Page 7 - FSUOGM Week 41 2021

FSUOGM COMMENTARY FSUOGM

The Groningen gas
field.

ahead as planned. gas reserves, estimated by the British Geolog-
The Netherlands has stifled upstream invest- ical Survey at nearly 40 trillion cubic metres.
ment in other ways. Notably in 2019, a Dutch But amid strong local opposition to the use of
court ruled that the Netherlands’ previous hydraulic fracturing, these unconventional
standards for issuing construction permits vio- resources remain locked in the ground. The UK’s
lated EU laws protecting the environment from Conservative government, which has long advo-
nitrogen oxides, putting billions of dollars of cated shale gas extraction, imposed a temporary
projects in many industrial sectors, including moratorium on the use of hydraulic fracturing
natural gas, on hold. Several operators have cited in November 2019, in order to shore up support
the nitrogen ruling as the main reason for can- ahead of general elections that year. This was
celling investments, including German-Russian largely seen as the death knell for the sector.
joint venture Wintershall Noordzee, which in It is difficult to say exactly how much of an
November last year axed a plan to develop two impact large-scale shale gas development would
oilfields. Meanwhile, the government has also have had for the UK’s energy mix. But in 2013,
delayed introducing new incentives to encour- then Prime Minister David Cameron esti-
age investment in fields. mated that if even 10% of known reserves were
Dutch gas output slumped to an historic low extracted, the UK would be able to cover its gas
of 20 bcm in 2020, down from over 75 bcm a needs for over 50 years.
decade earlier. Moving forward, the UK government looks
set to take a more aggressive stance against gas
Years of UK decline development. Under a revised policy, upstream
UK gas output has similarly been on a downward regulator Oil and Gas Authority (OGA) has
trajectory since the early 2000s. With an output said it will scrutinise new projects more over
of only 40 bcm last year, the UK now relies on their environmental impact. And earlier this
imports to cover around half of its demand. In month, the Offshore Petroleum Regulator for
2004, in comparison, the country was self-suf- Environment and Decommissioning refused to
ficient in gas. approve Shell’s plan to develop the Jackdaw field,
Arguably, successive governments could have expected to supply a substantial share of UK pro-
done more to incentivise offshore gas develop- duction in the late 2020s.
ment over the years, but were discouraged from OGUK, a lobby group for the UK gas and
doing so because of climate concerns and the gas industry, warned on October 6 that without
shift in priorities towards offshore wind power continued investment in gas supply, production
development. But the UK North Sea is also a could fall by a further 75% within the next dec-
mature region, and so to an extent the decline ade, leaving the country dangerously reliant on
has been inevitable. What is more, its production energy imports.
is increasingly high-cost, making it vulnerable “We will need gas to power us through this
to market downturns like those that occurred in green transition,” OGUK CEO Deirdre Michie
2014 and last year. said in a statement. “It would be far better to get
The UK has considerable onshore shale as much of that gas as possible from sources we

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