Shell and Equinor weeks away from court fight over two mega oil & gas projects in UK waters

As the clock keeps ticking away, the legal battle that may decide the fate of two of the largest undeveloped oil and gas fields off the coast of the United Kingdom (UK) is fast approaching with less than three weeks left until the set date. The operators of these projects, Britain’s Shell and Norway’s Equinor, have a court fight on their hands, which is further complicated by two factors: the government’s decision to drop their legal defense of the two North Sea developments and a recent court ruling, which brings emissions created when the oil is burned into play.

The global efforts to create a more sustainable future are gaining momentum and renewables are expected to keep growing over the decades ahead, however, most of the world is still depending on fossil fuels, primarily oil and gas, to meet their energy needs. As a result, energy experts continue to underline that now is the time to pursue as many energy sources as possible to enrich and diversify the global mix, rather than give up on oil and natural gas, as they fear such a scenario would lock the world in an energy crisis driven by supply shortages, increasing energy demand, and rising population growth, exacerbating the cost of living crisis.

Despite these dire warnings, climate activists, such as Greenpeace and the campaign group Uplift, which have instigated a court battle against Shell’s Jackdaw field in the North Sea and Equinor’s Rosebank asset west of the Shetland Islands, argue that the decision to move forward with the development of new oil and gas projects, including these huge untapped oil fields in British waters, is incompatible with the UK’s legally binding climate commitments. Greenpeace and Uplift claim that the ministers’ original analysis ignored the alleged devastating impact of burning oil from the site. While James Findlay KC is acting on behalf of Uplift, David Welsh is representing Greenpeace in court.

The UK’s recently elected Labour government intends to turn Britain into a green energy powerhouse. To this end, Great British Energy, to be headquartered in Scotland, was launched by the Prime Minister and Energy Secretary in the aftermath of the largest-ever investment in offshore wind, revoking of the onshore wind ban, and consenting homegrown solar to move away from fossil fuels and forge ahead with new North Sea industries like carbon capture and storage (CCS) and hydrogen. 

The country’s Department for Energy Security and Net Zero has revealed that energy ministers in the Scottish, Welsh, and UK governments have asked the newly formed National Energy System Operator (NESO) to produce the first-ever strategic spatial blueprint for Great Britain’s energy infrastructure up to 2050 across land and sea in 2026, as a way to provide stability for investors with a more strategic approach, which is expected to assist in curbing grid connection waiting times, cutting overall system costs, and speeding up the government’s clean energy superpower mission.

Keeping in mind the new government’s stance on fossil fuels, the decision not to go toe to toe with environmental activists over the Rosebank and Jackdaw oil and gas fields did not come as a surprise. Greenpeace and Uplift, which received the green light to bring a legal challenge against both fields on climate change grounds, interpret the government’s decision as a major setback for these two projects and believe it will make it difficult for the developments to go ahead.

The Jackdaw gas field, approved in June 2022, is located approximately 250 km east of Aberdeen, Scotland, and is adjacent to the UK/Norway median line. The project’s design is based on a not permanently attended wellhead platform and subsea infrastructure tied back to Shell’s existing Shearwater gas hub. The development is currently slated to come online next year.

At peak production rates, this project could cover more than 6% of forecast UK North Sea gas production in the middle of the decade, with operational emissions of less than 1% of the whole UK basin, which is perceived to be enough energy to heat 1.4 million homes. The peak production from the field is estimated at 40,000 barrels of oil equivalent per day.

However, Greenpeace’s data differs from the operator’s claims, as it paints the North Sea gas field as carbon-intensive with the potential to generate more CO2 each year than the entire country of Ghana, whilst doing nothing to bring down bills, as the extracted gas will belong to Shell. The activists expect the gas to be sold on international markets to the highest bidder and claim that this is something government officials have also acknowledged.

For its part, the Rosebank oil field, which received a stamp of approval in September 2023, enabled Equinor and its partner, Ithaca Energy, to disclose a $3.8 billion investment. Located around 130 kilometers northwest of Shetland, the field’s lifetime upstream CO2 intensity is estimated to decrease from 12 kg to about 3 kg CO2/boe by employing electrification.

At its peak, the field could produce 69,000 barrels of oil or 9,000 tons per day, which is equivalent to 8% of the UK’s entire output between 2026 and 2030, along with over 21 mmscf of natural gas every day, the equivalent of the daily use of Aberdeen City. The development is anticipated to result in £8.1 billion (over $9.8 billion) of total direct investment, of which 78% is likely to be invested in UK-based businesses. 

Greenpeace, which estimates the oil field to hold around 500 million barrels of oil, emphasizes that once this is burned it would emit as much carbon dioxide as running 56 coal-fired power stations for a year, and just like Jackdaw, Rosebank would mean “diddly squat” for energy bills. In light of these beliefs, legal challenges against both projects were launched in July 2022 and December 2023, respectively, with the latter representing a collaboration with Uplift.

According to Greenpeace, both Jackdaw and Rosebank projects were given the go-ahead without taking into account the emissions caused by burning fossil fuels, which accounts for the large amount of produced emissions. A few months ago, such a claim would not have made a difference, as no case could be used as a reference to support the argument in favor of considering these emissions.

However, the UK Supreme Court’s ruling in June 2024 set a precedent by ending a yearslong court saga with a plot twist in the handling of lawsuits against fossil fuel projects, throwing for the first time emissions from burning oil and gas into the mix that needed to be taken into account when approving such projects.

The lawsuit challenge against Surrey County Council over its decision to grant planning permission for oil drilling at Horse Hill was brought on by local campaigner Sarah Finch on behalf of Weald Action Group and supported by Friends of the Earth.

The decision in this court case, which is seen as an advantage given to those fighting for the climate in court, is said to have helped persuade the government to drop its legal defense for Jackdaw and Rosebank.

Aiyan Maharasingam, Greenpeace UK, underlined: “Shell and Equinor are still determined to squeeze every last drop out of the North Sea. They’re refusing to give up without a fight – so we’re going back to court to stop them.We’ll be doing everything in our power to stop these new oil and gas fields in court.”

The court hearing date has been set for November 12, 2024. Greenpeace is adamant that a lot is riding on the verdict in this case, as it has the potential not only to prevent Shell and Equinor from developing Jackdaw and Rosebank but also to set a precedent for stopping other oil and gas developments.

“A fairer, greener and safer world is at our fingertips. We need to move away from fossil fuels, invest in renewables, make oil giants pay for the damages caused by climate change and ensure the government supports and retrains oil and gas workers into secure, unionised green jobs! This is the fight of our lifetimes – and we owe it to future generations to throw everything we’ve got at it,” added Maharasingam.

Is this the right time to stop the oil and gas industry in its tracks, given the energy security implications a decision of this sort may have for the UK in the long term based on the warnings against such a course of action?

With no silver bullet in sight for the energy transition, climate change woes, and potential energy crisis that could arise from any supply shocks, caution to many energy experts seems like the better part of valor.