Both the UK and Scottish governments remain committed to continuing extraction of North Sea Oil and Gas. Carbon emission from the burning of these fuels are more than five times those of the whole Scottish economy. Yet these emissions are not included in Scottish or UK targets for emissions reduction. The assumption is that other countries will cut usage and the market will then drive down demand or, and more often, that we can carry on producing willy nilly but consumers will find ways of capturing the carbon. Both of these events are deferred into the future and exploration and development of new fields continues. The Sea Change report shows how these plans are incompatible with a zero carbon economy and with a just transition.
Thanks to Friends of the Earth Scotland for these notes on the latest development west of Shetland.
Oil giant Shell and Siccar Point Energy are seeking permission from the UK Government to develop the Cambo oil field, West of Shetland, just months ahead of COP26. In the first phase, due to start in 2025, the companies expect to extract 150 million barrels of oil – the emissions equivalent of 16 coal-fired power plants running for a year. They anticipate operating the Cambo field, which contains 800 million boe, until 2050, by which time Britain has pledged to be net carbon neutral.
The Cambo Field is the second largest oil and gas development waiting for approval and once up and running is set to be the fifth largest producer in the North Sea. If approved, Cambo Field will be the first UK project to get the green light since the International Energy Agency Net Zero report calling for no new investment in oil and gas starting this year and the Shell ruling mandating the company to slash carbon emissions 45% by 2030.
The UK Government is currently expected to give its final approval on the project over the next six to eight weeks. Moving forward with the Cambo Field contradicts the findings of the IEA’s net zero report and is incompatible with limiting warming to the Paris Agreement target of 1.5C.
The climate impacts of opening the Cambo Oil field would be devastating. In the first phase alone, developers want to extract 150million barrels of oil; the emissions from which are equivalent to running a coal-fired power station for 16 years. The field is expected to operate until 2050 – the point by which your government has committed to reaching net zero emissions. And this is just the beginning. Cambo Field is only one of many oil and gas projects waiting for government approval that have the potential to extract 1.7 billions barrels of oil.
Approving the Cambo field will be a massive failure of UK climate leadership and threatens to undermine the success of the crucial UN climate talks. In just a few months, the eyes of the world will turn to the UK as the hosts of the UN climate talks in Glasgow. Approving the Cambo field will send a clear message that this government is not serious about climate action and not willing to do its part to phase out support for oil and gas. If the UK keeps extracting oil and gas, how can it expect other countries to do anything different?
The International Energy Agency has stated that to meet the 1.5°C target in the Paris Agreement, there should be no more new investment in oil, gas, or coal. Further, the recent UK Climate Change Committee assessment clearly laid out that current UK policies are far from delivering the UK’s climate goals. The amount of oil and gas in already operating fields in the UK will exceed our share of emissions in relation to the Paris climate goals. The world cannot afford to open new fossil fuel frontiers. This starts with rejecting the Cambo Field.
If Boris Johnson is serious about being a climate leader, he must reject Cambo, all new fossil fuel developments and support a just transition for oil and gas workers and impacted communities. It’s time to end the UK government’s support for maximising the economic recovery of oil & gas and commit instead to a rapid and fair energy transition. With the right policy support, the UK could create three jobs in clean energy for every oil & gas job at risk. We need a clear, credible plan to wind down production and deliver a just transition that is driven by oil and gas workers, their unions and affected communities.
The Cambo Field will bring few jobs, little tax and a potentially huge clean up bill for the public purse. Contracts for construction and installation have been awarded to overseas firms, meaning the bulk of jobs will be outside of the UK. As part of a global oil market 80% of UK crude is currently exported, and so this field would not contribute significantly to UK energy security. Siccar Point Energy, who owns the majority stake in the proposed field, paid no net tax between 2015 and 2019, instead receiving £41mn from the government to cover decommissioning costs. Meanwhile, the complexity of the field and high cost of operating in the West of Shetland makes the project high risk, with similar projects suffering from large cost overruns that have driven producers to bankruptcy.
One of the key issues we heard from oil and gas workers in Offshore was the high cost of training, borne by workers as more and more are forced into short-term contracts, posed a barrier to moving easily between similar offshore jobs in renewables as well as oil and gas.
This new survey shows that these workers are paying an average of over £1,800 a year in training costs, and among more results that:
97% are concerned about the UK’s offshore energy industry training costs
74.5% are employed ad-hoc as contractors
65% said their employer contributed 0% to their training costs including safety and first aid training in the past two years, which is up from 45% before 2015
94% of respondents said they would support an offshore passport, which licences accredited workers to work offshore in any sector through a cross-industry minimum training requirement.
A court case launched today against the UK Government that exposes the billions it gives to the oil and gas industry. The case is supported by the Paid To Pollute campaign, a new initiative coordinated by Uplift and endorsed by a number of organisations including Greenpeace UK, Platform London, Oil Change International, Friends of the Earth Scotland, Friends of the Earth England, Wales and Northern Ireland, UK Student Climate Network, Parents For Future, Fridays For Future Scotland, Extinction Rebellion, and Mothers Rise Up.
From it’s beginning more than 50 years ago oil and gas extraction from the North Sea has been heavily subsidised by the taxpayer. To find out more about the UK’s North Sea oil tax regime, which has handed super-profits to international oil companies while the taxpayer now foots the bill for decommissioning, you can read the featured report on our North Sea Oil and Gas page.
It’s excellent news that the BiFab yard in Fife will reopen over the next few months with the prospect of 290 jobs working on the production of eight platforms for the Neart na Gaoithe offshore wind farm project. It’s a time for optimism but also a time for organising to ensure that this is not another false dawn.
Neart na Gaoithe is just 15km off the Fife coast. When complete the windfarm will have 54 turbines generating enough electricity to power 375,000 homes. 54 turbines require 54 platforms, and it makes environmental sense to build these massive structures as close to the site as possible. But BiFab will only be making eight, the others will be produced thousands of miles away.
Announcements from the new private owners are positive about more orders in the pipeline, but we have heard this before – and back in 2017, prior to all production ending in early 2018 there were 1400 workers at BiFab. There have been four wasted years.
We’ve argued on this site that the Methil yard should be a key part of the engineering infrastructure that’s needed to build a new sustainable, zero carbon economy. The Methil, Burntisland and Arnish facilities can form part of the much more extensive network of sites required as we build an integrated, full-scale green energy economy.
We’ve also argued that the transition to the new economy we need so urgently can’t be left to the chaos and instability of the market. The workers at BiFab paid the price for the anarchy of the market in 2017/18. To avoid this happening again, to guarantee jobs and a future for our children and grandchildren, we need public investment, public ownership, long term planning and democratic control.
In the year that COP26 comes to Scotland Neil Rothnie asks why there is no public debate on the Petroleum Amendment Bill
For the last 15 months the Petroleum Amendment Bill has been sitting on the table in the House of Lords. The Bill is a private member’s bill based on the recommendations of the Sea Change report. It calls for an end to oil and gas exploration, the rapid phasing out of production and a transition for oil and gas workers into the renewables industry. 270,000 jobs are supported by the industry.
So just when were the oil and gas workers, their families and communities going to be informed of the existence of this plan, and get the opportunity to scrutinise and discuss it?
Who has been in on this discussion? Who has been making what plans?
Presumably the Government has a view on the Bill. Why the silence? Their current plan, the Act that the Bill aims to amend, is spectacularly unfit for purpose. It calls for “maximising economic recovery” of North Sea oil and gas. This is at complete odds with their claim to be leading the world against climate change. When UK Cabinet Minister, Alok Sharma, chairs the COP26 discussions in Glasgow in November is he going to be inviting delegates from Russia, Saudi Arabia, America, China and every other fossil fuel producer to follow the UK lead and maximise economic recovery of their own fossil fuels?
Are the trade unions in on the discussion? Have they informed their members on the North Sea what is being proposed?
Does the industry not feel the need to comment on a radical plan that has massive implications for their business on the North Sea and internationally. If it’s necessary in the UK such a plan not necessary internationally?
Do the Labour Party, the SNP and the Greens have positions on the Bill? Lady Sheehan is a Liberal Democrat so presumably her party has a view. What is it?
Why the silence? Does the media, the BBC and the newspapers, know of the existence of this Bill. Are they deliberately ignoring it and going to continue only to report what is written for them in the oil company public relations departments? A proud tradition that has disappeared the North Sea from national scrutiny.
What about the environmental movement itself? Scot.E3 has been campaigning on employment, energy and environment for three and a half years; but such is the silence that it was only alerted when Baroness Sheehan and Mary Robinson (past President of Ireland) alluded to the Bill in a recent article in the Times.
Ex North Sea oil worker Neil Rothnie asks why the Scottish Government’s updated climate plan is so quiet on North Sea oil and gas. This piece was published as a letter in the Herald newspaper on 30th December 2020
SCOTTISH Climate Change Secretary Roseanna Cunningham, has been giving her opinion on the Government’s updated Climate Change Plan. But nowhere in her Herald on Sunday article (“‘COP26 is a chance for us all to play our part in debate’”, December 20), or even in the plan itself, do we get a glimpse of the reality of climate change.
Climate change is increasingly experienced by people across the globe as extreme weather events that are already destroying lives. It’s experienced by the natural world as rising temperatures, the melting of ice and the destruction of habitats and the threat of species extinctions.
There’s no sense of this in the report. The term “climate change” is scattered throughout it like punctuation marks, and carries about as much meaning as a comma.
There is scientific consensus about climate change. It’s caused by burning fossil fuels which give rise to greenhouse gases (carbon emissions) that cause the atmosphere to heat, and progressively destabilise global climates.
The oil industry, and the North Sea where 75 per cent of the UK’s carbon emissions originate, have been “disappeared” from the Government’s plan. It’s one area where the UK and Scottish governments are completely in step. Their plan for the North Sea is “Maximising Economic Recovery”. And if that isn’t clear enough, just think, “business as usual”.
Maybe you thought that a climate change plan might concentrate on how we might replace fossil fuel production with renewable energy production in a planned way, that protects the workers, their families and communities by helping them transition to work in a sustainable industry.
But no. Oil and gas must stay, and stay in the hands of the giant corporations, and suffer the vagaries of a basket case of an oil market that gives us periodic price collapses and catapults thousands of workers onto the dole. Twelve thousand have gone so far this time. Another 18,000 or so expected to go soon.
Now it seems, our new future best friends are to be “hydrogen” and “carbon capture”. We’re to continue sucking the hydrocarbons from under the North Sea, then spend a fortune taking the carbon out, leaving hydrogen. Then we’ll pump the carbon back under the North Sea. Is this feasible at scale? Globally?
A third of North Sea gas comes ashore at St Fergus where by 2024 we “could” be able to remove 340,000 tons of carbon dioxide a year – a measly one 800th of the 280 million tons of greenhouse gasses that were produced by burning North Sea oil and gas last year.
Is Ms Cunningham going to be standing alongside UK Minister Alok Sharma to welcome the COP26 circus to Glasgow this coming year? If so, what leadership is she going to be showing Saudi, Russian, US and Nigerian delegates? Should they follow our lead and maximise economic recovery of their own oil and gas resources? And hope to decarbonise it and pump the carbon back underground?
The updated Climate Change Plan does not look like the Government has the measure of carbon emissions or the oil and gas industry. They all need public scrutiny.
We republish this article with thanks from the excellent People and Nature blog (well worth following) – it has also been reposted by the Ecologist.
The UK paid Royal Dutch Shell $116 million of tax rebates in 2019, while the company reported $92.1 billion revenues in the UK for the year.
Internationally, Shell made pre-tax profits of $25.5 billion in 2019, and paid $7.8 billion income tax and $5.9 billion royalties, in dozens of countries. But the UK, France, South Africa and Indonesia handed money back to Shell.
Shell and BP’s rebates are part of the hugely generous system of tax breaks for North Sea producers, linked to the decommissioning of declining oil fields (and analysed last year in the Sea Change report by Platform, Oil Change International and Friends of the Earth).
These are subsidies to fossil fuel production, running into billions of pounds, devised by a Tory government that claims to be taking action on climate change.
And the problem runs deeper. North Sea oil production has since the 1980s been taxed with profit-based, rather than resource-based, methods, which gave the international companies access to the resources in the ground on unprecedentedly favourable terms.
The central role of these tax arrangements in the neoliberal “process of redefinition of the economic frontiers of the state” was analysed in this article by Juan Carlos Boué, published by Scot.E3, the just transition campaign group. The UK tax model was promoted across the world and “destabilised many key petroleum producers, whose governments found themselves starved of fiscal income”, Boué argues.
This is all politically relevant right now, as trade unionists and environmentalists seek ways to unite to ensure a just transition away from oil and gas production on the North Sea.
There have been some vital steps forward in recent weeks.
In September, a report compiled by Platform, Friends of the Earth Scotland and Greenpeace gave voice to North Sea workers’ views on just transition. It was based on a survey of 1383 workers, all in upstream oil and gas.
The report showed that most people who actually work on the North Sea (91% of respondents) had never even heard the term “just transition” – a reminder of the yawning gap between working people on one hand and political, academic, trade union and “left” circles on the other.
The report – which was greeted by the Rail Maritime and Transport (RMT) union – also showed that North Sea workers definitely embrace the idea of moving out of oil and gas production and into offshore wind, in particular,
and other twenty-first century ways of doing things in general. The respondents were overwhelmingly positive about retraining and moving to other industries, and offshore wind was the favourite choice.
On a webinar arranged by Platform last week, three offshore workers gave their views, together with a trade union official (Jake Molloy of the RMT), a Labour politician (Lewis MacDonald, Member of Scottish parliament) and an energy researcher (Anna Markova, Transition Economics).
The workers spoke of the hardship and demoralisation caused when the oil price falls and big companies shed labour, which they have been doing throughout the coronavirus pandemic. The high level of casualisation on the North Sea makes matters worse.
Workers who hope to move to offshore wind jobs are further aggrieved by an unjust, bureaucratic qualifications regime. They are required to pay for re-training courses from their own pockets – at the very moment when they are looking for a job and short of money. Many companies add insult to injury by requiring them to do e.g. basic safety training that covers issues they have learned over decades offshore.
The webinar provided space to reflect on what a worker-led just transition would look like. Jake Molloy of RMT pointed to the huge job, now starting, of decommissioning old oil rigs. “The steel should be recycled and used for wind turbines”, he suggested. (He said similar things when addressing the Scottish TUC recently. See this recording, at 4 hours 52 minutes.)
Such suggestions will take on meaning if they are linked to calls for public ownership, and for an end to the subsidies paid to oil and gas producers, in my view.
Only public corporations, acting in the interests of society as a whole and not for profit, would be able to act on proposals such as Molloy’s. Running down oil and gas production, and decarbonising the economy, needs integrated approaches by entities that take full account of the social and climate consequences of their actions.
Only moves towards public ownership can challenge the energy companies who see the North Sea as one part of their global operations, and use their lobbying power to mould the tax regime to their interests.
At last week’s webinar, repeated mention was made of work that could be done in the UK, e.g. building and repairing rigs and wind turbines, being done elsewhere.
There is a danger of the labour movement approaching this as a competition between workers in different places, going back along the road trod by Gordon Brown, with his notorious call for “British jobs for British workers”.
This can only feed the divisive nationalism and protectionism to which the Johnson government appeals.
A campaign for public ownership, by contrast, highlights the fact that the state can be used to challenge the power of multinational capital and constrain its exploitation of working people and of natural resources.
It highlights the fact that state action could run down oil and gas production on the North Sea, expand electricity generation from renewable sources, and develop other industries in the areas where communities now rely on employment offshore.
A campaign for public ownership to underpin a just transition could start to challenge the multinational oil companies and their accomplices in government, and unite offshore workers with school students and all those demanding rapid action to stop dangerous climate change. GL, 15 December 2020.
■ As the discussion on just transition got started in Scotland, Shell’s truth-bending claims that it is doing something about climate change have been taking a beating. Several senior executives in its renewables energy business have quit, amid what the Financial Times reported is “frustration” at the minute quantity of investment in non-carbon technologies. Two big court cases against Shell by Friends of the Earth Netherlands are close to their conclusion. The first is to compel the company to clean up the damage it has done over decades to the Niger Delta, in Nigeria, where it produces oil. The second case is aimed at forcing Shell to reduce its carbon emissions.
Climate crises, Covid-19 and a looming global recession: how many more storms can the N Sea oil and gas industry take?In part one of this report, published in April 2020, Brian Parkin looked at the combined impacts of the Covid-19 pandemic and a world economic downturn on the UK offshore oil and gas industry. In this brief second paper, he looks at the emerging trends from the second half of 2020 onwards and how the global hydrocarbons sector will face up to a post-Covid-19 world in which renewables may well begin to dictate the shape of energy things to come.
50… and nearly out
The North Sea oil and gas industry, in defiance of many forecasts and expectations, is now 50 years old. At the time of its baptism, governments were obsessed with balance of payments columns as well as the commitment to the post-war social compact of an economy run at levels of full employment. It was also a shared view that with an unshakeable belief in government intervention and technological innovation, things could be done.
Initial interest in UK offshore (North Sea and UK Irish Sea sectors) lay in the deposits of natural gas and the potential for a reliable and long-term resource of energy for, initially, domestic (household) consumers. The growing estimates from c.1970 onwards also promised a resource that could be extended to industrial space heating and manufacturing processes. Regarding oil, it was clear from early chemical analysis that UKCS crude oil was unsuitable for refining into the Heavy Fuel Oil required for power generation, and so the North Sea offered nothing in the way of breaking energy dependency on indigenous coal- and the National Union of Mineworkers.
However, oil from the Forties- and a little later- the Brent fields provided an ideal crude grade suitable for refining into the required range of transport fuels. The value of this asset though, was not appreciated until the global oil shock of 1972, when a largely Arab dominated OPEC punished the Western economies for their alignment with Israel in the Yom Kippur war.
In terms of petroleum supply security, the North sea has paid off. For the better part of half a century the UK has enjoyed near total security of indigenous supply. Apart from the 1984-85 miners’ strike when the UK government had to fuel the coal- fired power stations with Heavy Fuel Oil- which cannot be refined from North Sea crudes- almost all oil crudes (and distillates for aviation fuel)- have come from the North Sea. And even now, with North Sea oil capacity falling, the UK remains 95% petroleum self-sufficient.
Global oil …passing its prime?
As we have previously noted, all fossil fuels have been under the pressure of a climate consensus to conform to CO2 limits by reducing production as well as emissions from production operations. The response of the oil and gas companies as well as the OPEC cartel has been- with some success- to lobby governments as well as attempting to massage public opinion away from climate concerns. To these ends they have now failed. But as ever resourceful, the oil – and also gas – interests have been redeploying their considerable financial interest elsewhere – albeit grudgingly. After years of ‘scientific’ misinformation and fake data, the oil and gas industry faces an irreversible shift in both public opinion and scientific consensus.
At 2015 the view of the oil and gas lobby was that demand for petroleum would begin to peak in the early 2030’s – albeit tapering off slowly into the future. But by 2019 the industry had significantly changed its forecasts. Even before the combined whammy of the onset of a world economic turndown and the Covid-19 pandemic, BP, Shell, Total, DNV-GL, the IEA and OPEC had come to the uncomfortable conclusion that oil peak demand had already been reached. Big oil exceptions to this forecast have remained as the US giants, Exxon/Mobil and Chevron, who have both continued to set aside some $30 billion investment capital in further oil exploration and developments.
As early as 2016, Shell had established its New Energy Division; a new venture into renewables generation, high capacity batteries, grid management and hydrogen. This has come at the expense of tar sands investment and shale oil extraction and refining. The company has also undertaken a major restructuring in order to free up capital investment for diversification into non-petroleum activities.
Also in October 2019, BP declared its intention to be a zero-carbon operation by 2030. And, in that year, BP entered into a $1.1 billion joint venture with Equinor Energy for the purpose of becoming a major player in offshore wind power. This was with the expectation of offshore wind appreciating six-fold to 190 Gwe installed by 2030. (But just to get things in proportion, the OECD now estimates that globally there will have to be a $6.3 trillion per annum investment to convert energy systems into renewables in order to meet the 1.5oC climate mitigation target for 2030.
The repo-man cometh
With financial data changing almost frantically day by day, it is not easy to reach a reliable estimate of the overall health of the global oil industry. Nevertheless, recent figures show the overall scene against which the North Sea industry fares. But first some raw data:
Oil production million barrels per day (Mbpd) by country 2019 (96 producers)
The global daily production for 2019-20 was 80,622,000 bpd of which 68% was produced by the top 10 producers with an overlapping 44% produced by OPEC member states. The average output for the top 3 producers was 11 mbpd. By the beginning of 2020 the same producers had an average output of 12.3 mbpd – a significant overproduction given the emerging market conditions for the year.
With signs of a global economic recession as early as September 2019, it was clear that at 15.043 mbpd, the US was entering 2020 at a significant rate of over-production. The sustained production rate of the previous year began to depress the world traded price of oil to an unsustainably low level for many OPEC+Russia producers – hence the output war of OPEC to depress output in order to increase prices. But within weeks it was clear that such a strategy was failing – hence the output switch to increase production in order to break the back of the relatively high cost US shale oil sector.
But within weeks of this price/output war, the already global markets were hit by the Covid-19 pandemic – with the second week in April seeing the price of West Texas Intermediate (WTI) fall to minus $40 dollars per barrel. After several weeks of price bounces, the world traded price of the Brent and WTI grades settled at just below $35 per barrel. Since then a fitful recovery has seen North Sea Brent begin to trade at around $40 per barrel- a price that barely covers the combined production and development costs of c.$38 pb.
Much regarding the likely fortunes of the North Sea oil and gas industry was covered in the first paper but if we want to examine the drive behind the global plight of the hydrocarbon industries, it would be better to look at the biggest producer and consumer of oil and gas- the USA.
When the bottom of the oil market fell through the floor in 2014 it was the US with some 25% of its oil and gas production from shale ‘plays’ that took the greatest hit. Since then, and not without considerable help from the US Treasury, the US has bounced back to be the biggest hydrocarbon player in the world – and with a Congressional act in 2016, a net exporter of oil and gas into the world market. And prior to the combined recession/Covid crisis, even the shale extraction sector was doing well at an oil price of c.£65 pb.
Immediately prior to March 2020 most US producers could break even at a $46> pb price. But in order to kick-start the many needed DUC’s (Developed but Uncompleted wells) required to maintain medium-term production, an additional $6.00 pb was required. Also, at that time it was reckoned that the bullish confidence of the industry was waning with an estimated 66% of oil company CEO’s of the view that 2020 had seen the peak in oil demand coming and going. Consequently, by April the fall in demand in the US had resulted in a 20% excess in capacity with a subsequent registration in Chapter 11 bankruptcy protection orders. If we want to measure the historical scale of this default, then the post-2014 crash of 2016 would be a good comparison:
2016 oil bankruptcy debt $56.8 bn
2020 oil bankruptcy to date $89 bn
Expected 2020 debt $134 bn
Furthermore, on the current market estimates it is expected that a further roll-over debt of at least £100 bn can be expected to the end of the 2020-21 financial year. Also, although the number of individual bankruptcies are so far lower, the capital size per company failure is much higher. In 2016 the failures amounted to $56.8 billion. But in 2020 to date the total is $89 billion and is expected to reach $134 billion by the end of the year. And as each company has been debt financed with no failure insurance, it is reckoned that the banks would be lucky to recover 35 cents in the $US in the event of a winding-up order.
In conclusion, with no foreseeable growth in oil and gas demand and a totally unstable market deterring future field developments, a ‘self-levelling’ market price of <$40 pb- probably struck by the bigger OPEC members and the dominant oil companies, much of the worlds marginal reserve/high cost capacity will be squeezed out. Certainly, the crash to $35 pb is a price that even the bigger and lower cost producers would find it hard to live with. This much was revealed by the leaked news that OPEC’s leading member Saudi Arabia reckoned that a sustained price of $50 pb would be the most favourable price to 2030 in order to allow margins to cover the cost of future field developments.
But whatever, the enduring relationship between US big oil and the military-imperialist project is likely to see the hydrocarbon industry not go out quietly- particularly as the states of the Gulf Cooperation Council – and Exxon/Mobil insist on peak oil as far ahead as 2030. But those the Gods wish to destroy, they first make mad.
Beyond the North Sea
The economic viability of oil and gas have always been predicated on the myth that all other sources of energy are uncompetitive and/or only so in the distant future. Petroleum, of course is mainly used as a feed-stock for mainly transport fuels – crude oil for refining into petrol (gasoline) and condensates into diesel and aviation fuels.
And by far the largest contributor today of global CO2 emissions derives from petroleum extracted transport fuels. But sticking with North Sea Brent as refined at Grangemouth (Petrochina) or Total’s Humber refineries we see the following product percentages:
(It should also be noted that the Ineos plant in the Grangemouth complex processes methane for conversion into a feedstock for plastics manufacture)
Of course the fate of some 4,000 workers and their families at Grangemouth now hang in the balance with the likely demise of hydrocarbons- both as transport fuels and plastic materials.
In April 2020 the OECD anticipated a year in which at least 1 million oil and gas industry workers would lose their jobs – a calculation which must include many thousands of North Sea workers. But there does seem to be a levelling off – possibly due to a convergence of strategic thinking on the part of OPEC and the oil ‘majors’ that a sustainable price of $45 pd could be struck over the next period – a price that would strike out both the higher cost OPEC members as well as other high cost sectors such as US shaleand most deep water operations.
On the other hand, the anticipated rise in demand for more and more offshore wind capacity – ideal for Scottish waters – along with an expected Compound Annual Growth Rate of matching large scale lithium/ion battery capacity to match incoming wind/wave/tidal and solar units.
The future is full of dangers and hope- and if the rage generated by the threatened loss of 20,000 miners jobs in 1984 could the reproduced many times over again in order to demand a Just Transition for the threatened tens of thousands of oil and gas sector workers, then the future is full of hope.
This post by Gabriel Levy was first published on Tuesday 29th September on the People and Nature website. We are pleased to repost it here with permission.
Most UK oil workers would consider switching to another industry – and, if given the option to retrain, more than half would choose to work on renewable energy, a survey published today shows.
The survey blasts a hole in the argument by trade union leaders that every last drop of oil must be produced, supposedly to preserve jobs. Actually, workers are ready to move away from fossil fuel production – as long as they can work and their families don’t suffer.
The 1383 offshore workers who responded to the survey crave job security, above all. Nearly half of them had been laid off or furloughed since oil prices crashed in March.
Many complained about precarious employment and the contract labour now rife on the North Sea.
The survey’s authors seem to be the first people who have actually asked workers what they think.
The Scottish government has a comfortably-funded Just Transition Commission, including trade union chiefs, that recently ran a consultation on its interim report.
But it was campaign groups, working with activists on the ground, who bothered to talk to offshore workers. The survey, distributed via social media and targeted advertising, garnered 1546 responses. The results excluded replies by 163 people who work in midstream or downstream industries, and are focused on the 1383 respondents who work upstream. That’s a representative sample: about 4.5% of the workforce.
One of the survey’s most sobering results is that, when asked if they had heard of a “just transition”, a staggering 91% of survey respondents said no. (The term “just transition”, nowadays used and misused by politicians, was coined by trade union militants in the 1990s to define the need to fight for social justice during the switch away from fossil fuel burning and other ecologically ruinous practices.)
The Offshore report’s authors comment:
Clearly, campaigners and NGOs lobbying for just transition, and policymakers tasked with implementing one, have failed to reach oil and gas communities – the people who ought to be most central to transition plans.
Despite not sharing vocabulary with the chattering classes, North Sea workers are very clear that the future lies away from oil and gas.
Asked, “would you consider moving to a job outside of the oil and gas industry?”, 81.7% said yes, 7% said no and 10% said they did not know. The survey’s authors commented:
The fact that a huge majority of workers are interested in leaving the industry speaks volumes about the stability and future of oil and gas. There are of course a multitude of reasons why anyone would consider changing jobs, but it is clearly that the offshore workforce is willing to make large lifestyle changes given the opportunity.
In case studies and written responses, the vast majority of offshore workers state that they are fed up with the lack of security, decreasing employment rights and hostile conditions.
Of the 7% who would not consider moving, the three main reasons given were that they were close to retirement age; that the offshore work schedule allowed them to spend time with their families; and concern that their skills would not be transferable.
Asked what was most important to them in considering a move, respondents replied: (1) job security (contract length, pension, etc), 58%; (2) pay, 21%; (3) similar work schedule, 11%; (4) health and safety regulations, 5%.
The survey’s authors reported “a palpable exhaustion with the precarious nature of work offshore”.
North Sea workers are also ready to participate in the transition to renewable energy production, judging by the survey.
Asked, “if you could receive training or education to help you move to a new part of the energy sector, what education or skills training would you be interested in?”, and allowed to choose as many of ten options as they liked, the responses were:
Offshore wind 53%
Rig decommissioning 38%
Carbon capture and storage 26%
Non-energy sector 20%
Solar installation 19%
Geothermal technologies 18%
Battery technologies 16%
Electrical engineering 13%
A barrier to the transition to renewable energy is the lack of adequately-funded training schemes, the survey showed. Respondents complained that they are expected to pay for courses and qualifications themselves – and the bills are counted in thousands of pounds.
Survey respondents criticised the lack of government support for workers:
The overwhelming majority [of respondents] asked for some form of training, support to leave the industry or investment in renewables. Other prevalent themes included a need to invest in decommissioning, financial support and local supply chains.
The report ends by saying that Platform, Friends of the Earth Scotland and Greenpeace will be running a participatory consultation of oil and gas workers across the UK. “Workshops will enable energy workers to draft policy demands for a transition that works for them, and a renewables industry they want to work in.”
The report urges “energy workers, union branches, local communities, environmental groups or other stakeholders” to get involved.
Today’s report shows that North Sea workers are well aware that the false choice that trade union leaders talk about – fossil-fuel production or unemployment – has nothing to do with reality.
On the contrary, a move out of the oil industry could be, from workers’ point of view, a chance to say goodbye to precarious contracts and the constant fear of sudden lay-offs.
Offshore workers’ readiness to retrain to work on renewable energy, as shown in the survey, strikes a refreshing contrast with trade union officials’ approach. They back the oil companies’ and governments’ plans to keep pumping oil until there is no more money to be made from it.
This approach is not only incompatible with combating dangerous global warming, but also avoids focusing on the really urgent job of closing down oil and gas production and planning other futures for workers and communities (as NGOs have argued in the Sea Change report, for example).
In April, when the oil price slump triggered a new wave of lay-offs, the union bosses reiterated their sympathy for “a longer term investment strategy” in oil, rather than accelerating the switch to non-fossil technologies. The Unite, GMB, RMT, Nautilus International, BALPA and Prospect unions all fell in line, rather than treating the Covid-19 crisis as an opportunity to leave behind the fossil-fuel-centred economy.
Surely what is needed now is a real discussion in communities and among workers about how to shape the just transition, to achieve social justice and to contribute to tackling climate change. Hopefully, the participatory consultation proposed in today’s report will be part of this. GL, 29 September 2020.
Comments by North Sea workers (from the report)
On precarious work …
■ As I was self employed prior to April, the company put me on a PAYE contract even though the government delayed its implementation of the IR35 rule [rules that apply to off-payroll work contracts]. Consequently I now earn less, have to pay for all my courses out of my wages, and I have no employee safeguards or protection. It seems the oil companies have got away with everything but the workforce gets hammered. […] A union won’t stop this, it needs government intervention to hold these companies to account in the way they are treating the entire workforce.
■ I’ve gone to agencies who employ contractors as staff, and have had to go back as an independent contractor and take a 25% pay cut. This is happening on a wide scale. It’s very attractive to companies because they have to take on the risks of employees. I fear in the long term that IR35s will allow for companies to get rid of workers whenever they want. They have zero risk, they can take 150 guys and then get rid of 150 guys six months later.
On retraining …
■ At my last job […] our safety guy had worked in oil for 15-20 years. He applied for a job on [a wind farm] and it was going to be offshore. He was told he’d have to do the offshore survival course for wind. If he wanted the job he would have to spend at least £1000 for offshore wind qualifications. But the main theory behind offshore survival is surviving a helicopter crash, and it’s the same helicopter if you are going offshore to a wind turbine or an oil rig. Even a half day conversion course would be better, because as it stands it’s perceived as a money-making scam.
■ We need retraining and a job at the end of it. I can’t get any work. I was an agency worker so I get no money or help whilst not working. I have to use the money I have previously earned to live. I can’t claim one single penny from the government, it’s soul destroying. I am 52 years old and I feel my life is finished already.
■ Offer courses either free or heavily subsidised, unlike the last downturn in oil and gas where it was an absolute nightmare to get funding for retraining. They made it so difficult and unrealistic that the local governments basically pilfered the funds for themselves. They should offer better rates than what is given from the completely useless and proven to be absolutely abysmal Universal Credit. No-one can survive on that.
On the energy transition …
■ Up until now we’ve been quite reliant on oil and gas for transport, heating and generation of electricity, and obviously that’s going to have to change. […] If we want to look at training people towards understanding how we maintain our planet, it’s really important that people understand that there are ideas out there that are fantastic. But of course, not all of them are that sustainable, including biomass. I’m interested in a degree in tidal generation, mostly because we live near Montrose and there’s a three square mile basin that fills with seawater every day. […] It empties and fills twice a day, and I can’t help but think ‘surely we could be taking advantage of that’.
A very important report has been published today by Platform that collates the results of an extensive survey of the views of more than a thousand offshore oil and gas workers on their lives, the industry they work in and energy transition. We’ll publish more on the report over the next few days but we strongly recommend downloading the full version.
Front cover of the report
Key survey results include:
81% of offshore workers would consider leaving the industry
43% had been made redundant or furloughed since March 2020
91% of respondents had not heard of the term ‘just transition’
Given the option of retraining to work elsewhere in the energy sector, more than half would be interested in renewables and offshore wind.
Over 50% of workers deemed government support at all levels “nowhere near enough”
Current job security satisfaction was rated 1.9 out of 5, with 58% of respondents also identifying job security as their top priority in considering changing industries