Energy firms have reminded policymakers that renewables are not the only game in town, writes TERRY MURDEN
Just as new best friends John Swinney and Sir Keir Starmer were preparing to embrace in Edinburgh over their shared ambitions for energy transition, came two announcements to remind us that the older generation of fuels ain’t going away any time soon.
First came news that four ageing nuclear power stations would be staying in service for a little while beyond their expected lifespan. Twenty-four hours later it was announced that Shell and Equinor were combining their oil and gas assets in the North Sea, a deal that contrasted with a series of withdrawals by companies giving up on the region.
Among the four power stations given a stay of execution – because the energy transition just isn’t moving fast enough – was Torness in East Lothian. Mr Swinney, whose party is opposed to nuclear energy, was asked if he welcomed the announcement, but responded with a waffly explanation of his green credentials. A more informed response would have been to recognise that current thinking includes nuclear in the transition agenda.
It can’t have escaped the notice of the SNP’s policy wonks that their beloved EU has included nuclear power and natural gas in its Sustainable Finance Taxonomy, a classification system that helps guide private investment. Its move to label some nuclear and gas power as green investments has the potential to shape climate efforts in Europe and around the world.
Ed Miliband, the UK Energy Secretary, recognises that building new nuclear power stations will be “essential” to decarbonising Britain’s energy system. He is due to give his verdict on the development of Sizewell C, a 3.2 gigawatt nuclear power station in Suffolk, in the spring. The winners of a government competition for taxpayer funding to build Britain’s first mini-nuclear power plants are also due to be announced at the start of next year.
By contrast, it was no surprise that there was no official response to EDF and Centrica’s nuclear announcement from the Scottish government (nor from any of the other parties, for that matter). Nor was there any word on the other big revelation of the week. Shell and Norway’s Equinor are creating what the energy analysts Wood Mackenzie describe as nothing less than a “new UK superpower”.
Gail Anderson, research director at the firm, said: “This new venture will create the biggest producer on the UKCS and demonstrates the long-term attractiveness of the region.” It will deliver the equivalent of nearly 150,000 barrels of oil a day in 2025, well ahead of the second largest, Harbour Energy, at 130 kboe/d. By 2030 it will drive 2030 production to 220 kboe/d, eclipsing the second largest producer at that time, Ithaca Energy, by over 100 kboe/d.
A decade ago, certainly two decades ago, this sort of news would have been appearing in SNP election material. A joint venture between two of the biggest players in the sector was the stuff of dreams. A supply of energy on Scotland’s doorstep to finance an independent nation. Now it doesn’t even merit a footnote.
To be fair, these are difficult times for politicians trying to balance the climate emergency with ensuring energy supplies. However, in spite of the transition pledges by both governments and the actions of activists opposed to any further oil exploration, the industry is determined to press on and the politicians are struggling to make their own commitments stick.
Anderson points out that west of Shetland is a key growth area for the Shell-Equinor incorporated joint venture, through the Rosebank, Clair and Victory fields. There is also the potential for future fields, as both companies acquired exploration acreage west of Shetland in the 33rd licensing round.
The Wood Mackenzie report notes that the deal comes at a time of unprecedented fiscal volatility in the UK with multiple changes to the Energy Profits Levy since 2022. While this has prompted some explorers to pull out of the region, Anderson says “it is clear the UK is still attractive for some companies, and this deal will provide greater certainty for long-term investment on the UKCS.”
So much for North Sea oil and gas being yesterday’s big idea.
Terry Murden was Editor and Business Editor at The Sunday Times Scotland, Business Editor at The Scotsman, and Business and City Editor at Scotland on Sunday. He is now Editor of Daily Business.
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