Pragmatic or Problematic

Why approve the Jackdaw gas field? It makes no sense economically, creating only a handful of jobs, and some modest tax receipts for the exchequer. Environmentally if it displaces imported LNG (liquified natural gas) it will reduce emissions marginally. If it displaces Norwegian gas they will be worse. It will do nothing for the cost of living, the volume extracted will be too small to have a material impact on the global markets. There’s no energy security benefit, it in fact keeps UK industries and consumers exposed to the international markets that set prices and the wills of foreign governments who can control the flow of resources.

So the only reasons for this decision are that it appeases the US President. A man who has decided to side with Russia in their unjustified invasion of Ukraine if it keeps diesel flowing, and to please the Oil and Gas company lobbyists.

Before Andy Burnham was even in possession of the keys to No. 10, it felt like this was coming, and now the Government has confirmed a license for the Jackdaw gas field. 

The Usual Suspects

The typical arguments for expansion or extension of North Sea Oil & Gas production are energy security or cost, both of which have been largely debunked. The volume extracted will be too small to have a material impact on the global price, and the government has no ability to compel companies to sell into the domestic market, let alone at a less than market cost. Remaining tied to the use of fossil fuels doesn’t provide security or reduced cost, it in fact keeps UK industries and consumers exposed to the international markets that set prices and the wills of foreign governments who can control the flow of resources.

With Jackdaw reportedly creating only around 27 new jobs and enriching the very companies who are arguably to blame for the heat wave that just killed 2,700 of the most vulnerable people in this country, doesn't feel particularly ground-breaking, progressive or responsible. 

The case is still not made

Ending reliance on North Sea Oil and Gas does not just mean ending reliance on its use as an energy source, but also ending reliance on it as a driving force of the economy, although as the evidence presented to Parliament states the sector represents around 0.7% of GVA and less than 1% of employment in the UK. Cities like Aberdeen with 17% of employment tied up in it would be disproportionately affected by a cliff edge end to the industry. Fossil fuels are a volatile industry and the sector has already seen decline in employment, which points to the need to be focussed on the transition, building the renewable industries that can soak up all those skilled workers and support the wider economic infrastructure. 

Commentators from Sky’s Ed Conway to the former Tory Shadow Energy Secretary Claire Coutinho (before Kemi Badenoch abandoned Net Zero completely) have made the case that North Sea Oil and Gas is a lower emission option than the LNG we currently import. Whilst this is correct, although not the four times lower sometimes quoted, but in fact a more modest 14% reduction, it does rely on substituting the former for the latter. Which for all the reasons discussed above cannot be guaranteed, or mandated. It is worth noting that as humans we have a nasty habit of expanding activity to use the energy available, and there’s no evidence to suggest now would be different. 

What is mentioned less is that imported Norwegian gas has lower emissions due to their stricter controls on flaring, methane emissions and electrification. 

We are at a crucial time for action on climate and for doubling down on the need to defossilise in the face of domestic and international opposition. 

A quote from the New Economics Foundation from 2024, when the Energy Secretary Miatta Fahnbullah was its CEO, summarises the situation well. 

By granting new North Sea licenses, the government is impeding progress towards a secure, cheap and renewable supply of domestic energy. Every pound invested in fossil fuel exploration is a pound which could have been invested in clean energy, and takes us further down a more expensive path. Expanding our oil and gas infrastructure now makes it harder and more expensive to switch to clean energy further down the line. Oil rigs and pipelines will become a financial burden. Training fossil fuel geologists to work in a dying industry is a waste of money, when that investment could be used to train renewable energy specialists. The earlier we act, the less money we waste.

New Economics Foundation

The argument will go that this is not new exploration just “pragmatically” using our resources, but it would be interesting to know with which of these points the Secretary of State no longer agrees.

What next for a world leader?

We now wait for the Rosebank decision which will likely follow and has even less of a case than Jackdaw. The UK does not have the refining capability for the majority of the oil that will be produced, so most will flow directly to international markets.

The benefits are tiny if any, but the message this sends is massive. How can Burnham go to COP31 and act as if the UK is a world leader on climate action?