The UK's current energy furor is serving as a reminder of the importance of the North Sea oil and gas industry, but the sector still struggles to get across the realities of UK fossil fuel reliance amid uproar over oil investment and the government's own energy transition campaigning.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
A record spike in gas prices and issues with supplies at the petrol pump point to the need for secure hydrocarbon supplies, but this is sharply at odds with pressures from Greenpeace and others for the UK to outlaw projects such as the proposed 500-million-barrel Cambo oil development.
As the UK prepares to host the COP26 climate talks in November, companies such as BP and Shell have been unveiling low-carbon investments, but the industry has struggled to get across its message that there are no quick fixes in a country that still meets over 70% of its energy needs from oil and gas, including half its gas needs from the UK North Sea.
Industry group Oil & Gas UK says the UK has plenty of gas resources, but much of these lie in undeveloped fields, and output could fall 75% by the end of the decade without investment in new projects.
Some in the industry see little harm in debate over Cambo, a West of Shetland project awaiting approval by London-listed Siccar Point Energy and Shell, arguing the UK remains an attractive and stable destination for investment, evident in the array of companies involved in the sector, from as far afield as Canada, China, Israel, Malaysia and South Korea.
"I have not seen any hesitation around investing" as a result of the Cambo controversy, Alastair Young, co-chair of oil and gas projects at Houston-based specialist law firm Bracewell, told S&P Global Platts recently.
But others have been unnerved by the scale of opposition and what they see as an equivocal response from Scottish First Minister Nicola Sturgeon and even the government in London, despite Prime Minister Boris Johnson insisting existing licenses cannot be torn up.
"If you look at the damage that Cambo has done, or the speculation around Cambo, it has done an awful lot," one company official told Platts on condition of anonymity, going on to add, in regard to UK energy transition plans: "You can't set an energy policy only for the days when the sun is shining."
Insiders argue it is unrealistic to separate off oil projects viewed as bad by environmentalists from gas projects essential for energy security. While some upstream companies prioritize gas and some North Sea locations are more "gas prone" than others, the geological, infrastructure and economic realities of oil and gas are tightly enmeshed.
This is especially so in the North Sea industry heartland northeast of Aberdeen at workhorses such as TotalEnergies' Elgin-Franklin gas complex, or the field synonymous with Platts' own oil benchmarks: Brent.
A 25% plunge in UK gas production in the first half of the year, to around 15 Bcm, was caused partly by the dependence of gas fields on crude oil pipelines that underwent months of shutdowns.
Output was severely impacted when part of the main crude oil artery, Forties, was shut due to an outage in April and again for a seven-week summer overhaul, postponed from the previous year due to the pandemic.
The reliance on oil pipelines stems from the fact fields such as Elgin-Franklin produce "wet gas" rich in natural gas liquids that have to be transported through Forties. Another gas field dependent on the route is Vorlich, a target of Greenpeace activists in 2019 and more recent legal action.
Even if a pipeline network dedicated to natural gas liquids existed, hydrocarbon fields generally can switch over time from being mainly oil producers to gas producers; the North Sea -- including the Brent field -- being a case in point.
Having started out as one of the UK's most prolific oil fields in the 1970s and '80s with output of over 500,000 b/d, Brent produced more gas than oil starting around 1998, data from the regulator shows.
And when Oil & Gas UK talks about potential additional gas sources it includes oil fields with a gas component such as Cambo. Cambo gas production is expected to peak at 29 MMcf/d around 2029, which is less than 1% of UK demand, but part and parcel of the UK's patchwork hydrocarbon output.
With some of the biggest oil and gas companies spearheading low-carbon projects, executives say spending on oil and gas cannot be abandoned.
Andy Samuel, chief executive of regulator the Oil & Gas Authority, told an industry event in September that companies were not looking at clean-energy projects in a "siloed way" and oil, gas and renewables represented a single "energy play."
BP chief executive Bernard Looney has said oil and gas earnings will be the "engine" of the UK major's transition plans, including Irish Sea wind power and storing CO2 from the Teesside and Humber regions under the North Sea.
Similarly Shell's UK upstream head, Simon Roddy, stressed the need for "selective" oil and gas investment alongside low-carbon projects, such as in Shell's case providing renewable power to UK homes.
Curbing North Sea investment would increase dependence on overseas suppliers less focused on the efficiency of the production process and limiting emissions, Roddy told the same industry event. "In parallel to investment in low-carbon energy, we believe it crucial that the UK continues to focus on indigenous oil and gas supply," he said.