Blow to North Sea oil and gas companies in landmark court case

UK court finds in favour of environmental activists fighting to stop development of Rosebank and Jackdaw oil fields

An oil platform in the North Sea. A Scottish court has found the consent given to three oil companies to develop the Rosebank and Jackdaw oil fields should be quashed. Photo: Equinor via ABACAPRESS.COMShow less

The development of two major oil and gasfields in the North Sea must be halted after a landmark court case ruled in favour of environmentalists.

The Scottish Court of Session in Edinburgh ruled the approval to develop the Rosebank and Jackdaw fields, which was granted by the previous Conservative government, should not have been granted on the grounds that the companies involved did not take into account so-called scope-3 or downstream carbon emissions.

The Norwegian oil company Equinor owns the Rosebank field, along with Ithaca Energy of the UK, while Shell owns Jackdaw. Government consent for drilling for Rosebank was granted in September 2023, and permission to develop Jackdaw came just over a year earlier. Rosebank is the UK's largest untapped oilfield, estimated to contain up to 300 million barrels.

Environmentalists argued the companies had only considered the carbon emitted during the extraction process, rather than the total amount of emissions further downstream when the extracted fossil fuels are burned. The court agreed and ruled that the government must now consider the full environmental impact of the emissions from the fields. As such, the current Labour government will have to make a new decision on whether drilling can proceed.

The judge overseeing the case, Lord Ericht, said on Thursday that the decision to grant consent was unlawful, and that the consent itself should now be reconsidered.

“The public interest in authorities acting lawfully and the private interest of members of the public in climate change outweigh the private interest of the developers,” Lord Ericht said.

“The effect of the burning of fossil fuels on climate change and the lives of individual persons is now well recognised in law,” he added.

He ordered that consent be suspended pending reconsideration by the UK's Energy Secretary Ed Miliband, which would give the companies “options” on how to proceed in the meantime.

“This is a historic win,” said Philip Evans, senior campaigner at Greenpeace UK. “The age of governments approving new drilling sites by ignoring their climate impacts is over.

“The courts have agreed with what climate campaigners have said all along: Rosebank and Jackdaw are unlawful, and their full climate impacts must now be properly considered,” Mr Evans said.

Climate activists demonstrate against Rosebank and Jackdaw developments outside of the court of session in November last year. Environmentalist are claiming an 'historic victory'. Getty Images

No extraction

Importantly, Lord Ericht said that no oil and gas should be extracted until the government makes its new decision. However, the companies involved can continue to make preparations for production. The oil and gasfields were expected to come on line within the next few years.

The government had already admitted in November that the consent to develop Rosebank was unlawful.

Shell said it has already spent £800 million ($984 million) since the regulator and the government approved its development of Jackdaw in 2022. “Swift action is needed from the government so that we and other North Sea operators can make decisions about vital UK energy infrastructure,” a representative said.

“When operational, Jackdaw would provide enough fuel to heat 1.4 million UK homes, at a time when older gasfields are reaching the end of their production and the UK is reliant on imported gas to meet its energy needs.”

Meanwhile, an Equinor representative said: “We welcome today's ruling and are pleased with the outcome which allows us to continue with progressing the Rosebank project while we await new consents.

“Rosebank is critical for the UK's economic growth, with an estimated 77 per cent [£6.6 billon] of total direct investment benefiting UK businesses.

“Equinor and its Rosebank joint venture partner, Ithaca, have already committed over £2.2 billon on developing Rosebank – awarding vital contracts across the supply chain and employing personnel to deliver the work.”

For its part the Department for Energy Security and Net Zero said it had already consulted on the revised environmental guidance on downstream emissions.

“We will respond to this consultation as soon as possible and developers will be able to apply for consents under this revised regime,” a representative said.

“Our priority is to deliver a fair, orderly and prosperous transition in the North Sea in line with our climate and legal obligations, which drives towards our clean energy future of energy security, lower bills, and good, long-term jobs.”

Global warming

However, analysts like Josh Burke, fellow at the London School of Economics' Grantham Research Institute, say that the development of Rosebank and Jackdaw would play little role in the UK's energy security, nor would they lead to lower prices for British consumers, because the oil that comes from the UK part of the North Sea is almost all exported and the gas that does come ashore is sold to UK consumers at wholesale global prices.

“The verdict rightfully quashed the approval of a new oil site in the North Sea on the grounds that the vast emissions produced when the oil and gas is burned had not properly been factored into the decision,” Mr Burke said.

“The evidence is clear and should not be ignored: the development of North Sea fossil fuel infrastructure would encourage other producers around the world to carry on as well, and would be incompatible with efforts to limit global warming to 1.5°C. If the government is serious about its climate commitments it must reject any future applications from Equinor, or any other company, for new development in the North Sea.”

The legal decision has far-ranging implications for projects outside the North Sea oil and gas industry, and comes just a day after Chancellor Rachel Reeves outlined certain specific plans to kick-start the British economy, including the building of a third runway at Heathrow airport.

One of the concerns surrounding the extra runway at the UK's busiest airport was the issue of the additional carbon that would be emitted by the 260,000 extra flights that would be landing and taking off from the airport once the new runway is operational. Environmentalists have objected to the third runway on those grounds, despite government and Heathrow's assurances that the project would take place within Net-Zero targets. Many climate change campaigners say the government should not be choosing to green light economic growth projects like the third runway at Heathrow at the expense of carbon reduction targets.

Nonetheless, Ms Reeves commented on Wednesday that there was “no trade-off between economic growth and net zero”.

“Quite the opposite,” she said. “Net zero is the industrial opportunity of the 21st century, and Britain must lead the way.”