Shell resubmits plan to UK regulator for large North Sea gasfield

Shell has resubmitted plans for approval of a large North Sea gasfield as the UK government seeks to boost domestic production to make up for a looming ban on Russian imports.

Europe’s biggest oil and gas company said on Friday that it had sent the UK’s Oil and Gas Authority a revised environmental plan for the development of the Jackdaw field, off the Aberdeen coast.

If approved, the oil major said first production could start in 2025 and at its peak the field would supply an estimated 6.5 per cent of the total gas output from the UK sector of the North Sea, producing enough energy to heat 1.4m homes.

Shell’s original environmental development plan was rejected by the regulator last year. The company said it had since changed the chemical processes that would be used to meet the requirements.

The resubmission comes ahead of the publication of the government’s revised energy transition strategy in the wake of the invasion of Ukraine, which will put more focus on the security of energy supply through domestic production, including greater production of hydrocarbons from the North Sea.

The government is expected to relax rules for onshore and offshore wind farm development as well as commit to a new generation of new nuclear power stations while also cautiously opening the door to the “fracking” of shale gas in the UK. The publication of the new strategy has been delayed repeatedly and is now not expected to happen until towards the end of the month.

North Sea oil and gas production has been in decline over the past two decades. But in recent days, Kwasi Kwarteng, the energy secretary, has said it would be “completely insane” for Britain to turn its back on North Sea oil and gas, insisting that boosting domestic reserves would weaken Russian president Vladimir Putin’s “malign grip on the west”.

The government has vowed to phase out Russian oil imports by the end of the year but has yet to make its position clear on Russian gas.

Kwarteng has insisted that swapping Russian imports for domestic production would make no difference to the government’s 2050 net zero target. “This has to be a transition, not an extinction,” he said recently in reference to the North Sea.

The position marks a change from the position of government in the energy white paper in December 2020, which highlighted the need to ensure that licensing of domestic oil and gas exploration continued to be “compatible with our climate change ambitions”.

That paper said the government should shift towards carbon capture schemes, renewables and hydrogen production because “a return to business as usual is no longer an option”.

Approval of new North Sea fields would be highly controversial, with climate campaigners arguing the UK fossil fuel industry should be wound down and investment prioritised for clean energy technologies.

Shell bowed to pressure from environmentalists last year and pulled out of the proposed Cambo oilfield in the North Sea.

Shell said the Jackdaw gasfield “would help secure fuel supplies that UK homes and businesses will still rely on for years, while Shell and others scale up low-carbon solutions of the future”.

Friday’s submission marks the start of a 30-day consultation process, after which it will be reviewed for approval by the Oil and Gas Authority.

Britain gets 40 per cent of its gas from the North Sea, while Russian gas accounts for 5 to 6 per cent of overall gas imports.

Source: Financial Times