By stewartb
The head of trade body Offshore Energies UK (OEUK) was moved to write (July 4) in the specialist news website, Energy Voice in order to rebut a Westminster government minister’s evidence to the Scottish Affairs Committee of the Commons. The Committee was taking oral evidence from Michael Shanks MP, Parliamentary Under-Secretary of State (Minister for Energy) at the Department for Energy Security and Net Zero (DESNZ).
Source: Energy Voice, ’Let’s be clear about the value of the North Sea – Offshore Energies UK boss responds to minister’s claims there’s no difference between oil and gas imports and domestic North Sea production.’ https://www.energyvoice.com/renewables-energy-transition/575658/lets-be-clear-about-the-value-of-the-north-sea/
According to the above article, this is the nub of the controversy triggered by the minister: ‘.. the suggestion it aired that there is not a material difference between imported oil and gas and what we produce here in the UK does need to be addressed. Because there is a difference. And it matters.’ (my emphasis)That seems like a blindingly obvious observation but not for the British Labour Party government’s representative!
Below is the relevant part of the transcript of the Committee’s evidence session (from https://committees.parliament.uk/oralevidence/16235/pdf/)
‘Chair (Patricia Ferguson MP): On the basis of the premise that oil and gas will continue to play a part in the mix, would the UK economy benefit from prioritising domestic production over imported options? (my emphasis)
Shanks: ‘I do not think it makes a material difference, in the sense that we do not own what is extracted from the North Sea. It is owned by private companies that trade on an international commodity market, at an international price that is not set by Britain, for anything that they extract from the North Sea. Although the receipts that come from offshore extraction obviously contribute significantly to the Treasury, I do not think it makes a material difference to that long-term trajectory. The truth is that we have been importing significant amounts for so long that our energy mix is a diverse mix of imported LNG and others. I think we have been in this place for many years.’
‘The truth of all this—I suspect I will come back to this point repeatedly— is that for too long we have buried our heads in the sand and said, “This transition is not happening” while thousands of jobs have gone around us. The transition is under way. It is driven not by Government policy but by the geology of the North Sea. We want to grasp the opportunity that comes from that transition to deliver investment in the jobs of the future. That is the critical thing. To begin, you have to accept that the transition is happening and that the Government need to play a key role in driving it forward.’
The Energy Voice article reels off the ‘material differences’ to the UK – and because of the location of much of the UK’s upstream oil & gas sector, to Scotland:
- producing oil and gas in the UK supports over 200,000 jobs domestically
- it provides £25 billion of value in the UK’s economy each year
- it supports the companies needed to deliver the UK’s energy future.
More statistics are presented in the OEUK article:
- presently, 75% of the UK’s energy needs are met by oil and gas
- domestic production met 60% of the UK’s oil demand and 50% of its gas demand last year. ‘That is not a marginal contribution — it’s a critical part of our energy mix’. And the contribution from fields located offshore Scotland? Very far from being marginal!
- the UK is importing historically large amounts of energy: ‘over 40% of our energy needs met by imports’
- the North Sea Transition Authority (NSTA) reports that imported LNG can have up to four times the emissions of UK-produced gas
- the sector has paid over £400 billion of tax in the last 50 years – it states what is obvious to all but the Labour minister: ’That’s a material difference — environmentally, economically, and strategically’. A positive ‘material difference’ to the UK made by exploiting a resource found to a very large extent offshore Scotland!
And adding: ‘The real choice is whether we want the oil, gas, wind, hydrogen we will use produced in the UK or if we become increasingly reliant on imports.’
The critical choices for energy-rich Scotland in Union will of course – as always – be made in Westminster by a government which calculates based on the electoral arithmetic of England!
The Offshore Energies UK article goes on: ’We also need to be clear about the role of policy. The Minister said the decline in the basin is geological, not political. But policy shapes investment. It shapes confidence. And it shapes whether people see a future for themselves in this industry.’
And for Scotland’s remaining offshore oil & gas resources, the Scotland-based oil & gas supply chain and the sector’s workforce in Scotland – as with energy generated by wind, tides, waves, nuclear reactors and the rest – ‘shaping’ by policy will be done to Scotland by the policies of governments which rely for sustaining political power on meeting the needs and wants of England, with its markedly different energy generation capacity than Scotland’s relative to scale of demand and population size.
The CEO of Offshore Energies UK ends with this: ‘Our Chancellor recently said, “where things are made, and who makes them, matters.” I agree and that applies to our energy too.’ On oil & gas, one might have hoped a British Labour Party MP representing a constituency in Scotland would have grasped this!
As we know, the ‘where’ of energy generation makes Scotland a very energy rich country relative to its size: pity it still lacks the agency to valorise its resources optimally – oil & gas, offshore wind and the rest – for the present and future benefit of its industries and people!
Talking-up Scotland 'Albatraz' 
Shanks Quote, There is no English wind nor Scottish wind its GB wind I leave it there.
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Oil & Gas is taxed up to 80%. Depending on barrel price. Labour are thick as mince.
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The recent session of the Scottish Affairs Committee of the Commons gained quite a few ‘insights’ from oral evidence given by Michael Shanks MP, Parliamentary Under-Secretary of State (Minister for Energy) at the Department for Energy Security and Net Zero (DESNZ)
See transcript of the oral evidence at https://committees.parliament.uk/oralevidence/16235/pdf/
Shanks – ‘Oil and gas has played a critical role in our energy story for the past 60 years. It will continue to play a critical role for decades to come, …’ (my emphasis)
Later, Committee Chair (Patricia Ferguson MP, Labour): ‘Do you think it is necessary to reduce North Sea oil and gas production in order to scale up clean energy?’
Shanks: ‘I do not think it is’.
Asked by another Committee member later in the session: ‘.. the drawdown in oil and gas is not contingent on the standing up of renewables. We do not need oil and gas to stand down before we can stand up renewables. Would that be your view?’
Shanks: ‘Yes, absolutely’.
The TuS blog post has already highlighted the following:
Chair: ‘On the basis of the premise that oil and gas will continue to play a part in the mix, would the UK economy benefit from prioritising domestic production over imported options?’
Shanks: ‘I do not think it makes a material difference, ….’
On the merits or otherwise of domestic production over imports, the DESNZ civil servant stated: ‘The emissions part, the balance of importing versus domestic production, is a very complicated calculation. …. when you extrapolate that beyond just the domestic view and look at it globally, the Climate Change Committee has concluded that it is not possible to establish the net impact of domestic UK production on global emissions.’
Does this mean there is no measurable global climate detriment from prioritising use of UK domestic oil & gas production over imports? If so why not ….?
The civil servant added: ’The reason there is not that direct connect is because it is not clear— especially when we have relatively low demand for fossil fuels as part of the global market—that turning down our production would have any demonstrable impact on the overall global production of hydrocarbons. You have gas production, LNG production and gas storage around the world that may continue, regardless of the demand from the UK and regardless of what the UK continental shelf is producing.’
And: ‘There is a propensity to draw a straight line between, “If you produce more domestically, there are lower emissions,” but when you stand back to the global scale, it is very hard to prove that argument, unfortunately. That is what the Climate Change Committee has said as well.’
Does this mean continuing to support domestic production of oil & gas — if kept within the bounds of UK demand which it long has been – would have no measurable impact on global levels of production, and by extension, no measurable impact globally on climate detriment from the production and use of oil & gas?
On other aspects of the present government’s policy for the future:
Shanks: ‘… The Government were elected on a manifesto commitment not to issue new licences to explore new fields. How we bring that into legislation will be brought forward as a result of the consultation response.’
Later in the session: ‘… I will say categorically that the Government are committed to their manifesto commitment of not issuing new licences to explore new fields.’
Finally, a Committee member (Dave Doogan, the SNP MP) tried to introduce some common sense! By the time of his intervention, the Committee had already heard that: (i) oil & gas will be critical to the UK for decades to come; (ii) there is ‘no material difference’ between domestic production and imports; (iii) UK production of oil & gas makes no measurable difference to global levels of production (- and by extension, arguably no measurable difference to climate detriment relative to that associated with production occurring globally?); but (iv) no new UK Continental Shelf exploration licences will be issued.
In response to the statement on ‘no new licenses’ Doogan asked: ‘Can you think of another industry with substantial domestic demand and substantial domestic supply capacity where the Government would introduce an externality, such as the role that the Government or their agencies have in licensing, to restrict the domestic ability for supply to meet demand? Is there any other industry where the Government would countenance that type of intervention?’
Shanks: ‘.. we have always licensed fields in the North Sea. It is an important part of how we have managed it to date, but as I have said in a number of my other answers, the North Sea is a declining basin. When you talk about an externality, I think the most fundamental one is that the geology of the North Sea means that extraction has been diminishing year upon year upon year and will continue to do so.’
Doogan’s follow up searched for logic: ‘By that logic, when you are using the age of the basin as a determinant, your manifesto commitment to not issuing further licences, which you have made a point of saying you are going to stand behind, will have no bearing, because you are saying that this is because of the age and maturity of the basin and its ability to continue to produce. If that is the determining factor, what difference does it make how many licences you issue? That is a risk for industry, to research and apply for licences that may not produce. That is industry’s risk, but you are putting the Government in the middle of that and saying, “No, we are not going to issue those licences”.’
Based on the evidence presented to the Committee, what’s the downside of further exploration at industry’s cost and risk? And recall from earlier: ‘We do not need oil and gas to stand down before we can stand up renewables. Would that be your view?’ Shanks: ‘Yes, absolutely’.’
The head of the trade body, Offshore Energy UK writing in Energy Voice, picked up on the minister’s reference to ‘geology’ and the decline of UKCS production: ‘We also need to be clear about the role of policy. The Minister said the decline in the basin is geological, not political. But policy shapes investment. It shapes confidence. And it shapes whether people see a future for themselves in this industry.’
Source: Energy Voice (July 4) ’Let’s be clear about the value of the North Sea – Offshore Energies UK boss responds to minister’s claims there’s no difference between oil and gas imports and domestic North Sea production.’
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