Exclusive:North Sea chief demands action from Andy Burnham to open 'bigger pipeline' of oil and gas projects
The Prime Minister has been urged to put his warm words in support of the oil and gas sector into action to secure investment in the North Sea.
The head of the North Sea energy sector has called on Andy Burnham to finally put his vow to reindustrialise the UK into action by opening the door for a “bigger pipeline of projects” in fossil fuel drilling.
David Whitehouse, the CEO of Offshore Energies UK (OEUK), made the appeal to the Prime Minister ahead of an expected decision in the coming days as to whether the UK government will give the green light to the Jackdaw oil field project.
Jackdaw’s developers, Adura, argue the project will be able to meet gas requirements this winter with domestic fuels if approved by UK ministers. But critics have warned that Jackdaw would provide just 2 per cent of the UK’s gas demand over its 10-year lifetime while adding to Britain’s impact on climate change.
Mr Whitehouse has called on Mr Burnham to lay the path for several other key oil and gas projects to receive environmental consent. He warned that a failure from Westminster to support the North Sea oil and gas sector could lead to Scotland failing to reap the rewards of the offshore wind sector, if supply chains are lost.
READ MORE: Andy Burnham faces early crucial oil and gas test that will define his leadership in Scotland
Last week, The Scotsman revealed that five further projects are lined up behind the prominent Jackdaw gas and Rosebank oil projects, which require environmental consent to begin drilling.
The five developments, including the Cambo oil field and the Tornado gas proposals do not require an exploration licence so approval from the UK government would not break Labour’s manifesto commitment to end new drilling permits.
That exploration licence ban is poised to be formalised in the Labour government’s upcoming energy independence bill, which will also allow oil and gas projects “tied-back” to existing infrastructure to be approved, in a compromise agreed after talks with the industry last year.
Speaking to The Scotsman in Aberdeen, Mr Whitehouse pointed to comments by Mr Burnham since entering Downing Street over his pledge to reindustrialise the UK and taking a more pragmatic approach.
Speaking in July, the Prime Minister argued that “the question isn’t whether Britain will still be using oil and gas, the question is where does it come from”.
Mr Whitehouse said: “That language, I think, is really important, not just for the oil and gas sector but I think for broader industry in Scotland and the wider UK.
“Now is the time I think we want to start seeing what does that language mean - what does that mean in reality.”
He added: “What we're looking for is the signals of what the answer to that question is, and in our view, and in the view of the thousands of people who work in the sector, the answer is we should prioritise our own production.
“There's an imminent decision that is going to come on the key fields, Jackdaw and Rosebank. I think the data that has been submitted strongly supports the right decision to support them.
“We want to hear that support and more importantly, we want to see the government recognising it's not those two projects, it's the bigger pipeline of projects that's important.”
OEUK estimates that 111 additional North Sea oil and gas projects could be unlocked with the right support from Mr Burnham’s government. The body has claimed that could add £50 billion of investment to the economy and more than 3 billion barrels of oil equivalent to domestic production.
The industry has persistently called for reforms to the so-called energy profits levy to be brought forward from 2030 to next year - arguing that by encouraging investment, the UK government will generate more tax from fossil fuel giants. The industry is demanding those reforms are set out in Chancellor John Healey’s Budget next week.
“When we get to the Budget, I think we want to see the successor regime to the energy profits levy, the think or the oil and gas revenue levy legislated, and importantly that the date be brought forward from 2030”, Mr Whitehouse said.
“What the industry has spoken about is why it's right to support our own industries and the thousands of jobs.
“By supporting our own industry, that means we have more tax in the UK economy, not less. We have more value in the UK economy, not less. I think we must deliver.”
Mr Whitehouse warned that “we're sitting in a world where the UK is continuing to import diesel and jet fuel made from Russian crude oil”, adding that at the same time “we’re choosing not to support our fields”.
“It is not right, we must support our own fields”, he added.
“We want to come out at the end of this, actually, with a reset with the government, one that says yes, there is a path where we need to build out renewable energy.
“But while we need oil and gas, we should be prioritising our own production from the North Sea.”
Concerns have been raised over emerging industries, including offshore floating wind, failing to scale up at the pace expected.
Mr Whitehouse has issued a warning that a failure to support the oil and gas sector, where crucial historic supply chains operate, could lead to Scotland failing to benefit from the economic gains of renewables.
“There's no doubt that wind, particularly floating wind and carbon storage are really good opportunities for actually, not just Scotland but for the whole of the UK”, Mr Whitehouse said.
“But the only way we're going to create real value in those is if our supply chain is providing more of the elements of those projects.
“The majority of our supply chain companies absolutely rely on their oil and gas revenues, but they are also looking to build their opportunity in the future of renewables.
“If you take away the oil and gas revenue today, we lose those companies. If we lose those companies, we lose the opportunity to have a Scotland-driven supply chain in those renewable opportunities of the future.”
“These things are totally complementary,” Mr Whitehouse added.
“Support the oil and gas industry, create the value to support those jobs.
“By supporting that supply chain, we give ourselves the opportunity to grow a really positive story about the future of renewables in Scotland where more is made here in Scotland and more of that value comes into our economy.”
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