Energy crisis: North Sea booms with six new oil and gas fields in the pipeline

Move comes despite Boris Johnson's target for UK to become net-zero emitter by 2050

North Sea oil and gas industry platforms and drilling rigs  moored in Nigg Bay in Cromarty Firth, Ross and Cromarty, Scotland. Several new fields will receive government approval in 2022. Alamy
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Six oil and gas fields in the North Sea are expected to receive the go-ahead from the British government this year, despite Prime Minister Boris Johnson's green push to drastically reduce fossil-fuel emissions.

Chancellor of the Exchequer Rishi Sunak has pressed business secretary Kwasi Kwarteng to fast-track the licences for the construction of the six energy areas – a move in stark contrast with Prime Minister Boris Johnson’s attempt to ensure the UK is a net-zero carbon emitter by 2050.

Mr Sunak’s request is driven by Treasury fears for the economic hit from switching to greener forms of energy too quickly, coming at a time when the country is already grappling with higher energy bills, with prices expected to go even higher in April.

“The business secretary is pushing for more investment into the North Sea while we transition,” a Whitehall source told The Telegraph.

The six areas will receive the green light from the regulator – the Oil and Gas Authority – with expectations the drilling will start in the Rosebank field, to the west of Shetland, and at Jackdaw, Marigold, Brodick, Catcher and Tolmount East in the North Sea.

The combined reserves of the six sites are understood to be enough to power the UK for six months, with 62 million tonnes of oil-equivalent fuel in the ground.

While the UK’s focus is now turning to renewable energy sources, there are calls for the UK’s domestic fossil fuel extraction to be halted completely.

But ministers have pledged to continue to support oil and gas production through the transition to net zero to ensure the industry does not fall off a cliff edge that would destroy jobs.

At the same time, however, the government will continue to keep the pressure on businesses to reduce the carbon footprint of their operations.

“Kwasi is actively resisting insane calls from Labour and the eco-lobby to turn off UK production,” the Whitehall source said.

'Doing so would trash energy security, kill off 200,000 jobs, and we would only end up importing more from foreign countries with dubious records.”

Over the long term, however, the UK must generate affordable, low-carbon power to ensure it hits its net-zero targets, and secures energy independence that protects consumers from fluctuations in gas prices.

Natural gas and electricity prices around the world have rocketed since the middle of last year amid supply disruption and a post-pandemic surge in demand, which has caused energy bills to soar for millions of Britons.

UK energy companies Shell and BP are now in the firing line after reporting a hefty rise in profits just as UK energy regulator Ofgem unveiled a £693 ($939) rise in the energy price cap – the maximum suppliers are allowed to charge in a year – which will hit consumer wallets from April.

Calls are now growing for a windfall tax on energy companies, with some MPs arguing that while households are grappling with much higher prices – with energy bills expected to rise more than 50 per cent in April – the companies that extract the gas are reporting enormous profits.

BP chief executive Bernard Looney on Tuesday rejected calls to impose a windfall tax on British oil and gas producers after the company reported its highest profit in eight years.

"We need to be encouraging investment in natural gas in Britain, not discouraging," Mr Looney said.

Earlier this month, environmental campaigners reacted negatively when the new oil and gas field, the Abigail field, which lies about 233 kilometres from Peterhead, Aberdeenshire, was given the go-ahead for construction by the government.

The project will cost about $200 million, according to Rystad Energy data.

Tessa Khan, director of Uplift, a campaign group working for a fossil fuel-free UK, said the new site "only worsens the climate crisis", and urged the UK government to stop sanctioning oil and gas developments.

The plans for the new field were given the green light on January 19 by the OGA – just over two months after Glasgow held the world's Cop26 event where thousands of delegates descended on the city to talk about their methods to tackle the climate crisis around the globe.

Abigail, which is owned by by Ithaca Energy, is estimated to contain 5.5 million barrels of oil equivalent, which will be split equally between oil and gas.

"Why is the government sanctioning an oil and gas development that will see little to no benefit for UK energy customers or taxpayers, which only worsens the climate crisis, and where the only winners are the oil firm behind the project?" Ms Khan said.

"If we carry on down this path, we'll be dependent on a very expensive, highly polluting energy source for decades longer than is necessary.

"A serious response from the government to both unaffordable energy bills and the climate crisis, would see all this investment steered into cheaper UK renewables.”

A UK government spokesperson said while the country is working hard to drive down demand for fossil fuels, "there will continue to be ongoing demand for oil and gas over the coming years as we transition to lower carbon, more secure forms of energy generated in this country".

"We cannot turn off our domestic source of gas overnight," the spokesperson said.

"That would put energy security, British jobs and industries at risk, and we would be even more dependent on foreign imports."

Updated: February 08, 2022, 11:26 AM