Tag: Oil

The case against new developments in the North Sea

The North Sea hydrocarbon reserves are among the most expensive and most technically difficult in the world. They are also short-medium life reserves compared with larger landmass oilfields.

Anticipating these disincentives, the incoming Labour governments of 1964-69 and 1974-79 with the state-owned BNOC and British Gas companies decided to make them more attractive for licenced operators by zero valuing to hydrocarbon assets thus avoiding the usual auction bidding process that would entail up-front purchase and risk acceptance by prospective extraction companies.

Then taxation rates on oil/gas extracted were relaxed to a very minimum as an incentive subsidy on future exploration and extraction activities. These arrangements- along with wholesale privatisation in 1980- meant that high profits were assured at low taxation rates and with the burden of risk and asset write-off being shouldered entirely by the taxpayer.

Also, these arrangements allowed for profligate extraction with value worthless assets being frittered away when the operational conditions got too difficult.

Unlike Norway– and many other oil and gas nation-states, no sovereign wealth fund was created on the back of oil/gas profit taxes- which in the case of Norway, has resulted in the biggest such fund for social welfare and public infrastructure in the world. So with Scottish territorial waters accounting for over 70% of UK oil and gas fields, little in the way- other than employment- of benefit has resulted/been accrued for the Scottish people.

Now Climate Change imperatives are bearing-down on all countries signed up to the IPOCC targets on carbon emissions targets- but yet ALL reliable sources producing estimates on oil (in particular) output and demand/consumption set targets well above limits required to bring about anything like a global temperature slow-down.

Also, the estimates for Scottish offshore- and fracked gas onshore- extraction fly clearly in the face of the Scottish government targets for a green neutral to zero-economy by 2030.

And also, also, it is clear that despite over 40 years of offshore hydrocarbon extraction- the living standards of the Scottish population- already low in comparison with much of the EU as well as many regions of the UK as a whole- have continued to fall and have continued downwards while the offshore company profits have continued upwards.  Essentially we have had subsidies and tax breaks for the rich oil companies and merciless market rigour for the poorest consumers.

Global oil prices (to which gas is pegged) continue to be volatile- but with an OPEC cartel of some 20 countries which are hydrocarbon exporting economic mono-cultures- future price wars- like the one in 2014 which saw 75,000 job losses in the North Sea- make any future dependence on the industry both a climate change folly and an economically ruinous strategy.

Oil and gas over-production is already upon us and any future development- such as the West of Shetland fields- is both unsustainable AND a waste of opportunities to create a green and socially equitable political economy for Scotland.

Dr Brian Parkin, Senior research fellow (Energy Economics), Leeds University

February 2020.

StatfjordA(Jarvin1982)Image CC0 StatfjordA (Jarvin1982).jpg

 

Phasing Out Oil and Gas

One of the workshop streams at the Scot.E3 conference in November focused on Oil and Gas and Just Transition for workers involved with the North Sea.   Stephen McMurray summarises the discussion that took place.  

The oil and gas group included Simon Pirani, author of Burning Up: a global history of fossil fuel consumption, and a retired oil worker now campaigning with XR and ScotE3. The initial discussions included how we start to phase out oil and gas extraction. The main policy suggestions included ending subsidies to the oil and gas industries and ending licences for oil and gas exploration.

There was an interesting debate about whether the government should set a date to end oil and gas, for example in 2030. On a positive note, it may stop companies exploring for oil and gas well before 2030. On a more negative note, it may encourage companies to seek to maximise output and increase carbon emissions before 2030.

Earlier in the conference, we had watched a series of short films by REEL News. One of the films illustrated that companies were increasingly turning to automation and subsequently reducing their workforce. This led to a discussion considering that research should be undertaken into the impact of automation into the oil and gas industries. Furthermore, it would be useful for REEL News to make a film of the North Sea and show their films on the impacts of oil and gas to oil workers.

There was a general feeling that there was a lack of information for oil and gas workers in relation to training for new industries, and that a just transition conference should be held in Aberdeen for oil and gas workers. There was also a discussion on how we engage with suppliers to the oil and gas industries so they are included in a just transition. Additionally, it was not clear that the Scottish Government had produced a post-oil industrial strategy, and there was a need to give presentations at universities for the need to move to careers post carbon.

Finally, there was an agreement that we need to bring the rebellion to the oil and gas industries and that we need a massive confrontation with big oil in Aberdeen during COP26 when it comes to Glasgow next year.

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Update on the November conference

We are really pleased that Simon Pirani will be speaking at the Scot.E3 conference on 16th November.  Simon is the author of ‘Burning Up: A Global History of Fossil Fuel Consumption’ (Pluto, 2018).  Here’s a video of him speaking about the book:

 

Stopping Oil and Gas Part 3

Daisy Jamieson was the third contributor to Scot.E3’s Glasgow public meeting on stopping North Sea oil and gas. In her talk Daisy reflected on the importance of just transition.  Part 1 of the public meeting can be viewed here and part 2 here.

Stopping North Sea Oil and Gas Extraction

Scot.E3 public meeting at Kinning Park Complex, 43 Cornwall Street, Glasgow G41 1BA, 7pm Tuesday 24th September.

Ryan Morrison from Friends of the Earth Scotland will speak about Friends of the Earths co-authored report ‘Sea Change’ which shows how a rapid phase out of carbon extraction from the North Sea and investment in renewables could safeguard the livelihoods of those working in the oil and gas sector and create many more jobs. Other speakers include young climate activists and Mike Downham from Scot.E3.  Tickets from Eventbrite.

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Demand a Just Transition to renewable energy

One of the lead stories on the BBC today is the UK’s oil and gas industry assertion that the best response to tackling greenhouse gas emissions is to continue production at maximum levels.  Oil and Gas UK’s “Roadmap to 2035” argues consumption would remain above the levels they could produce. 

Neil Rothnie, life long offshore oil worker and activist, argues the case for an end to business as usual and a just transition out of hydrocarbon production in the North Sea.

Both the UK oil industry and Government seem to think that new licenses should be issued and oil and gas exploration on the North Sea stepped up.   The industry estimates that 20 billion bbls of fossil fuel remain under the North Sea.  No one in authority seems to think that these reserves should not be fully exploited.

This begs the questions;

If a policy of business as usual is to be applied to the North Sea, why then should Saudi Arabian, Gulf of Mexico, Venezuelan, Sakhalin, Nigerian and other hydrocarbon reserves not also be fully exploited?

What would the effect of producing all the world’s oil and gas be on global warming and climate change?

The Scottish Government seem to be prepared to try and lead us to an independent Scotland based on a carbon economy.  According to the First Minister, Scotland’s carbon emissions would increase if oil production from the North Sea was stopped. This only makes any kind of sense if there is to be no transition to a renewable energy system to replace fossil fuel from the North Sea.

Despite government complacency, the oil industry will come under increasing pressure – financial and political – to reduce and eventually end hydrocarbon production, though perhaps not till it’s too late to avoid catastrophic climate change if the politicians and industry leaders have their way.

The past practice of both oil industry and Government suggests that the workforce, offshore and onshore, will then be abandoned to their own devices, creating the sort of wilderness in the North East of Scotland that the UK coalfields became when there was no just transition from coal.  Energy workers and their families from all over the UK would then be very badly affected.  Though this time it looks as though they won’t suffer in isolation if climate science predictions are realised.

The unjust transition from coal wasn’t inevitable.  The miners and their families were punished for standing up to Thatcher’s plans to cripple organised labour. Offshore employers wanted anyone but ex-miners with their tradition of struggle, on the North Sea, and the unions failed to step up to the mark. This time it has to be different for everyone’s sake.
A just transition to renewable energy could be planned and enacted starting now.  New oil and gas exploration could immediately be stopped and a planned rundown of hydrocarbon production and a massive development of renewable resources begun now.

Not a penny of the oil windfall has so far been saved for the peoples of the UK.  Is it not now imperative that all (declining) oil profits must be immediately re-invested in developing the renewables energy sector?  Retraining of the oil industry workforce is a must where there is an expected skills gap in a much-expanded renewables sector.  The current oil and gas workforce can and should be re-deployed to replace the fossil fuel that we can no longer afford to produce.  Without a just transition to renewable energy from sun, wind and wave, we are fucked.

2018-07-19 08.57.05Our children and grandchildren deserve more from us than business as usual.  They and the rest of the remaining life on the planet need a chance of a future that does not include the misery of living through a global meltdown.

GREEN NEW DEAL – AN OPPORTUNITY TO SEIZE THE TIME

Mike Downham notes the publication of the Scottish Green Party’s proposals for a Green New Deal and the need to step up the action on climate at this time of political and constitutional crisis.

On the same day that the Government announced the proroguing of parliament, the Scottish Greens launched their proposals for a Green New Deal. Climate change remains the most urgent of all the issues pressing down on us, and the Green New Deal initiative gives us a concrete opportunity to flex our muscles in the new context of Westminster collapse.

So the people have finally had enough of this UK Government. Its decision to trash democracy left a governing vacuum. Yesterday’s broad-based and widespread protests shows the potential to fill that vacuum and take control. Kicked off by the proroguing of parliament, the protests have escalated to articulate anger against austerity cuts, privatisation and the whole political position of the Tory Party.

The Scottish Greens give this summary of their proposals:

Scotland can

  • Redirect massive investment into low carbon industries
  • Grow a world-leading low carbon manufacturing sector
  • Restore our natural environment
  • Give everyone a warm home
  • And provide access to cheap, reliable and green transport.

But to do this we have to ditch neoliberal economics for good.

At the heart of a Scottish Green New Deal is a belief that the Scottish Government can and must take a direct role, working in partnership with citizens, communities, and companies to deliver the change Scotland and the planet so urgently needs.

Rather than pick holes in these proposals, we can build on them by making three immediate demands. Demands which are focussed, achievable and directly address key desperate needs of working-class people – fuel poverty, poverty in general, and the need for jobs which are properly rewarded, secure and satisfying.

The three demands emerge naturally from the climate movement’s in-depth work over recent years:

  1. We demand a just transition from North Sea oil and gas to renewable energy, starting immediately with the phasing out of North Sea oil and gas extraction, as recommended in the Sea Change report co-authored by Friends of the Earth Scotland, Oil Change International and Platform (2019).
  2. We demand an immediate programme for the insulation and draught-proofing of all homes, public buildings and businesses, as recommended in the One Million Climate Jobs booklet produced by the Campaign Against Climate Change (2014).
  3. We demand an immediate nationwide Free Public Transport system, as argued for by the Scottish Socialist Party since 2007, and now by the Scottish Greens (2019)

We will make it clear that we won’t take no for an answer, confident in the new-found breadth of the movement for democracy and for a break with the Economy of Madness and the Politics of Division.

Green New Deal

Image by Bart Everson, CC BY 2.0 https://www.flickr.com/photos/editor/32447100627

Sea Change – a review

In May we welcomed the publication of an important report on North Sea Oil and Gas. Ann Morgan shares her reflections on the report here.

Sea Change: Climate Emergency, Jobs and Managing the Phase Out of UK Oil and Gas Extraction

Introduction

Sea Change highlights the tremendous potential for a just transition and in outlining the scale of the potential increase in new climate jobs provides convincing evidence that trade unions, activists, politicians and economists can utilise in designing a sustainable economy.

Bella Caledonia calls the report a ‘landmark’.  A landmark is defined as a’ turning point’ or a ‘critical point.’ However, as the report is released there are very mixed messages from policy makers.  On the one hand the declaration of climate emergency by the Scottish Government and many local authorities and on the other the Oil and Gas Authority press release on 10thJuly 2019 announcing new licences for exploration and exploitation of hydrocarbons.

The Gas discovery by the Chinese State Owned CNOOC in January this year is said to be the largest in over a decade.  Exxon Mobil and Shell and other oil companies are busy extolling the virtues of Natural Gas, greenwashing thus

‘This versatile and abundant resource is contributing to emissions reductions all over the world’

No word of emissions of methane (research is currently underway to assess methane emission underestimated previously in the North Sea).  As we know methane is a potent greenhouse gas and natural gas is not a ‘bridge’ fuel as the report emphasises.

Just transition

The ScotE3 draft manifesto defines a just transition as

‘One that ensures no individual or community suffers economically or socially as old jobs end and new jobs are created’.

Sea Change makes it clear that a just transition to renewable energy is manifestly possible with the potential that three new climate jobs could be created for every North Sea job at risk. 

Just transition is the way to win hearts and minds and the Sea Change report gives an informed and detailed bridge to that improved working and living environment.  An effective campaign is needed to turn around the Oil and Gas Authority (OAG) insistence on opening up applications for the 32ndround of licensing.

Alternatives

To end fossil fuel dependence and move to the alternative, a clean and safe working and sustainable environment, will not be easy.  However the structured and planned transition that Sea Change describes cannot be ignored.  The report notes that oil and gas was developed with Government support and intervention.  Indeed the big energy companies continue to attract subsidy for their hydrocarbon activities. It argues that it is now high time for intervention and investment to enable a renewable transformation.

Sea Change is an outstanding analysis of the importance of energy at the ‘production’ level and has relevance in the systemic changes required, in public ownership, in governance and accountability and in designing new social models.  The report further illustrates a point also made by Asbjørn Wahl that solutions cannot be made on an environmental/scientific analysis alone.  Action is required to change the power imbalance nationally and internationally.

The need to end extraction

Sea Change documents the current impact of North Sea Oil and Gas and demonstrates in the starkest terms that the continued practice of Maximum Economic Recovery (MER) Is incompatible with the Climate Change Act and emissions reduction.  Mary Church Head of Campaigns at FoE (Scotland) puts it succinctly

‘ Climate Science is clear that we urgently need to phase out fossil fuels, yet the government and big oil companies are doing everything they can to squeeze every drop out of the North Sea … we must ban further exploration and redirect the vast subsidies propping up extraction towards creating decent jobs in a clean energy economy.’

The report finds that:

  • The Uk ‘s 5.7 billion barrels of oil and gas in already operating oil and gas fields will exceed the UK’s share of carbon emissions agreed in the Paris Climate goals. Currently Government and industry aim to extract 20 billion barrels.
  • The additional oil and gas extraction enabled by recent subsidies will add twice as much carbon to the atmosphere as the phase out of coal power saves.
  • Given the right policies, clean industries could create more than three jobs for every North Sea oil job lost.

The authors call for the withdrawal of the OAG authority’s 32ndlicensing round.  They recommend that the UK and Scottish Governments work with affected communities and trade unions in a managed phase out of North Sea oil and gas, investing in education, retraining and reskilling (although it is acknowledged that many existing jobs are highly skilled and transferable) and influencing the priorities of the Scottish National Investment Bank with a significant degree of public ownership. Infrastructure costs can be met with a rapid phase out of oil subsidies underpinned by a fiscal policy of support for clean energy to at least the level to which the oil and gas industry have been supported.

Otherwise the future looks bleak.  The report notes that

  • Offshore oil industry increasingly pressurised (See RMT union’s report on North Sea working conditions)
  • Renewables – currently no significant UK jobs creation with manufacturing jobs going overseas
  • Oil and Gas extraction from newly developed fields would push the world beyond climate limits

In short, the Westminster and HolyroodGovernments face a choice between two pathways to stay in climate limits.

  1. Deferred Collapse: Continue to pursue Maximum Extraction through subsidies until worsening climate impacts force rapid action to cut emissions globally. The UK Oil industry collapses pushing workers out of work in a short space of time.
  2. Managed Transition. Stop approving licensing permits and tax breaks and phase out extraction.

Climate jobs

The report argues that a National Energy Strategy can mean an energy transformation that meets climate commitments while protecting livelihoods and economic well being.  Local manufacturing and workforce participation needs to guide this transformation with new approaches in economic development, strong trade union rights and sectoral bargaining.

‘Clearly it is an ambitious project to transform the UK energy sector within a couple of decades, just as the rapid development of the North Sea was an ambitious project …’

The report models the impact on the oil and gas workforce of ending the development of new fields.  Taking into account the jobs created through decommissioning and forecast retirement in the existing workforce, it estimates that 40,000 existing oil workers (direct and support chain) may need to be in a different job by 2030. To examine the scale of jobs that can be created in compatible clean energy industries and the level of policy ambition necessary, it models the numbers of new jobs that would be created in offshore wind, marine renewables and energy efficiency retrofits, sectors that have strong overlaps with existing oil and gas skills and finds that the number of jobs created will be at least three times more than the number lost.

Social Justice

The report also highlights the international justice commitment to ensure transition is fastest in wealthier countries and end operations, which harm poor communities and workers (Jake Molloy in the RMT report notes the harsh working conditions for Asian migrant workers in decommissioning in the North Sea for as little as around £3 an hour).  Decommissioning should be paid for by oil companies and decommissioning plans should detail and provide for a Just Transition for workers.

Overall, Just Transition plans, guided by climate limits, should provide structured pathways for the existing workforce, new workers and communities.  Terms and conditions of workers must be safeguarded and accountability to trade unions and local stakeholders in place.

Finally, the authors report that in other policy arenas restrictions on the supply of harmful substances (e.g. ozone depleting chemicals and asbestos) targeted the substances, whereas with fossil fuels only measures to slow the consumption have been taken leaving the market to determine extraction.  This is beginning to change.  It is to be hoped the banning of fracking in Scotland and UK wide in future will serve as an example of legislative measures to make unsafe practices unlawful.

It is worth noting that the authors place no great faith in carbon negative strategies such as capture and storage.  While these technologies may have their place in future developments, philosophy of enabling business as usual must be guarded against.  To finish with the words of the authors

‘Oil and Gas sucks investment …’

Investment in renewables could swiftly move us to reduction in emissions within climate limits.

‘Today’s decisions shape the long term energy future’.

Let’s begin the sustainable revolution.

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Sea Change

This week has seen the publication of an important report on North Sea oil and gas.  ‘Sea Change – climate emergency, jobs and managing the phase-out of UK oil and gas extraction’.  The report is co-published by Platform, Oil Change International and Friends of the Earth Scotland. It finds that

  • The UK’s 5.7 billion barrels of oil and gas in already-operating oil and gas fields will exceed the UK’s share in relation to Paris climate goals – whereas industry and government aim to extract 20 billion barrels;
  • Recent subsidies for oil and gas extraction will add twice as much carbon to the atmosphere as the phase-out of coal power saves;
  • Given the right policies, job creation in clean energy industries will exceed affected oil and gas jobs more than threefold.

Recommendations to the UK and Scottish Governments include:

  • Stop issuing licenses and permits for new oil and gas exploration and development, and revoke undeveloped licenses;
  • Rapidly phase out all subsidies for oil and gas extraction, including tax breaks, and redirect them to fund a Just Transition;
  • Enable rapid building of the clean energy industry through fiscal and policy support to at least the extent they have provided to the oil industry, including inward investment in affected regions and communities;
  • Open formal consultations with trade unions to develop and implement a Just Transition strategy for oil-dependent regions and communities.

We hope to publish a longer review of the report in the near future.  However, in the meantime we strongly recommend downloading, reading and sharing the PDF.

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