Ministers ‘have failed to stand up for North Sea oil project’
THE Government is facing a backlash after Shell pulled out of a controversial North Sea oil and gas project amid rising pressure over climate change.
Top industry figures accused ministers of failing to stand up for the Cambo project, which is expected to create 1,000 jobs and pump 170m barrels of oil, in the face of sustained opposition from climate campaigners.
They warned the lack of political support risked creating a hostile environment for investors needed to fund projects vital for oil and gas, which still accounts for 75pc of the UK’S energy needs, as well as the green shift.
Sir Ian Wood, an oil and gas industry veteran now leading efforts on green technologies in Scotland, said: “I urge politicians to reflect carefully on their public statements on oil and gas and the impact they have on investment in the industry.”
Shell said on Thursday that it would not invest in the planned Cambo oil and gas field 75 miles to the west of Shetland, where it owns 30pc of the licence alongside Siccar Point Energy. The FTSE 100 oil giant said the economic case for investing was not strong enough, but that it also had the potential for delays – believed to reflect concerns about becoming mired in legal challenges or red tape.
A Whitehall source hit back at Shell, arguing that it “didn’t pull out because the project is economically unviable. They bowed to pressure from a vocal minority of activists who, perversely, would rather the UK imports more foreign oil”.
Cambo has a licence but is waiting for the go-ahead from the government’s Oil and Gas Authority. Nicola Sturgeon, Scotland’s First Minister, said last month the project should not get the green light.
The UK Government backs the domestic oil and gas industry and has set out a plan to help it move towards cleaner energy and decarbonise its rigs.
However, Scotland’s opposition combined with a lack of vocal public support for Cambo from the UK Government are believed to have frustrated senior figures at Shell. Mike Tholen of Oil and Gas UK said: “We have got to be very careful about the signals we send to potential investors.”
Heating would have to be limited to a few hours a day. Factories would be put on to a three-day week. And schools would have to operate in the dark while pupils wrapped up in woolly scarves and mittens. It is only a few short weeks since we were all discussing emergency plans for fuel rationing amid soaring gas prices, and wondering what kind of deal with Vladimir Putin we might be forced to swallow just to keep the lights on. And now? Instead of planning ahead, we are putting a major source of energy at risk in a shocking display of virtue signalling.
Shell has walked away from the Cambo oil field in the North Sea amid fierce opposition from the Scottish First Minister Nicola Sturgeon and lukewarm, at best, support from the Government in Westminster. Sure, we all understand it is important to transition to green energy as quickly as possible. Even so, it is just as crucial to have a back-up plan, and the oil and gas that is still sitting under the North Sea is the best one we have. In truth, both Sturgeon and Boris Johnson are guilty of extreme recklessness in not backing the field – and they may pay a heavy price.
It remains to be seen whether the Cambo project can still go ahead. The field off the Shetland Islands has the potential to produce more than 170m barrels of oil and gas equivalent, making it a major contributor to the UK’S energy supplies. Shell owns a 30pc stake, but this week concluded the political hassle of developing it meant it was no longer worthwhile. Siccar Point Energy, a private company that owns the remaining 70pc, could press on, but the legal and regulatory obstacles may prove insurmountable on its own. The oil may well end up lying completely undisturbed in the ground while a battle over its fate meanders through the legal and regulatory system.
It is hard to blame Shell for its decision. The field was never going to be more than a tiny slither of its vast portfolio of energy assets. The energy giant is under constant attack from climate activists and Esg-driven shareholders for its reliance on fossil fuels. It would understandably prefer to talk about its latest wind and solar projects than another field in the North Sea. The flak is not really worth it. In reality, the real villain here is Sturgeon, and weak-willed, short-sighted ministers in Whitehall.
Even though it used to be central to its economic plans, the North Sea is now about as popular with the SNP – which is dependent on Green support in the Scottish Parliament – as the England football team and the flag of St George. “I don’t think we can go on extracting new oil and gas forever,” argued Sturgeon only two weeks ago. “So I don’t think that Cambo should get the green light.” Ministers in London have hardly been any more encouraging. While climate change activists threatened to tie up the project in the courts for years, the Government gave it only the most tepid support. If Siccar does press on, it is going to be on its own, and that is a lonely place to find yourself.
This is madness. Of course, everyone agrees that we should switch to green energy as fast as possible. Fossil fuels should be steadily phased out. And yet, as we have already discovered this winter, that is not going to happen instantaneously, and in the meantime we have to make sure we have a back-up plan in place. Who knows what may happen over the next few months or years. Climate change, or just some weird weather, may impact wind generation, leaving us short on an increasingly crucial power source. If Russia invades Ukraine in January, its gas will be cut off to the whole of Europe, and prices will go through the roof. Meanwhile, are we really confident that the Gulf is so stable that Qatar, the largest exporter of liquefied gas, can always be relied on? Here’s a clue – the answer is no.
If the Cambo field is developed, we will have a vital extra source of supply if it is ever needed. If it isn’t, the energy produced can always be sold into a booming global market. In reality, the Government should ignore Sturgeon’s posturing, and give the Cambo field the backing it needs. Even if it gets mothballed halfway through its life it is worth it simply as an insurance policy. You hope you never need it. But it is certainly good to know it is there in case anything goes wrong. And it is a lot better than ever having to ration the light and heating.
‘The oil and gas sitting under the North Sea is the best back-up plan we have’