Press briefing: Cambo oil field

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Just weeks away from the UK hosting global climate talks, COP26, in Glasgow, the Cambo oil field has become a symbol of the government’s failure on climate. 

Where it has the opportunity to show climate leadership, it’s shown reluctance and fear of change. The government has been loyal to the oil and gas industry giants, rather than the key workers in the energy sector who have powered our economy and kept the lights on. 

The damage

Approving Cambo goes against the experts, locks in reliance on fossil fuels, and drives climate change which could mean extreme weather deaths for decades

  • The International Energy Agency has said there can be no new oil and gas developments if we have a hope of keeping global temperature rise within 1.5 degrees.
  • The UN Secretary General has said that the latest report from the IPCC “must sound a death knell” for fossil fuels and that countries should “end all new fossil fuel exploration and production”. 
  • The first phase of Cambo would produce up to 170mn barrels of crude oil from 2025 until 2050, with plans for a second phase of production beyond that.
  • That’s the carbon emissions equivalent to running 18 coal fired power stations for a year.
  • The full field development is forecasted to be 288mn barrels.

Even Cambo’s production emissions will be bad 

  • At present, OGUK and the UK government are only focused on action on little more than displacement activity – -reducing emissions coming from the extraction process – while ignoring the much larger emissions from the combustion and use of the oil itself.  
  • The UK has an abysmal track record on its production emissions, with North Sea oil and gas firms pumping out a coal plant’s worth of emissions each year through flaring and venting.
  • The crude oil in the Cambo reservoir is a heavy grade, which means that more emissions will result from refining it into products like petrol or diesel. The average emissions intensity of the oil produced by the field comes to 23kg CO2e/barrel, which is triple the average emissions intensity of oil produced in Norway.
  • By focusing on production emissions, the government is patting itself on the back – despite the UK’s poor track record – with no regard to the much greater harm coming from burning fossil fuels themselves.
  • As former oil worker, Erik Dalhuijsen, explained: “They’re going carbon neutral on their own production systems, they’re not going carbon neutral on the products.  That’s like saying you’re a consortium of drug dealers and your drug dealers are all clean… You see, that’s not the point. The point is, you’re still dealing drugs.”

Carbon capture and “low-carbon” solutions

  • The government and OGUK have argued that projects like Cambo can go ahead because it will be possible to reduce production emissions and use carbon capture storage. 
  • Carbon capture storage is unproven at scale, and is currently not capable of being run with zero emissions. It should not be relied on to tackle growing emissions from projects like Cambo. 
  • Carbon capture is also currently expected to be very expensive. It means continuing to prop up an expensive, declining oil sector, and paying more money in an attempt to mitigate the harm caused – instead of switching to cheap, clean renewable energy. 
  • Low carbon solutions, especially those that require big and long lasting infrastructure, can stand in the way of better, zero carbon solutions. 

Demand distraction

No evidence Cambo will help meet demand

  • OGUK, the industry body representing the interests of Big Oil, keeps insisting that the Climate Change Committee has said we will still need oil and gas to 2050 and beyond, however the CCC’s 6th Carbon Budget says “Our Balanced Pathway sees an 85% reduction in UK oil demand and a 70% reduction in gas demand. Though some oil and gas will continue to be used, lower production costs internationally may favour imports of these fuels over domestic production.”
  • And OGUK chief executive Deirdre Michie has claimed that stopping Cambo will mean the UK has to “import [oil] from overseas – frequently from countries with higher emissions and less commitment to act on them”.
  • The reality is that 80% of oil produced from Cambo is due to be exported, so this will not have a significant impact on the UK’s continued reliance on imports or on domestic demand. 

Government has the power to change demand, but does nowhere near enough

  • If the government is truly concerned about energy security, it should take action to reduce energy consumption. 
  • Retrofitting homes with energy efficiency measures, supporting the installation of heat pumps, investing in energy storage, accelerating an electric vehicle revolution, clean public transport, prioritising active travel – are all policies that the government must prioritise to reduce fossil fuel demand. 
  • These policies could provide a much-needed jobs boost and a shot in the arm for our economy to achieve a green recovery and a just transition to renewable energy
  • Yet the latest home insulation policy, the Green Homes Grant, was withdrawn, there’s no overall plan for clean building heat, worries over there being enough charge points for electric vehicles to charge up, nowhere near enough money for public transport or active travel. 
  • Instead we’re left with yet more oil from Cambo. 

Costing taxpayers money, blocking green recovery and just transition

Tax breaks for polluters means Cambo will be a drain on our economy

  • Projects like Cambo are  actually a drain on our economy. Siccar Point Energy, who owns the majority stake in the proposed field at Cambo, paid no net tax between 2015 and 2019 (UK EITI data). 
  • Shell, which owns a 30% stake, paid no corporation tax in the UK in 2019.

Question marks about one of Cambo’s contractors

  • One of the main contractors of the Cambo project, Petrofac, is being investigated on corruption charges. Petrofac is under investigation by the Serious Fraud Office (SFO) for allegedly paying million-pound bribes to secure contracts in nine different countries.
  • Petrofac’s co-founder Ayman Asfari has along with his wife donated almost £900,000 to the Conservative Party.

Cambo contracts go abroad, as usual. We need green jobs. 

  • Even were the development of the field to be approved, it would be unlikely to bring significant jobs to the UK. Sembcorp marine, a Singaporean offshore engineering firm, is leading the design and engineering of the floating production storage and offloading (FPSO) vessel, which is the biggest source of jobs for the project. Were operations to begin, likely in 2025, the FPSO is designed to operate with only 100-150 staff, provided by operational contractors who may not be UK based. 
  • Siccar Point Energy themselves only have a small managerial footprint of 36 staff based in the UK. All other contracts awarded to date have been to firms outside of the UK.
  • In contrast, Shetland’s Viking wind farm, under construction, will create over 400 jobs, with primary contractors based in the UK.
  • Government demands on the offshore wind industry for more supply chain jobs to be located in the UK are conspicuously absent for oil. 

Cambo is a risky investment, prone to taxpayer bailout

  • The field is technically very complex, and higher cost than other existing fields, due to its significant depth, geology of the surrounding rock, and harsh Atlantic conditions in the West of Shetland.
  • The final decision to go ahead with the project was postponed last year, due to the collapse in oil demand and the global economic slowdown resulting from the Covid-19 pandemic. This follows a trend of other projects in the West of Shetland region suffering severe delays and cost overruns, which have severely impacted the share price of producers involved
  • This carries a risk for the taxpayer, with the government liable to provide additional tax relief to cover decommissioning costs.

Approving Cambo makes the government vulnerable to expensive legal challenges

  • Campaigners argue that approving new oil projects without assessing their impact on the climate is unlawful, because it’s a failure to properly carry out an Environmental Impact Assessment. 
  • The government is already facing legal action from Greenpeace for granting a permit to BP to drill in the Vorlich field, without assessing the harm that would result from burning the oil extracted. 
  • The government has promised that no new oil licences will be granted without meeting a ‘climate compatibility checkpoint’ but has created a loophole so that permits – like Cambo – can proceed unchecked. All decisions on the climate checkpoint, including the criteria for ‘climate compatibility’, have been delayed until after the Glasgow climate summit in the Autumn. 
  • Shell has already been told by courts in the Netherlands that it must cut its production by 45% by 2030, so the UK government giving Shell permission to start new production in Cambo could be in conflict with that legal ruling. 

Losing credibility with voters and on the world stage

  • 63% of British people believe spending should be redirected away from oil and gas, towards low-carbon industries such as wind and solar power, according to a survey by Paid to Pollute polling, May 2021.
  • More than 160,000 people have signed a petition calling on Boris Johnson to commit to no new oil or gas in the North Sea and support oil and gas workers and communities in the transition towards renewable energy. . 
  • US climate envoy John Kerry recently stressed there is “no need” for any new fossil fuel investments if the world is to meet its climate goals, and that the UK government should “measure the need for [the oil field] very, very carefully”.
  • Dr Fatih Birol, executive director of the International Energy Agency said there is already enough oil and gas reserves to meet energy demands, and that he hopes the UK government still wants to be an “inspiration for the rest of the world” on climate action, adding that the Cambo North Sea oil field decision “will be an important step in that direction.”
  • Scottish First Minister Nicola Sturgeon called on UK Prime Minister Boris Johnson to reassess the Cambo licence before permitting development of the field, saying “I am asking that the UK government agrees to reassess licences already issued but where field development has not yet commenced. That would include the proposed Cambo development. Such licences, some of them issued many years ago, should be reassessed in light of the severity of the climate emergency we now face, and against a compatibility checkpoint that is fully aligned with our climate change targets and obligations.”
  • Sir Keir Starmer, leader of the UK Labour Party, has said the Cambo oilfield should not get the go-ahead and called for a “hard-edged” timetable to end oil and gas extraction.

This briefing has been prepared in collaboration with the #StopCambo coalition. For more on the Stop Cambo campaign please see:

 

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