The devastating case for North Sea oil and gas
TCW
LABOUR’S Net Zero ambition cannot possibly be achieved by 2050, a new analysis published today has found.
The report from the free-market think tank the Institute of Economic Affairs says that no credible forecast shows UK oil and gas demand falling to zero by 2050, even under Net Zero scenarios. Oil and gas, it says, will remain essential ingredients in plastics, fertilisers, medicines and modern technology.
The 78 per cent tax rate on North Sea oil and gas is forcing a decline in production and driving investment overseas, with the workforce forecast to halve to as low as 57,000 by the early 2030s, losing up to 1,000 jobs a month, says the report, which found that replacing domestic production with imports will increase overall emissions by around 50 per cent and risk gas shortages on cold days as early as next winter.
The authors say their argument dismantles the case for ending UK oil and gas production, and warn that it would damage the economy, increase global emissions and threaten Britain’s energy security.
The paper, Just Stop Oil?, by respected analyst Kathryn Porter of energy consultants Watt-Logic, highlights how oil and gas underpin modern life far beyond their role as fuels. Essential uses run from hospital equipment and medicines to fertilisers and electronics.
Even the Westminster Climate Change Committee, a body always committed to Net Zero, projects UK demand of 168million barrels of oil equivalent in 2050, around 40 per cent of current production.
Kathryn Porter said that forcing premature decline in North Sea production will not cut global emissions, but will increase them. Imported oil and gas carries a carbon footprint around 50 per cent higher than domestic production, according to Climate Change Committee calculations.
Her paper is particularly critical of the windfall tax, which has raised the headline rate on North Sea production to 78 per cent. Rather than punishing the populist targets of Shell and BP, it has devastated independent producers, it argued.
She said: ‘Oil and gas producers are not the enemy – they produce goods used by all of us every day. The windfall tax was supposed to target Shell and BP but instead it has hammered independents, driven investment overseas and vastly accelerated the decline of important tax receipts.
‘Unless we change course rapidly, Britain will be increasingly reliant on dirtier, more expensive imports – and less secure on cold winter days when we need energy most.’
Windfall tax victims, the paper says, include Harbour Energy, which paid four times more UK tax in 2022 than Shell despite revenues more than 60 times smaller. It saw its profits collapse from $101million to $8million, and has since cut more than 700 UK jobs and shifted investment to Indonesia and Mexico. Apache has announced it will end all North Sea operations by 2029. Chevron is closing its Aberdeen office after 55 years.
Analyst Wood Mackenzie has warned that 2025 is set to become the first year since 1960 without a single exploration well in the North Sea.
The North Sea workforce has already fallen from 120,000 to 115,000, with Robert Gordon University in Aberdeen forecasting a decline to as low as 57,000 by the early 2030s. An estimated 89 per cent of supply chain firms plan to increase non-UK business. In stark contrast, Norway is investing $26billion in its continental shelf, making major new discoveries under a stable, investment-friendly regime.
The IEA paper warns that accelerated decline also threatens energy security. As offshore pipeline infrastructure loses investment, it risks cascading closures that make fields unworkable. The National Energy System Operator has warned that by 2030 there could be insufficient gas to meet UK demand on cold days, with industry analysts expecting the risk to emerge as early as next winter.
IEA Director General Lord Frost said: ‘Many people imagine that campaigns against oil and gas target only “the industry” and not the rest of us. But in a modern economy, energy supplies and energy costs affect every sector of activity.
‘Pushing up costs and imagining that we can simply eliminate oil and gas in sectors in which there is no satisfactory replacement risk bringing disaster. It would be quite simply destructive and counter-productive to ‘”just stop oil”.’
This article (The devastating case for North Sea oil and gas) was created and published by Conservative Woman and is republished here under “Fair Use” with attribution to the author TCW
See Related Article Below
Miliband to ‘miss net zero targets unless he spends extra £75bn’
UK does not have enough wind and solar to decarbonise the grid, warns energy consultancy
Ed Miliband will fail to meet his net zero targets unless he spends an extra £75bn on renewables, a leading energy consultancy has said.
Wood Mackenzie has warned the UK does not currently have enough wind and solar to decarbonise the grid, claiming nearly all of the Energy Secretary’s 2030 clean power targets are “out of reach”.
In a new report, Wood Mackenzie said the Government must spend at least an extra £75bn on net zero by the end of this decade to have any hope of achieving its target of almost entirely clean power by 2030.
The consultancy said: “The UK has reached crunch time on climate commitments, with nearly all 2030 energy transition targets now out of reach.”
It is the latest warning over spiralling costs and delays to Mr Miliband’s net zero transition, which involves spending hundreds of billions of pounds on green energy projects.
Chris O’Shea, chief executive of British Gas owner Centrica, warned last week that electricity in the UK is on track to co
He said “system costs” were expected to push up power prices as the Government oversees upgrades of the electricity grid to prepare for net zero.
The Tony Blair Institute released a separate report days later describing Mr Miliband’s net zero drive as “not fit for purpose”.
Wood Mackenzie’s latest report on the UK’s energy outlook 2025 has also reached similarly awkward conclusions.
“The UK faces a critical paradox,” said Lindsey Entwistle, an analyst at Wood Mackenzie.
Ms Entwistle added: “The country successfully halved emissions since 1990, but the next phase demands simultaneous acceleration of renewable deployment and management of prolonged fossil fuel dependence.
“What worked in the last decade won’t be enough for the next.”
However, Wood Mackenzie’s suggestion to spend an extra £75bn on net zero would have a huge impact on bills.
The consultancy’s latest report also highlighted how Mr Miliband’s ban on North Sea exploration has “locked in structural dependence on oil and gas imports”.
[…]
This dependence is only set to grow as North Sea developers are scared off by Mr Miliband’s green agenda, combined with Labour’s 78pc windfall tax on oil and gas profits.
Wood Mackenzie predicts that “domestic oil production will fall to 79pc of 2025 levels by 2035, with gas production dropping to 40pc”.
The Telegraph: continue reading
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