UK North Sea sees political reprieve plan in energy crisis

Bloomberg

Six months ago, UK North Sea oil and gas faced the bleakest outlook in its 50-year history.
The government was focused on hosting the COP 26 climate talks and environmentalists were close to killing off one of the country’s largest oilfield developments, called Cambo. An industry that had excelled at prolonging its lifespan was at risk of sudden death.
Russia’s invasion of Ukraine and the subsequent spike in fuel prices changed all that. Pariah oil CEOs who were “not welcome” at the Glasgow climate summit are now invited to Downing Street and encouraged to increase investment due to worries about where the nation will get its oil and gas.
“We’re seeing commentary that is much more supportive from the Prime Minister,” said Gilad Meyerson, chairman of Cambo developer Ithaca Energy Ltd. “The view is that energy security is absolutely critical.”
The UK got less than a quarter of its oil supplies from its own fields last year, compared with about 9% from Russia. And domestic output is dropping fast — down by 10% in the first quarter from a year earlier after companies cut investment or spent their cash elsewhere.
The decline could be halted and the current flow of hydrocarbons maintained for a decade if the country developed all remaining commercially viable resources, according to Wood Mackenzie Ltd. That would hardly be transformational for the UK economy — the North Sea is too old for such feats — but it would make it a lot easier for the country to implement the ban on Russian oil and gas announced March.
Cambo may prove to be a test case for whether North Sea drilling really can undergo a revival. The untapped reservoir that sits some 80 miles west of Scotland’s Shetland Islands isn’t a game changer in terms of resources. It holds about 170 million barrels of oil equivalent, or less than two days of global demand. It was a matter of unfortunate timing that made the field a totemic battleground between people who believe the UK needs to have an active oil and gas industry for decades to come, and those who say investing in hydrocarbons is incompatible with the country’s climate goals.