Developing a huge new North Sea oil field is the “right long-term decision for the UK’s energy security” despite concerns over climate change, Rishi Sunak has insisted.
Rosebank, which got the go-ahead from regulators yesterday, lies about 80 miles northwest of the Shetland Islands and is the biggest undeveloped oil field in Britain, containing an estimated 300 million barrels.
Norway’s state oil company Equinor and Britain’s Ithaca Energy said they would now proceed with the $3.8 billion development of the first phase of the field, which could produce 245 million barrels and begin production by 2026 or 2027. The field could pump up to 70,000 barrels per day at peak, or about 8 per cent of UK oil output in the latter part of this decade, and could still be producing some oil by 2051.
The project was approved by the North Sea Transition Authority (NSTA), the government-owned regulator for the oil and gas industry, a day after the International Energy Agency reiterated that no new oil and gas fields were needed if the world is to achieve net zero emissions by 2050. The NSTA said it had taken “net-zero considerations into account”.
The government welcomed the approval for the project, arguing it would boost energy security and create jobs.
The prime minister said: “As we make the transition to renewables, we will still need oil and gas — it makes sense to use our own supplies such as Rosebank.”
Claire Coutinho, the energy security secretary, said: “The jobs and billions of pounds this is worth to our economy will enable us to have greater energy independence, making us more secure against tyrants like Putin.”
However campaigners have threatened to bring a legal challenge against the approval for the development. Tessa Khan, executive director of the campaign group Uplift, alleged there were “strong grounds to believe that the way this government has come to this decision is unlawful”.
She added that Rosebank would “do nothing to lower fuel bills or boost UK energy security”, saying: “Most of this oil will be shipped abroad and then sold back to us at whatever price makes the oil and gas industry the most profit.”
Equinor said that the oil from Rosebank would be loaded on to tankers for shipping to refineries, where it is used to make fuel. Arne Gurtner, a senior vice president at the group, admitted it would be sold on the “international market”. He said: “We currently can’t say where it will go for sure. However what we do know is with the lack of Russian oil coming to Europe we currently see the market situation as such that most of the oil produced in Europe goes to Europe. If the UK needs the Rosebank oil it will actually get it.”
The field is also expected to produce smaller quantities of gas, which will be sent by pipeline to Scotland. The companies said the amount of gas would be equivalent to the daily average use of the city of Aberdeen.
An independent study for Equinor has previously estimated that Rosebank could create £8.1 billion of investment over the lifetime of the field, of which £6.3 billion is likely to be invested in British businesses. Equinor said it could support about 1,600 jobs during the height of construction and continue to support about 450 UK-based jobs once in production.
Labour has said it is opposed to Rosebank but will not revoke its permissions if elected.
Caroline Lucas, the Green Party MP, called the decision to go ahead with Rosebank “morally obscene” and accused the government of “climate crime”.
“Amidst a summer of raging wildfires and the hottest July on record, this government approves the biggest undeveloped oil and gas field in the North Sea,” she said. “Energy security and cheaper bills aren’t delivered by allowing highly-subsidised, foreign-owned fossil fuel giants to extract more oil and gas from these islands and sell it overseas to the highest bidder.”
Decision to grant licence ‘could be unlawful’
Campaigners have threatened to launch legal action against the government over the Rosebank oil field (Geraldine Scott writes).
Uplift, a campaign group which pushes for a fossil-free UK, said it believes the decision to grant a licence for the scheme is unlawful.
The group said that there was a potential failure to assess the environmental impacts created by burning Rosebank’s oil and the marine environmental impacts of the field, and a potential failure to ensure a transparent and participatory decision-making process.
Tessa Khan, executive director of Uplift and a climate lawyer, said: “There are strong grounds to believe that the way this government has come to this decision is unlawful. We shouldn’t have to fight this government for cheap, clean energy and a liveable climate, but we will.”
What is Rosebank and how does it square with net zero?
The government says the untapped oilfield is a positive step on the path to net zero and will help secure energy security. But environmental groups have condemned the project and are threatening a legal challenge.
So, how true are the government’s claims?
Read more: What is Rosebank and why is it so controversial?
Oilfield is a ‘shot in the arm’ for energy sector
Russell Borthwick, the chief executive of Aberdeen & Grampian Chamber of Commerce, believes the development of more oil and gas fields is required to ensure a smooth transition to net zero (Greig Cameron writes).
He said: “Rosebank will make an important contribution to UK and European energy security, create several hundred new jobs here in Scotland and result in over £6 billion being spent within the UK supply chain which is anchored in Aberdeen and Aberdeenshire.
“Crucially, while its approval will generate vast economic benefits, it will not increase the UK’s projected emissions.”
He said the announcement was “a welcome shot in arm for the UK energy sector which will give investors, operators and the wider supply chain confidence as they strive to provide the power we need here and now and transition towards a net zero future”.
Sturgeon: Rosebank could slow green transition
Nicola Sturgeon said the go-ahead for Rosebank could slow the transition to more renewable energy (Geraldine Scott writes).
Scotland’s former first minister said the “scarce resources” could be going towards renewables and said “it risks slowing the green transition and the jobs that come from it”.
She said those who work in oil and gas “need that transition to happen at pace”.
Humza Yousaf, who replaced Sturgeon as first minister, accused the UK government of “climate denial”.
He said: “Scotland will remain on the right side of history and demonstrate climate leadership.”
But Alister Jack, Westminster’s Scottish secretary, said: “It’s really important that we maximise our domestic oil and gas reserves, which mean lower emissions than imports, while reducing any reliance on hostile states.
“Rosebank will play a big role in that, as well as growing our economy and providing skilled jobs in Scotland for generations to come.”
Producing locally ‘means less CO2 per barrel’
Gilad Myerson, executive chairman of Ithaca Energy, told Times Radio that the Rosebank project is a more carbon-efficient way for the UK to use oil.
He said: “When you really dig down into the details, the UK consumes both oil and gas at the moment. And the question then becomes, how can we make sure that the oil and gas that we consume are produced at the lowest CO2 per barrel?”
He said the UK could produce its own oil and gas or it could import. “Importing oil is roughly six times the amount of producing it locally in a new field. And importing gas can be up to ten times as much as producing it locally. So from a CO2 per barrel standpoint, it makes a lot more sense to produce it locally.”
He added: “I think it’s very clear to everyone who really spends time looking into the oil demand in the UK that we’re going to be using oil and gas deep into the into the 2050s and 60s, if not beyond. And then the question becomes, do we want to starve ourselves from energy or do we want to produce it locally or do we want to import?”
Myerson expects Rosebank will provide 1,600 jobs. Ithaca Energy’s share price rose 13½p, or 8 per cent, to 176¾p this morning.
It will improve UK’s energy security, says Equinor
Arne Gurnter, the senior vice-president of upstream in the UK for Equinor, said the company was not “tone deaf” to the environmental debate surrounding the field but pointed out it was committed to meeting net zero goals (Greig Cameron writes).
Gurtner also argued the development of the field, which could remain in use until 2051, would improve energy security for the UK. Gas will be fed into the Shetland pipeline system primarily for domestic use in the UK although there is no guarantee the oil extracted will be refined here.
He said: “The oil goes to the international market . . . We currently can’t say where it will go for sure. With the lack of Russian oil coming to Europe, we currently see the market situation as such that most of the oil produced in Europe goes to Europe. If the UK needs the Rosebank oil it will actually get it.”
Environmental groups had strongly opposed Rosebank project
The green light for Rosebank has been widely condemned by opposition politicians, climate change experts and green groups (Adam Vaughan writes).
“This is a disappointing decision, particularly on top of last week’s announcement by the prime minister that he is weakening key climate change policies,” said Bob Ward, policy director at the Grantham Research Institute at the London School of Economics.
Several influential bodies and researchers, including the International Energy Agency, have said that no new oil and gasfields should be built or extended if the world is to cut emissions to net zero by 2050.
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“Amidst a summer of raging wildfires and the hottest July on record, this government approves the biggest undeveloped oil and gas field in the North Sea,” said Caroline Lucas, a Green Party MP.
Simon Evans, energy analyst at the Carbon Brief website, said that burning 300 million barrels of oil would release the equivalent of the combined carbon emissions of more than 90 countries.
Philips Evans, of Greenpeace, said: “Rishi Sunak has proven once and for all that he puts the profits of oil companies above everyday people. We know that relying on fossil fuels is terrible for our energy security, the cost of living, and the climate.” Oxfam, the marine group Oceana have also criticised the decision.
It is morally obscene, says Green MP
Caroline Lucas, the Green Party MP, has called the decision to go ahead with the Rosebank oilfield “morally obscene” and accused the government of “climate crime” (Geraldine Scott writes).
She said the field would produce “more than the combined CO2 emissions of all 28 low-income countries in the world” and added: “Energy security and cheaper bills aren’t delivered by allowing highly-subsidised, foreign-owned fossil fuel giants to extract more oil and gas from these islands and sell it overseas to the highest bidder.”
Drilling ‘could create £8.1bn of investment’
Geir Tungesvik, executive vice-president of projects and drilling at Equinor, the Norwegian state oil giant that owns 80 per cent of Rosebank, said the development would “bring significant benefits to Scotland and the wider UK”.
An independent study for Equinor has previously estimated that Rosebank could create £8.1 billion of investment over the lifetime of the field, of which £6.3 billion is likely to be invested in British businesses.
Equinor said Rosebank could support about 1,600 jobs during the height of construction and continue to support about 450 UK-based jobs once in production.
It said that it would develop Rosebank using a floating production vessel which would unload the oil on to tankers that would take it to refineries. The field is also expected to produce smaller quantities of gas, which will be sent by pipeline to Scotland.
Ithaca Energy’s share price rose 13½p, or 8 per cent, to 176¾p this morning.
We must continue to use oil, says net zero secretary
Claire Coutinho, the energy security and net zero secretary, said oil and gas needed to continue to be part of Britain’s energy supply on the path the net zero — and that it was better to use supplies for British oilfields.
She said: “We are investing in our world-leading renewable energy but, as the independent Climate Change Committee recognises, we will need oil and gas as part of that mix on the path to net zero and so it makes sense to use our own supplies from North Sea fields such as Rosebank.
“The jobs and billions of pounds this is worth to our economy will enable us to have greater energy independence, making us more secure against tyrants like [President] Putin.
“We will continue to back the UK’s oil and gas industry to underpin our energy security, grow our economy and help us deliver the transition to cheaper, cleaner energy.”
Tessa Khan, executive director of the campaign group Uplift, said: “Rosebank will do nothing to lower fuel bills or boost UK energy security. Most of this oil will be shipped abroad and then sold back to us at whatever price makes the oil and gas industry the most profit.”
She also raised the prospect of a legal challenge against the decision, alleging that there were “strong grounds to believe that the way this government has come to this decision is unlawful and we will see them in court if so”.
The NSTA said that it had granted development and production consent for Rosebank after accepting the environmental case set out by developers “in accordance with our published guidance and taking net zero considerations into account”.
Labour would not revoke licence
Labour does not back the opening of the Rosebank oilfield but would not revoke the licence if the party wins the next election (Geraldine Scott writes).
Jonathan Reynolds, the shadow business secretary, told Times Radio: “We don’t support Rosebank, we don’t think it is the right use of, again, limited resources, [it] requires a significant subsidy.”
But he said, while Labour would not have granted the licence for the site, “we wouldn’t revoke any licences that are granted before a general election”.
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He said: “We’ve done that to try and provide a degree of investment certainty for the UK environment because that has been absolutely trashed by the Conservative government.
“So we’re very clear we think we need to transition away from fossil fuels.
“We think until the electricity system as well as the heating system for most people in this country is removed from the volatility of the gas price we’ll never have the real energy security that we need.”
Greg Hands, the Conservative chairman, said Labour was “all over the place on energy security”.
