Andy Burnham promised to be “pragmatic” about drilling in the North Sea in his conference speech. Those in Aberdeen say there’s not a moment to lose.
Bedecked in her obligatory high-vis jacket and surrounded by hardhard-wearing oil and gas workers, Miatta Fanbulleh’s first ministerial trip was a striking piece of political symbolism.
Just three days on from being named Andy Burnham’s energy secretary, the former think tank chief had managed achieved something that took her predecessor Ed Miliband more than four months: visit Aberdeen, and engage with the city’s pariah-like oil and gas industry.
The early trip north was an “important signal” in and of itself, Offshore Energies UK (OEUK) chief executive David Whitehouse said, given the cold shoulder many in his industry had been given by the previous government. Talks during it were hailed as “constructive” by industry, and added to a sense of optimism first rekindled during the Makerfield byelection, when Burnham said he was “open-minded” about new North Sea oil licences.
“That visit was a very positive sign of the sector,” says Enrique Cornejo, energy policy director at Offshore Energies UK. “Setting out that they understand and recognise the importance of the North Sea…. was a really good first step.”
More than two months since that visit, however, and energy executives have little to point to by way of concrete progress beyond more positive mood music and non-committal overtures.
This week’s Labour conference was no different. In a speech dripping in concrete policy announcements, Burnham could only manage to promise a “pragmatic approach” to the North Sea. His remarks were a carbon copy of comments made days earlier by Fahnbulleh, who as well as using the ‘p’ word also acknowledged oil and gas would continue to “be part of [our] mix” for decades.
But the lack of hard progress notwithstanding, industry figures remain optimistic that inroads are just around the corner. First on ministers’ in-tray is a decision over Jackdaw and Rosebank, two major energy developments that have been in limbo for over two years after a controversial court ruling.
The two fields – both owned by a joint venture between Equinor and Shell known as Adura – could produce nearly a billion barrels of oil and fulfil more than six per cent of the UK’s gas demand.
After a consultation into the fields’ future wrapped up in August, Burnham and Fahnbulleh were due to make a decision on them early September, ahead of party conference season.
To Cornejo, rubber stamping both those projects would represent an “important first step”. But for those on the front line of the industry, to stop there would be to hamper the country’s energy security and economic prosperity just as other markets are doubling down on domestic supply.
The war in the Middle East – now into its seventh month – has uprooted global energy supplies just four years after Russia’s invasion of Ukraine had a similarly momentous effect. European natural gas prices, which unlike oil is not a global market, have risen by more than 130 per cent since the start of the year, while Brent crude is up more than two thirds.
In response, the government of Norway, whose basin neighbours the UK’s, chose to slow its planned production decline to help fill the supply-starved market. Meanwhile the US has announced plans to restrict exports of diesel in a bid to safeguard supply in its domestic economy.
This context, OEUK argues, makes the need for action as pressing as it is logical. As well as Jackdaw and Rosebank, there are over 100 licensed projects that are ready to be extracted should the government promise both a consitent tax regime and quicker regulation.
For its part, the Department of Energy Security and Net Zero says the North remains a “vital asset” and that a decision Adura’s two fields would “take into account all relevant evidence”.
That evidence, Cornejo says, is overwhelmingly on their side. “The government has choices with those additional revenues to use those to support consumers, or to support the uptake of of technologies,” he tells City AM. “But the alternative is to not have those tax revenues, to import all of that oil and gas that we will still need from somewhere else, and not deliver any benefits to the UK economy and society – those are the choices the government is facing.”
Until that choice is made, hard hats and high-viz jackets will have to suffice.
By City AM
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