Development moves forward but pending court verdict could spell the end for UK’s giant oil & gas projects

As the climate crisis intensifies, so do legal challenges for hydrocarbon projects, especially in the United Kingdom (UK), where two North Sea operators and climate activists are locked in a court battle with the potential to put the fossil fuel industry out of commission. While recent progress at one of these controversial projects has been achieved sooner than expected, a ruling from a court in Scotland could stop these developments in their tracks, effectively derailing or even pulling the plug on both multibillion-dollar projects.

Once a stamp of approval was received from the previous UK government in September 2023, Equinor and its partner, Ithaca Energy, disclosed a $3.8 billion investment for the Rosebank project, but the full 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 the UK-based businesses. 

According to Ithaca Energy, the project continues to progress to a multi-year development timeline, including the successful completion of a major subsea campaign, with the installation of all nine subsea structures ahead of schedule. Therefore, the operator seeks to maintain the schedule for the estimated 2026/27 first production date.

Whether Equinor will be able to do so remains to be seen in light of the UK Supreme Court’s Finch vs. Surrey County Council ruling in June 2024, which set a precedent by ending a years-long court saga in another case 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 by claiming these needed to be taken into account when approving such projects.

The first court test for the North Sea oil and gas industry since this landmark ruling came with the lawsuit, launched by Greenpeace and other environmental activists, to stop the development of Shell’s Jackdaw field and Equinor’s Rosebank project in UK waters. Given the climate win in the Finch case, the activists see the latest lawsuits as an opportunity to put an end to Big Oil’s drilling activities.

The Rosebank field could produce 69,000 barrels of oil or 9,000 tons per day at its peak, 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. 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.

On the other hand, 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, with the first production expected next year.

At peak production rates, the 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, neither of these two mega oil and gas projects takes into account scope 3 emissions, which is the main point in the climate activists’ arguments following the Finch case and what they are banking on to sway the judge to rule against the projects by pausing their development until such emissions can be evaluated.

Lord Deben, Former Chairman of the Climate Change Committee, stated:“If Britain wants the world to move away from fossil fuels it has to show the way, and that means no new expansion in the North Sea. Rosebank and Jackdaw should never have been approved by the previous government.

“These fields will do nothing to help the UK’s energy security or lower our bills because the oil and gas will be sold on the international market. They will only fuel more floods, fires and droughts all over the world.”

To this end, Greenpeace and its allies challenged Shell and Equinor in court from November 12 to November 15 in hopes of setting a precedent for stopping other fossil fuel developments. During the judicial review’s hearing at the Court of Session in Edinburgh, both sides seemingly agreed the projects were greenlighted unlawfully based on the Finch case.

The difference in opinion between the two sides on the way forward stems from the fact that lawyers representing the oil and gas companies do not believe the same ruling should be applied in this case and justify their argument by pointing out that all environmental assessments, required at the time when applications were made to develop these fields, were met; thus, the firms should not pay the price over a ruling that came much later.

These lawyers asked the court to allow the projects to continue with the ongoing developments rather than revoking the permits, prompting Judge Andrew Stewart, known as Lord Ericht, who will decide the projects’ fate, to conclude he was being asked to declare that even though he accepted the decision as unlawful, he should give it “lawful effect.”

Given the current UK government’s admittance in court that giving the go-ahead for Rosebank and Jackdaw without considering the full extent of their climate impacts was unlawful, despite there being no court ruling demanding consideration of downstream emissions implications at the time, climate activists believe the court case to be a straight-up fight that they should win.

However, the Scottish Court of Session has yet to decide whether Equinor and Shell should be allowed to extract and sell the oil and gas at these two fields. The ball is now in Lord Ericht’s court—no pun intended—who described the case as “a very difficult matter.”

Whether the judge’s verdict will allow the operators to continue with business as usual or state a crystal ball needed to be consulted before approving these oil and gas projects to foresee the Finch ruling, effectively revoking the permits, is still a mystery that could take weeks to be solved.

“If the court case is successful, the government will have the chance to remake the decision. This would be a huge step for the fight against climate change and could set a powerful precedent when it comes to blocking new oil and gas projects across the UK and beyond,” emphasized Uplift’s Holly Duhig.

Regardless of the direction in which the ruling swings, the outcome is bound to bring further controversy by either making things difficult for future climate cases or creating more complications for the oil and gas industry in the UK, which is already said to be suffering from exodus as companies seek other hydrocarbon playgrounds due to the hike in the windfall tax.

Even though some may argue that the activists have this court win in the bag due to the Finch case, things are not always as clear-cut as they may seem since surprises can still occur, as illustrated by a recent reversal of a landmark ruling issued by a Dutch court following Shell’s appeal against the decision.

The case, which was hailed as a historic climate win, is now seen as a setback for climate action after the decision that ordered the energy giant to step up its efforts to curb its carbon emissions was overturned.