sources of clean power have become major contributors to our energy mix, in part because UK became the first major economy in the world to pass legislation committing itself to a legally binding target of net zero emissions by 2050, but largely because of technological developments in clean energy and reductions in their cost. We are now witnessing a global and permanent shift away from fossil fuels, to a world where they will no longer stand as the backbone of our energy system as renewables take over as our main sources of power.

There has also been increasing uncertainty about the viability of the remaining oil and gas reserves in the North Sea, with several major projects abandoned or delayed due to the high costs of extraction, legislative challenges, and the wider funding environment due to the risk that developers would not be able to recover their investment given the declining demand for fossil fuels.

Driven to a considerable extent by these factors, North Sea gas production has continued to fall year on year. In 2024, less than half the UK’s gas came from the country’s North Sea reserves, and it is estimated that more than two-thirds will need to be imported from overseas by 2027, rising to 94% by 2050.

Yet despite this backdrop of decline, we see ongoing calls from certain political quarters for the country to turn back to North Sea reserves to meet our future energy needs. But is this even possible? And how much could we realistically expect to extract?

Our North Sea reserves are running dry

The extraction of oil and gas from the North Sea boomed in the 1980s and peaked in 1999. Since then, output has fallen by more than 65% and today accounts for less than 15% of the UK’s electricity. It’s now what’s known as a ‘mature basin’, one that might produce 7.5 billion barrels of oil and gas up to 2050 in the most optimistic scenario.

However, the UK is estimated to require between 10 and 15 billion barrels during that same time period, based on the country’s pathway to achieving net zero by 2050, meaning the gas needed to make any considerable impact on household bills or energy security is just not there. Should our net zero ambitions be diluted or postponed, this shortfall will grow even larger.

The Government has committed to ending new licences for oil and gas exploration in the North Sea, yet even with new licences production would still be expected to keep falling. The North Sea Transition Authority’s 2024 forecasts show a decline of over 7% annually, culminating in an 89% fall in oil and net gas production by 2050.

North Sea gas will only cover a fraction of the UK’s needs by the start of the next decade, far below what would be needed to justify the country’s return to a gas-heavy energy strategy, and its contribution to the UK’s electricity generation will remain modest even if the remaining gas fields are fully tapped.

Could it displace imported gas?

While gas still makes up over 30% of the UK’s electricity generation, most of that fuel is imported at significant cost. Even if every potential North Sea discovery was brought into production, it is estimated that this would only be sufficient to meet between 5% and 10% of the country’s electricity demand by the early 2030s.

Only around 14% of the UK’s remaining North Sea gas resources are thought to be commercially viable, meaning it could only supply a small fraction of the UK's future demand even in the most optimistic scenario. In fact, it is projected to fall short of the country’s domestic heating needs alone by 2027, discounting commercial and other sources of demand.

Some have made the argument that increasing gas production would strengthen the UK’s energy security. However, we cannot take out what simply isn’t there, meaning the country will continue to increase its dependence on volatile imports to meet rapidly growing demand from industry and new technologies such as data centres. There is also the question of the new infrastructure to extract and transport the gas, such as pipelines and power plants, which would require major investment in assets that would quickly fall into underuse as fossil fuel demand declines.

More fundamentally, there is widespread agreement that achieving energy security will require harnessing the UK’s whole energy mix – from wind and hydrogen, to nuclear and oil and gas - and cannot rely on a single source.

Why is extracting our own gas so expensive?

When looking at the costs of extracting gas from the UK’s North Sea reserves, it is essential to examine ‘lifting costs’, which is the term for how much it costs to get each barrel of oil, or its gas equivalent, out of the seabed and into production.

In the North Sea, lifting costs have tripled in the last 15 years, and stood at £18.59 per barrel of oil equivalent (BOE) in 2023. In some cases, they now exceed £30 BOE, which is simply not economically viable when set against equivalent costs in areas like the Middle East, which can be as low as $5 to $10 per barrel.

There are several reasons for this, including the fact that most of the large, easy-to-reach reserves have already been exhausted, while those that remain are significantly harder to access, more expensive to exploit, and capable of delivering smaller returns.

Against this backdrop, North Sea gas becomes unaffordable in multiple ways, not only given the geological fact that it can be extracted up to four times cheaper in other parts of the world, but also the fact that renewable sources such as offshore wind can produce electricity at less than half the cost of running new gas plants.

Even in a best-case scenario, where the infrastructure is in place and lifting costs are tolerable, North Sea gas fields can only realistically generate a fraction of the UK’s electricity, far short of what is needed to free us from volatile imports, whilst relying on significant subsidies at the expense of billpayers.

In conclusion

Although certain political figures have sought to position North Sea oil and gas as the ‘cornerstone of Britain’s future’, such analysis is both misguided and unrealistic. The ‘drill more’ strategy is based on flawed assumptions and a growing disconnect from economic reality and the country’s energy security.

Put simply, our North Sea reserves are finite and largely exhausted. This means there isn’t enough gas left to anchor our energy system against rising demand and, even if extraction could be increased, it wouldn’t lower energy bills or deliver the energy security we need. Rather it would lock the country into a reliance on importing fossil fuels subject to the whims of volatile global markets, as opposed to freeing us from them, all whilst ignoring the reality of climate change and the wider long-term costs of inaction regarding net zero.

Although the North Sea played a vital role in the past, it cannot power our future. By contrast, offshore and onshore wind, solar and other green technologies offer clean, homegrown energy that doesn’t run out, doesn’t saddle the UK with stranded assets, and provides real energy security.

Renewables also create long-term jobs, with more than 100,000 people expected to be working in the UK’s wind industry by 2030, and initiatives like the Energy Skills Passport helping to ensure a just transition for oil and gas workers by enabling them to build new careers across our energy mix, empowering the workforce to plan for expanded homegrown production as the country’s energy profile changes.