UK Set to Approve Jackdaw Gas Field as Energy Costs Soar
Key Takeaways
- •Prime Minister Andy Burnham is expected to approve the Jackdaw gas field development before the end of the month, according to a BBC report.
- •Jackdaw and Rosebank are operated by Adura, a joint venture between Shell and Equinor, with Jackdaw holding enough gas to cover 6.5% of UK gas demand at its peak.
- •The original approvals were overturned in court after environmentalists argued climate effects had not been considered.
- •Operators say Jackdaw's infrastructure is 99% complete and gas could begin flowing as soon as this winter.
- •Wood Mackenzie estimates that 90% of the UK's commercially viable oil and gas reserves have already been exhausted.
Prime Minister Andy Burnham is expected to approve the development of the Jackdaw natural gas field in the North Sea before the end of the month, the BBC reported, citing unnamed sources.
The Jackdaw project, along with Rosebank, was initially approved for development several years ago, but environmentalists sued and had the approval overturned on the grounds that the climate effects of the developments had not been considered. The legal challenge came amid years of debate over whether new fossil fuel production is compatible with the UK's legislated target of reaching net zero emissions by 2050, a commitment that has shaped much of the country's recent energy policy. With oil and gas prices now soaring and the UK's dependence on imported energy deepening, however, priorities are being reconsidered. The UK has been a net importer of both oil and gas for years as North Sea output declines, leaving it more exposed to global price swings.
"We won't be able to stop using oil and gas for some time. That's just a fact," MP Burnham said soon after taking office, signaling a pragmatic approach to energy policy. "The question is whether we can accelerate use of it so that we pay for the transition," Burnham added.
Jackdaw and Rosebank are operated by a joint venture between Shell and Equinor, which runs the two fields under the name Adura. Rosebank contains an estimated 300 to 500 million barrels of oil, while Jackdaw holds enough gas to cover 6.5% of UK gas demand at its peak, according to the partner operators.
Some observers, including Wood Mackenzie, argue that reviving the North Sea oil and gas industry is not worth attempting because not enough oil and gas remains to justify the effort. The analytics firm estimates that 90% of the UK's commercially viable oil and gas reserves have already been exhausted. At a time of soaring oil and gas prices, however, that view may be challenged.
According to Shell and Equinor, gas from Jackdaw could start flowing as soon as this winter, with all necessary infrastructure already 99% complete.
Opposition from environmentalists is unlikely to subside, however. This week saw the first protest in months organized by the radical group Just Stop Oil.
By Irina Slav for Oilprice.com
