UK’s oil and gas sector pushes Government to back 18 new projects as Cambo row rolls on

The overarching message is that current targets are misaligned with clear scientific evidence

Published today (1 September), trade body OGUK’s 2021 Economic Report claims that the need for “urgent action, by everyone, to tackle climate change, is indisputable”.

It then goes on to outline how the sector stands ready to invest up to £21bn in the next five years.  Much of this funding, the report states, will go towards extending the working lives of existing projects, but there are also 18 additional projects in the pipeline.

Should the Government approve all forthcoming applications for new and existing projects, OGUK estimates, an additional 2.7 billion barrels of oil could be extracted from the North Sea.

The report’s proposals clearly stand in contrast to the International Energy Agency’s (IEA) roadmap to net-zero globally by 2050 – the date with which the UK’s long-term target is aligned. The IEA has stated that, for the best chance of delivering net-zero, plans for future fossil fuel supply projects – especially more aggressive projects such as tar sands and arctic drilling – should be halted immediately.

The IEA’s recommendation has been echoed by the UK Government’s own climate advisors, the Climate Change Committee (CCC). Speaking to the Scottish Government’s Net-Zero, Energy and Transport Committee earlier this month, CCC chair Lord Deben said: “The justification for any new oil and gas exploration or production has to be very, very, very strong and I cannot say that I have so far seen any such case.”

OGUK’s climate angle is that, by downsizing its oil and gas sector too rapidly and by too great an extent, the UK could become more reliant on imports, which cause additional emissions from transport. The Economic Report states that gas imports hit a record high this winter past and calls for a “managed transition”.

OGUK has also emphasised the need for hydrocarbons to be used in some heavy industrial sectors post-2050 and the Government’s confirmed long-term support for ‘blue’ hydrogen, whereby hydrogen is produced from natural gas and the majority of process emissions are theoretically captured using man-made technologies.

“We all know that change is needed, so the question is how fast we make that change,” said OGUK’s chief executive Deirdre Michie. “This report shows the reality that cutting off the domestic production of oil and gas faster than we can reduce demand risks leaving us increasingly dependent on other countries that often generate higher emissions.”

As expected, OGUK’s report has been accused of greenwashing by several major environmental groups.

The Energy & Climate Intelligence Unit’s analyst Jess Ralston said: “The answer to high levels of oil and gas imports in winter, when they are always at their highest, is not increasing the UK’s domestic production; it’s investing in new green industries and weaning ourselves off of polluting oil and gas.

“Experts can’t be clearer that continued UK fossil fuel exploration doesn’t add up. The economic case is failing as renewables continue to get cheaper, a trend multiplied by gas prices tripling in the last year as we continue to rely on the geopolitical whims of leaders such as Russia’s Putin.

Last year. OGUK announced a target for the sector to reduce operational emissions by 2030. Climate activists urged the body to do more to take account of Scope 3 (indirect) emissions, which account for most of the sector’s footprint, and to outline pledges to cap further expansion.

An update on Cambo

The OGUK report comes as Ministers are facing mounting calls to end new North Sea oil and gas licencing and to halt specific projects – the most high-profile being the Cambo oilfield proposed by Siccar Point Energy and Shell. Should the project go ahead, more than 800 million barrels of oil would be extracted there.

Campaign groups Friends of the Earth and Uplift have this week written to Energy Minister Kwasi Kwarteng, challenging the Government’s repeated assertions that he and other members of the Department for Business, Energy and Industrial Strategy (BEIS) cannot intervene with the decision-making process.

Early July saw The National reporting that a journalist had been told by BEIS that the Oil and Gas Authority (OGA) is “ultimately responsible” for the decision on whether to grant consent. Then, two weeks later, an Evening Standard piece quoted a BEIS source as saying that Kwarteng “is not involved in the decision”. In August, Sky News ran an article in which a Government source is quoted as saying: “Cambo is not a new oil field, it was licensed in 2001. We cannot intervene. The ongoing approval process is not within our control.”

The letter from Friends of the Earth and Uplift states that Kwarteng has the power to give directions to the OGA on matters of the public interest, as per the Energy Act 2016. It also argues that all projects approved by the OGA are, ultimately, subject to the Energy Minister’s sign-off.

Speaking to edie, a BEIS spokesperson upheld the Department’s stance. They said: “As we have previously stated, the Cambo oil field was originally licenced in 2001 and consent for the development of the field is a matter for our expert regulators, the OGA, asn the Offshore Petroleum Reulator for Environment and Decomissioning, following their standard regulatory process.” 

The spokesperson added that the OGA has day-to-day operational independence from BEIS and that the power vested in the Secretary of State by the Energy Act 2016 can only be excercised “in certain circumstances”. 

Friends of the Earth Scotland’s director Dr Richard Dixon said: “The [Intergovernmental Panel on Climate Change’s] recent ‘code-red’ climate warning makes it absolutely clear that we must urgently transition away from fossil fuels if we are to limit further climate breakdown. The Government does have the power to stop Cambo and it must use that power instead of trying to wash its hands of this dirty development.“

The Conservative Party has not confirmed whether it intends to support the Cambo project. Some MPs have individually confirmed plans to support; others, plans not to. The Labour Party and Green Party have stated that they will oppose the project. The SNP only stated its opposition to the project after pressure from activists, with Nicola Sturgeon writing to Whitehall last month urging a “reassessment” of the project plans.

Sarah George