(Con): I speak as someone
of Shetland parentage, like my noble friend , and much of what I have to say
relates to Shetland. I wish first to deal with the Cambo oilfield,
north-west of the Shetlands, which Shell recently announced it is
pulling out of. The project is currently awaiting the green light
from the Government’s Oil and Gas Authority, which I hope will be
forthcoming. I hope that the authority will bear in mind the
words of the Shell spokesman when announcing the Cambo decision:
“continued investment in oil and gas in the UK remains critical
to the country’s energy security. We believe the North Sea and
Shell in it has a critical role to play in the UK’s energy mix,
supporting the jobs and skills to enable a smooth transition to
Britain’s low carbon future.”
While we move towards net zero, it is worth remembering that 75%
of the UK’s total energy needs are met by oil and gas. As my
noble friend reminded your Lordships last
Thursday, oil and gas are still essential for our energy needs,
are vital to the production of many everyday essentials such as
medicines, plastics, cosmetics and household appliances, and they
will remain so in declining amounts, even in a net-zero world. As
he rightly pointed out, the choice we face is whether we wish to
use oil produced domestically or to import it.
Opponents of the development of the Cambo field
might reflect on the desirability of replacing publicly listed
companies—accountable to shareholders and regulators and beholden
to disclosure requirements—with private equity capital, which
does not have such obligations. Cambo is
majority-owned by Siccar Point Energy, which is backed by private
equity. There are many eager private investors in fossil fuels.
According to the Private Equity Stakeholder project, over $1
trillion has been invested in the energy sector since 2010, and
only 12% of that in renewable energy projects. Opponents
of Cambo should
perhaps beware of what they wish for.
Siccar Point has said that the Cambo project
would create over 1,000 direct jobs and thousands more in the
supply chain. This is obviously of relevance to Shetland, which
has a population of just over 23,000. The west of Shetland
province has been identified as an important location for future
offshore oil production. In 2019, McKinsey consultants projected
that by 2025 the west of Shetland province would contribute
around 30% of UK continental shelf production, up from 2% in
2014. The report said that these estimates could rise further if
break-even levels fall as the price of oil rises—it is currently
predicted by JP Morgan to rise to $150 a barrel—bringing into
production a potential 3 billion barrels of oil: equivalent to
the province’s previously unsanctioned reserves. The Oil and Gas
Authority suggests that around a quarter of all upstream
production and operations jobs in the UK continental shelf—about
67,000 jobs—may be centred on the west of Shetland by 2025. The
country as well as the industry has a clear incentive to support
production to the west of Shetland...
(LD):...Even
without the urgent pressure to tackle climate change, the UK
continental shelf is a mature province and production is in
decline. The question is how we manage it. Since the
establishment of the nationalist/Green coalition in Scotland, the
Government have joined forces with campaigners to promote the
accelerated shutdown of Scotland’s offshore industry. Having
built the case for independence during the referendum on that
very oil and gas industry, the SNP is asking us to believe that
we could do it just as easily without it. Knowing that the
decision rested with the UK, called for the cancellation
of the Cambo field,
and it appears that that may have contributed to Shell’s decision
to pull out of the project. Regardless of the merits
of Cambo
the accelerated shutdown of the North Sea, pressed for by Green
Ministers, will make achieving net zero harder, take longer and
be more costly...
(Con):...Many noble Lords have touched on the importance of the
green economy and the role of the transition to net zero. At the
moment, this is a really interesting example of somewhere there
is an opportunity. My noble friend and the noble Lord, Lord
Bruce, mentioned Cambo
which to me is an example of the vulnerability of the Scottish
Government’s current position, because, as was alluded to, the
SNP is very happy not to take responsibility for decisions on
this...
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