Explained | What is the row over UK’s Rosebank oil field?

The story so far: Angering enivronmental activists across United Kingdom (U.K), the British government okayed one of the country’s biggest new oil and gas projects —the North Sea Rosebank field— on September 27. The Rishi Sunak government claims that the project was essential for securing the nation’s energy demands.

The move comes mere days after UK Prime Minister Rishi Sunak announced a delay in the ban on sales of new petrol cars from 2030 to 2035, claiming that he needed the public’s support in switching to net zero (carbon emissions). Mr. Sunak claims that Britain could afford to make slower progress in net zero emissions by 2050 as it was ‘so far ahead of every other country in the world’. The watering down of Britain climate action has triggered fears of other European nations following suit.

Mr. Sunak has stood firm by his decision to green light Rosebank, stating that it was a necessary domestic source of fossil fuel and that Britain would still be dependent on oil and gas as one of its fuel sources by 2050. His Energy Security Minister Claire Coutinho has stated that Rosebank will produce less emissions as it would eventually electrify the oil extraction process.

What is the Rosebank field project?

Located 130 kilometres north-west of Shetland islands, the Rosebank oil field was first discovered in 2004 by Chevron. While oil reserve capacity was demonstrated in 2019, the field has remained untapped till now. In 2019, Norwegian oil company Equinor acquired the licences for the project from Chevron. Known for tackling challenging deepwater untapped reserves, this joint venture by Equinor (80%) and British oil honcho Ithaca (20%) will drill for oil at a depth of 1100 metres under water. The project will be developed in two phases, with the first oil extraction scheduled for 2026.

Map of Rosebank oil field

Estimated to pump 300 million barrels of oil, the Rosebank field will comprise of 8% of UK’s total oil production and is estimated to generate 1,600 jobs during construction and 450 UK-based jobs throughout its lifetime — till 2051. Equinor estimates that the project investment will amount to £8.1 billion, of which £3.1 billion has already been invested in the first phase.

The project will reuse a Floating Production Storage and Offloading vessel (FPSO) previously owned by Altera Infrastructure. An FPSO is a ship-like structure which receives fluids through risers from subsea reservoirs and then separates them into crude oil, natural gas, water and impurities. In order to reduce carbon emissions, the FPSO will be prepared for future electrification, cutting down the upstream carbon dioxide (CO2) intensity from 12kg/boe (barrels of oil equivalent) to less than 3 kg/boe.

The Norwegian oil producer had first submitted its environmental proposal in August 2022, which was open for public consultation till September 2022. While initially questioning Equinor about the environmental impact of the project, the North Sea Transition Authority — UK’s oil and gas regulator— okayed the project after considering the project’s net zero action throughout its lifetime. After Equinor made a final investment decision, the Sunak government okayed the project on September 27, 2023, despite protests by climate activists.

The floating production storage and offloading (FPSO) unit for Rosebank, Petrojarl Knarr

The floating production storage and offloading (FPSO) unit for Rosebank, Petrojarl Knarr

Conservatives, Labour & Scotland: Where do they stand on Rosebank?

Throwing his weight behind Rosebank, Mr. Sunak highlighted how important the North Sea oilfield was for UK’s energy security and economy. In an interview with BBC Scotland, he said, “I don’t want our children to be dependent on foreign dictators like Putin for our energy”.

He added that while UK will switch to clean energy, he would prefer to use gas from domestic sources during the transition rather than “import [gas] from abroad at four times the carbon emissions.” The UK government has stated that if investment in new North Sea oil projects is stopped, the nation’s fuel imports will increase by 10% by 2035.

Britain’s Prime Minister Rishi Sunak leaves the stage after delivers a speech during a press conference on net zero targets, at the Downing Street Briefing Room, in central London, on September 20, 2023.

Britain’s Prime Minister Rishi Sunak leaves the stage after delivers a speech during a press conference on net zero targets, at the Downing Street Briefing Room, in central London, on September 20, 2023.
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Surprisingly, the Labour party, which opposes development in the North Sea, has said it will not reverse the approval to develop Rosebank if it wins the general election in 2025. Its leader Mr. Keir Starmer said that the party would accept the projects it inherits from this government to ensure stability, if it comes to power in 2025. His remarks were met by protests by Labour supporters outside shadow cabinet members’ offices.

Pulling up the Sunak government for reversing its net zero policies, Ed Miliband, the shadow Secretary of State for Energy Security said that the Labour party will tackle cost of living crisis and the climate crisis in tandem. Claiming that Conservatives lacked a vision for future economic growth, Mr. Miliband asserted that the only way to bring down household bills and secure UK’s economic future was by switching to green energy.

Criticising Mr. Sunak, Scotland’s first Minister Humza Yousaf claimed that Downing Street was in ‘climate denial.’ Taking to the microblogging site X (formerly Twitter), Mr. Yousaf pointed out that as Equinor planned to sell Rosebank’s oil at global prices, the fuel extracted from the site would not remain in Scotland or UK. He also slammed the UK government’s decision to commit to approving 100 new oil & gas licences, posting, “That isn’t climate leadership. It is climate denial.”

Why are climate activists opposing Rosebank?

Climate activists have already been seething over Mr. Sunak’s decision to water down the UK’s climate goals. Activists say that by pushing the ban on new petrol and diesel cars to 2035 and easing transition of home gas boilers to heat pumps, the UK will not be able to achieve its legally-binding 2050 net zero target. By estimations, Rosebank’s carbon emissions will be three times that of the nearby Cambo oil field — approximately 200 million tonnes of CO2, equivalent to operating 56 coal-fired power stations for one year.

Activists stage a protest against Rosebank outside a government Office in Edinburgh

Activists stage a protest against Rosebank outside a government Office in Edinburgh

The International Energy Agency (IEA) has indicatedthat for limiting global temperature rise to 1.5 degrees Celsius, no new oil and gas projects can be developed. The IEA has also estimated that demand for fossil fuels will fall by 80% by 2050 as more and more people switch to electric cars and solar panels. Hence, big oil fields like Rosebank are unnecessary for meeting energy demands, says the IEA.

Several British lawmakers have pointed out that Rosebank will not aid in bringing down household electric bills as most of the oil extracted (90%) will be sold to the global market across Europe. Equinor, meanwhile, has stated that its oil will be transported via the West of Shetland pipeline to support Europe’s ‘energy security.’ This will ultimately end up in the UK grid, securing the nation’s energy needs, the company avers.

What are the ecological effects?

The North Sea’s Faroe-Shetland Sponge Belt is host to deep sea sponges, a variety of clams and quahogs, already subject to a fragile ecosystem. In a protest held in January outside Downing Street, activists displayed a four-metre whale model — emphasizing the havoc oil pipelines will create when laid underwater along the migration corridor of the fin whale and the sperm whale.

During construction, noise pollution and sediment plumes would likely disrupt habitats of shellfish, marine mammals and cephalopods. Drilling may also harm delicate marine creatures like sponges, corals and slow-moving mammals. The biggest threat to marine life, however, is a deep-sea oil spill which would spread faster due to sea currents, damaging fauna like multiple species of fish, dolphins, orcas, and birds and disrupting the food chain in the area.

Windfall tax & oil incentives

Activists have also claimed that the UK tax-payers will hand over £3.75 billion to Equinor via tax breaks awarded to them by the government, just to develop Rosebank field for oil extraction. They further claim that once the plant is operational, the tax-payers are set to lose more than £750 million as Equinor will reap benefits from future tax breaks and profits earned in its oil sale.

Equinor’s Mariner field in the UK North Sea

Equinor’s Mariner field in the UK North Sea

However, Equinor and the UK government refuted any tax benefit for the oil company due to Rosefield. In the wake of the massive profits earned by oil companies during the initial days of the Russian invasion of Ukraine, the UK levied a 35% windfall tax called the Energy Profits Levy beyond the 40% corporation tax already imposed on oil and gas firms. Currently, oil companies like Equinor and Ithaca pay a 75% tax on their UK profits until 2028.

On the other hand, on June 9, 2023, the UK government announced the Energy Security Investment Mechanism which will go into effect post-March 2028. Under this scheme, if oil prices fall to normal levels (pre-Ukraine invasion rates) for a sustained period, then the tax for oil companies will return to 40%. The move is aimed attract investment in UK’s domestic oil fields — especially the North Sea region.

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Poland turns toward bets on offshore wind

The development of offshore wind farms in Poland has never before taken place on such a large scale. The PGE Group is the biggest investor in offshore wind farms in the Polish part of the Baltic Sea in terms of wind turbine capacity. As part of its offshore program, the PGE Group is currently implementing three offshore wind farm projects.

Two of them are the offshore wind power plants Baltica 2 and Baltica 3, which comprise the Baltica Offshore Wind Farm with a total capacity of 2.5GW. PGE is implementing this project together with the Danish partner Ørsted. Both phases of the Baltica offshore wind farm have location decisions, environmental decisions, and grid connection agreements with the operator, and have been granted the right to a Contract for Difference (CfD).

As part of its offshore program, the PGE Group is currently implementing three offshore wind farm projects.

Last April, PGE and Ørsted took a major step in the Baltica 2 project. They signed the first of the contracts for the supply of wind turbines. Subsequently, they also signed a contract for the supply of offshore substations in June. Baltica 2 is expected to start producing green energy in 2027, while the entire Baltica Offshore Wind Farm will be completed within this decade.

Independently of the Baltica Offshore Wind Farm, the PGE Group is developing a third project, Baltica 1. Commissioning is scheduled after 2030 and its capacity will be approximately 0.9GW. The project already has a location permit and a connection agreement. In May 2022, wind measurement studies for this project started, followed by environmental studies in autumn 2022. The energy produced by all three farms will supply nearly 5.5 million households in Poland.  This means that more than a third of all Polish households will be provided with energy from wind power.

Baltica 2 is expected to start producing green energy in 2027, while the entire Baltica Offshore Wind Farm will be completed within this decade.

At the same time, the PGE Group has received final decisions on new permits for the construction of artificial islands for five new areas to be developed in the Baltic Sea, which will enable the construction of further offshore wind power plants in the future. The total capacity potential from the new areas provides PGE with more than 3.9GW. Considering the projects currently under development (Baltica 2, Baltica 3 and Baltica 1) with a total capacity of approximately 3.4GW, PGE Capital Group’s offshore wind portfolio may increase to over 7.3GW by 2040.

Offshore wind — a new chapter for the Polish economy

A long-term vision for the development of the Polish offshore wind sector, based on the carefully assessed potential of this technology, will support the development of the energy sector in Poland. The benefits of offshore wind development in Poland should be considered in several aspects — first and foremost, due to their total capacity, offshore wind farms will become a very important new source of clean, green energy for Poland in just a few years.

“Offshore wind energy will make a significant contribution to Poland’s energy mix. The three projects currently under construction by the PGE Group, with a total capacity of almost 3.5GW, will generate electricity for almost 5.5 million households. All the investments planned for the Baltic Sea are crucial for strengthening Poland’s energy security. Regarding the Polish economy, in particular the economy of the entire Pomerania region, the construction of offshore wind farms will provide a strong development stimulus. This is not only about businesses closely related to wind energy, such as companies supplying components for offshore wind power plants. Jobs will also be created by businesses willing to join the development of this new sector and take advantage of the opportunities it brings,” said Wojciech Dąbrowski, president of the management board of PGE Polska Grupa Energetyczna S.A.

All the investments planned for the Baltic Sea are crucial for strengthening Poland’s energy security.

The construction of offshore wind farms will ensure Poland’s energy security

The development of offshore wind is also crucial to Poland’s energy security and independence. Thanks to the production of energy from renewable sources, there is no need to import fossil fuels from abroad or rely on dwindling domestic coal resources.

This means that Poland will not be dependent on external fuel suppliers or various international developments. The ability to generate electricity independently contributes to strengthening the country’s energy sovereignty.

Energy, environmental and social benefits

Poland has ambitions and capabilities to become one of the leaders in offshore wind energy development in the Baltic Sea and even in Europe. We have plenty of resources for the development of offshore wind farms because of our favorable geographical location and natural conditions — strong, stable winds and the relatively shallow considerable area of the Baltic Sea, located in the exclusive economic zone. The Baltic Sea has some of the best wind conditions not only in Europe but also in the world, which are comparable to those in the North Sea.

Offshore wind energy is a key element of sustainable development. For Poland, green wind energy means savings, security and energy independence at the same time. Electricity from renewable sources is less expensive than that generated from fossil fuels. By choosing green energy, consumers can save on their electricity bills while at the same time supporting the development of a green energy sector. As a zero-emission energy source, it contributes to achieving climate policy goals and minimizing negative environmental impact. It is a huge step towards reducing greenhouse gas emissions. The creation of an infrastructure for the construction of alternative energy sources with wind farms will ensure the diversification of energy sources.

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