Sanjoy Sen is a chemical engineer. He contested Alyn & Deeside in the 2019 general election.
“It’s Scotland’s Oil” was the rallying cry that put the SNP on the political map in the 1970s. And ahead of the 2014 referendum, the Yes campaign envisioned healthy offshore revenues feeding an ‘oil fund’ in an independent Scottish economy. Nicola Sturgeon even called on David Cameron to cut taxes to support the sector following a global price slump.
How things change. After 50 years of production, North Sea output is predictably in terminal decline (barely a third of the 1999 peak) with occasional new discoveries out-weighed by ageing fields dropping off their perch. But, more surprisingly, the SNP are no longer interested. Under pressure at COP26, Sturgeon finally relented, declaring her opposition to Cambo (a major development west of the Shetland Islands), casting doubt over the future over the entire sector.
In the ensuing media storm, Shell (a 30 per cent Cambo partner) announced its exit. Whilst environmentalists are naturally delighted, others fret over the consequences of an early end to North Sea oil. Industry and trades unions have warned of the impact on current jobs – and on the ability of businesses and workers to achieve the ‘just transition’ to clean energy opportunities. Even the SNP faithful are aghast, warning that the economic fallout could irreparably damage the independence campaign. A re-think appears unlikely, however, with Sturgeon now locked into a power-sharing agreement with the Scottish Greens.
But whilst the nationalists may have backed themselves into a corner, there’s no need for the Conservatives to do likewise. And there are sound reasons for doing so: key political, economic and environmental considerations all overlap.
What are the political implications?
Contrary to what we often hear, not everyone is fully signed up to the Thunbergian agenda. Experience from Cumbria shows that local support for new nuclear power and even coal mining can be strong as they create employment in areas where alternatives can be limited. Teesside battled in vain to save its steelworks whilst Coventry’s City of Culture celebrations paid tribute to its lost car industry. And Aberdeen remains proud of its status as the oil capital of Europe. Backing traditional industries is very far from the electoral liability that strategists fear.
With offshore oil and gas reserved to Westminster, the North Sea Transition Deal was signed earlier this year to support 40,000 (mostly Scottish) jobs. Sticking to the plan to safeguard production whilst supporting the shift to new opportunities now gives Scottish voters (especially around Aberdeen) a solid reason to get behind the Conservatives. Meanwhile, Scottish Greens co-leader Patrick Harvie is already at odds with his SNP partners over further extraction and has stoked controversy amongst voters with his “hard right” depiction of oil supporters. Unionists should not be slow to capitalise: any split in nationalist support impacts the case for indyref2.
Strengthening energy economics
Early cessation of production brings forward offshore decommissioning activities, a headache for the Treasury which is on the hook for some £24 billion in tax relief. And, needless to say, writing big out cheques to big oil is a PR nightmare for a government committed to net zero. Extending production defers taxpayer costs and buys time for the UK decommissioning supply chain to prepare. It could also see certain liabilities converted into assets if technology developments allow pipelines and platforms to be re-purposed for carbon dioxide storage, windfarm support and hydrogen production.
More significantly, with so much of the discussion framed around the environment, energy security has received scant attention. And past decisions are now back to haunt us, especially the unworkable price cap in combination with the closure of offshore gas storage. (If it’s any consolation, things seem even worse in Europe with ever-growing reliance on Russia.) Until we establish viable alternatives, continued North Sea production reduces our import requirements – and limits our exposure to global instability.
Tackling environmental concerns
And find alternatives we must: we will never be self-sufficient in oil and gas again. So if we’re going to extend domestic production, let’s use the time it buys us wisely. Offshore wind power generation is increasing at pace but to harness its fluctuating output, we need to take big steps in energy storage. This could be via hydrogen which is deployable across electricity, heating and transportation sectors.
Or it could be in grid technology, harnessing the ever-growing combined battery capacity of electric vehicles. (EVs clearly have some way to go but recent progress has been swift and now account for 10 per cent of UK new car sales.) Nuclear, both large-scale and small modular, also needs to be accelerated – sadly, none of these opportunities will be coming to Scotland due to the SNP’s continued opposition.
In the meantime, shutting down our own fields doesn’t reduce emissions. Not unless we intend to sit at home in the dark in order to meet our climate commitments. In fact, shipping in refrigerated cargoes of liquefied natural gas from around the world is far more energy-intensive than pipelining our own supplies from the North Sea. And the Transition Deal backs further improvements by the electrification of UK platforms via new offshore windfarms and subsea interconnector cables, an increasingly common feature in the Norwegian sector.
A month ago, the UK government was in the bad books of the Scottish offshore sector, backing two English carbon-capture developments (Merseyside, Humber-Tees) ahead of the much-fancied Aberdeenshire Acorn project. Since then, the nationalists’ new hardline stance on oil has presented the Conservatives with something of an open goal. If we hold our nerve and back the North Sea, it might still help the UK in its present energy crisis whilst also tackling long-term emissions. Who knows, it might even help preserve the Union.