Contested UK Oil Fields Get New Guidance for Environment Permits

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(Bloomberg) — Two controversial oil and gas fields in the UK — led by Equinor ASA and Shell Plc — will now have the opportunity to re-apply for environmental permits after the government published a guidance on how it will asses the climate impact of fossil fuel projects.

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While the state gave no indication of whether the Rosebank and Jackdaw projects could gain approvals, it said the long-awaited document provides “greater clarity and stability” for the industry, according to a statement from the the UK’s Department for Energy Security and Net Zero. 

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The guidance for environmental impact assessments covers already licensed fields, with the UK government saying it’s committed to not granting new drilling licenses.

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These two projects has been in the spotlight as major new developments are dwindling in aging UK North Sea. Their fate is a crucial test of whether the Labour government will prioritize economic growth or climate action. 

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Permits for the two fields were granted under the previous Conservative government, but came into question after the UK Supreme Court ruled that environmental impact assessments must consider the consequences for the climate of burning the fossil fuels pumped from the fields, so-called Scope 3 emissions. A further court decision in January said the assessments should be redone. 

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Environmental groups, which been campaigning against new North Sea fields for years, warned the state against granting new permits. “Approving these projects would be a political sleight of hand that would benefit oil giants like Equinor and Shell, while leaving us hooked on fossil fuels just as another war in the Middle East is pushing up oil prices,” Greenpeace UK’s head of climate Mel Evans said in a statement. 

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“We are reviewing today’s guidance and remain committed to delivering Jackdaw, which is a nationally important energy project and supports the Government’s growth agenda,” a Shell spokesperson said. 

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“We welcome clarity and can confirm that we will submit a downstream end user combustion emissions Scope 3 assessment in full compliance with the government’s new environmental guidance,” said Equinor spokesperson Ola Morten Aanestad.

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Last year, Equinor and Shell agreed to combine their North Sea operations into a single entity. 

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Rosebank, located about 130 kilometers (81 miles) northwest of Scotland’s Shetland Islands and co-owned by UK’s Ithaca Plc, has intended daily production of 70,000 barrels of oil and 21 million cubic feet of gas. That would make it one of the largest fields in the UK, but a minnow in a world where total demand exceeds 100 million barrels a day.

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The Jackdaw field, approximately 250 kilometers east of Scotland’s Aberdeen — adjacent to the UK-Norway median line — will provide enough fuel to heat 1.4 million UK homes when operational, or about 6% of projected UK North Sea gas output, according to Shell. 

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—With assistance from Kari Lundgren.

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