Rishi Sunak is handing out 100 licences to drill in the North Sea. Sophie Squire investigates the lesser-known companies that are burning the planet, and the bosses who are happy to profit amid the destruction
Rishi Sunak with Secretary of State for Scotland Alister Jack and fossil fuel executives at the Shell St Fergus Gas Plant near Aberdeen (Picture: Flickr/ No 10 Downing Street)
Who really stands to gain from more oil and gas drilling? Rishi Sunak tried to argue that the Tories signing off on up to 100 new oil and gas projects last week would benefit ordinary people. He promised thousands more jobs and the mythical “energy security.”
Sunak said that exploiting fossil fuel resources on British land and waters would be better than getting a supply from “hostile states” like Russia. But Sunak didn’t say much about the biggest benefactor of more drilling—the oil and gas bosses.
While he made it sound like he’d opened a bidding war last month, bids for new licences have been flooding in for some time. The North Sea Transition Authority (NSTA) reported that it was assessing 115 bids received for licences in the 33rd oil and gas licensing round in July.
That’s the first North Sea licensing round since 2019. The bids came from 76 different companies. Most of the bosses have kept quiet about putting in a bid, but several companies have confirmed they want to lay claim to more of the North Sea.
Mega profits on wild North Sea
The North Sea is like the Wild West for companies big and small. For some it’s the perfect place to make mega profits. For others extraction ventures can turn into costly nightmares. But who controls the North Sea has been changing for some time.
Due to fear of a decline in production, big companies like BP, Shell and Chevron have been selling off North Sea assets to smaller companies. Some of these smaller companies have then been able to merge with one another to grab a stronger hold on the market.
For example, BP sold off assets worth £474 million to Premier Oil. The company, which has been around since 1934, then merged with Harbour Energy to become one of the biggest players in the North Sea today. But there are still advantages for companies to stay small.
British Gas and Shell boast massive profits as planet burns
Often smaller companies specialise in one kind of technology, which can be developed and used to extract hard-to-reach places. They are also much more adaptable and can make decisions quicker than larger firms.
Since 2018 the number of smaller companies moving to extract profit from the North Sea has skyrocketed. That’s been helped by a loosening of regulations by the government’s Oil and Gas Authority (OGA). But the big companies can still buy oil and gas from smaller companies when extraction projects strike gold.
Many of those who have already applied for licences in the 33rd round of licensing only have a small number of assets and revenues that are in the millions, not the billions. These companies will be less well-known and less likely to face widespread scrutiny. But every one of these companies is a climate killer that will fight over fossil fuels in the North Sea while the planet burns.
Europa Oil and Gas
The bosses of Europa Oil and Gas hope to get richer off wrecking the planet. In a statement published in April this year, Europa Oil and Gas said it had “participated in Britain’s 33rd licensing round and is actively pursuing new opportunities.”
The company has assets in Ireland, Britain and Morocco. In just one year from July 2021, it managed to quadruple its yearly revenue to £6.6 million. In April Europa Oil and Gas recorded the highest interim revenues in its history. It also had a stake in the Serenity oil field in the North Sea, which didn’t actually have as much oil as previously thought.
This month the company seized the exclusive rights to exploit an onshore gas reserve found in Cloughton in North Yorkshire. Newly-appointed top boss Will Holland could receive £171,000 a year.
Cornerstone Resources
Cornerstone Resources wants to grow its small North Sea gas portfolio into an empire. The company currently owns the Abbey Discovery—a gas project located in the central part of the North Sea. In June last year the company was given confirmation from the NSTA that the project had reached the assessment stage in the 32nd round of oil and gas licensing.
Cornerstone Resources predicted the three-well project could be operational as early as next year. But it doesn’t want to stop there. It told Energy Voice magazine that it had applied for new exploration licences in the 33rd round of bidding.
IOG and CalEnergy Resources
Firms are desperate to capitalise on depleting North Sea oil and gas supplies. IOG, which owns several gas fields there, bid for a further nine exploration blocks as well as five licences alongside partner CalEnergy Resources
Initially, Saturn Banks looked promising for the company. Gas began to flow in March of this year. IOG struck a deal with BP to buy all the gas. But now, only a few months later, the company is in deep trouble. It has been forced to cancel a rig contract and suspend drilling due to financial difficulties. It could go into administration.
Cases such as these make a mockery of Sunak’s claim of “energy security”. The ceaselessly competitive nature of the industry means that there’s no guarantee supplies will keep flowing. With companies already going bust or discovering that drilling can’t produce as much fuel as they thought, handing out so many new licences won’t be the way to guarantee supplies.
Carbon capture—Oil industry’s wishful thinking
Rishi Sunak has also committed to investing £20 billion in developing carbon capture technology (CCS). He revealed two new major projects, the first being the Acorn project north east Scotland and the Viking project in Humber in the north of England. These will be in addition to two other projects in Merseyside and Teesside.
Both projects are backed by some big names in the fossil fuel industry. Oil and gas giant Shell will join Storegga, Harbour Energy and North Sea Midstream Partners in backing the Acorn project. Harbour Energy and BP back the Viking project.
Hydrogen power is not a green alternative
The plan for all four projects is to collect CO2 emissions from existing polluting infrastructure and transport it offshore to be stored in depleted gas fields in the North Sea. It’s easy to see why companies like Shell, BP and Harbour Energy back CCS. It keeps their industry alive and allows them to appear greener.
But even the bosses backing projects like Viking and Acorn are concerned that government commitments to extend CCS technology are not good enough. Ruth Herbert, chief executive at the Carbon Capture and Storage Association, added, “It’s really great to have this momentum, but there is still a huge amount to build by 2030.”
Sunak may have tried to make his recent plans sound impressive, but in reality, they are so pathetic that even some bosses have had to admit he hasn’t gone far enough. Carbon capture is an expensive scheme that won’t work. Instead of investing in technology that won’t work, the government should instead be investing in renewables that have been ready to be used on a massive scale for decades.
HS2 railway—Tories’ scheme is off the rails
The Tories, led by David Cameron, thought a plan to invest in an environmentally damaging, expensive high speed rail project would help them scoop up votes back in 2012. Yet over a decade on the HS2 project, which was said to mark a new dawn in British transport, has effectively crashed and burned.
The rail link the bosses hoped would create a faster connection between London and Birmingham and beyond was projected to open in three years. Bosses promised a greener way to travel across Britain that would create better links to places where travel infrastructure was poor.
But after a catastrophic series of delays and mismanagement, running at its current schedule the project is unlikely to be finished sooner than 2033. Government watchdog, the Infrastructure and Projects Authority, has said that HS2 is “unachievable”.
The whole project has been utterly shambolic from the beginning. The initial cost of HS2 was set to be £32 billion. But in 2020, the Oakervee Review found that it could cost up to £106 billion. HS2 construction sites have been mismanaged at every stage and are dangerous places for workers.
Until September of 2021 unions including Unite were barred from talking to workers on construction sites in an attempt by the bosses to stop workers from organising. Protests, led by workers, meant the bosses finally had to concede access to the unions.
HS2—the high speed rail that’s a slow speed fail
In April of this year a worker died on a HS2 construction site in Solihull in the West Midlands. Campaigners, who have battled against the project, are yet again vindicated by more news of delays. They argued that HS2 would not deliver and would destroy natural habitats, pollute water sources and pump out tonnes of CO2.
Activists waged an impressive campaign setting up camp along the rail line route, climbing trees that were set to be felled and even tunnelling underneath a park in Euston. The protests put so much pressure on the government that it was forced to impose an extensive injunction from London to Crewe to stop protesters delaying construction.
But it wasn’t just environmental protesters who voiced their concerns about HS2. The bosses and even some Tories had their doubts from the beginning. The extent of the Tory discontent with HS2 reached a peak in 2014 when 34 Tory MPs voted against the passage of an HS2 bill, and a further 47 were absent from the vote.
Many Tories worried about how the high-speed rail link would affect the views of their wealthy constituents. Andrew Bridgen, the MP for North West Leicestershire said in 2020 that “HS2 is unloved, unwanted and has been grossly mismanaged. It very adversely affects my constituents.”
Sunak’s plans to grant more fossil fuel licences may soon create a similar rift within the Tories. Activists must exploit these differences and push to get them out.
SOCIALIST WORKER
AUGUST 8, 2023
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