Climate Change News: Oil Industry In Scotland Stuck Between Economic Dependence, Environmental Fears

Analysts at Aberdeen University claimed Scotland's offshore oil industry should enjoy a boom for three decades more if prices remain at current levels.

A study by Alex Kemp, professor of petroleum economics and Linda Stephen, a research fellow, indicated the output from Scotland’s North Sea properties will depend on the prevailing price of crude. If the price averages about $70 per barrel (roughly the current price of Brent crude), Scotland could produce 14.5 billion barrels by the year 2050. But if the price averages at $50 per barrel, production over that period would amount to just under 9 billion barrels.

Kemp’s study also found the magnitude of investments in the sector would also depend on oil prices.

“Development and operating expenditures are also very sensitive to the oil and gas price behaviors,” the report said. “Thus, at the $50 price case, total field development expenditure over the period 2019-2050 is £51.6 billion [$67.7 billion], while at the $70 price case it is £113 billion [$148.3 billion].”

With Brexit a done deal and the potential for a new independence referendum the Scottish government would like to maximize profits from its offshore oilfields.

However, Scotland’s oil industry is also facing demands from environmentalists and climate activists to reduce carbon emissions.

The Scottish government has pledged itself a target of "net zero” greenhouse gas emissions by 2045.

“The true cost of North Sea oil and gas is too high for our climate,” said Richard Dixon, director of Friends of the Earth Scotland. “The price per barrel should be measured in the climate-changing emissions it releases and destruction it brings to the most vulnerable people and places on earth.”

As such, Dixon called for an end to energy exploration in Scotland.

“Tackling the climate emergency means we must ban oil and gas exploration, and redirect the vast subsidies propping up fossil fuel extraction toward creating decent green jobs in a zero carbon economy,” he added. “All exploration should stop now, no new licenses should be issued and current fields should be run down over the next decade as part of a just transition to clean energy jobs. In this climate emergency the U.K. and Scottish government’s continuing support for new exploration in the North Sea is inexcusable.”

Last month, members of the Church of Scotland urged their leaders to sell off their holdings in oil and gas companies.

The Rev. Richard Frazer said the church came to the conclusion “that for reasons of conscience and out of an urgent necessity to respond what is happening to our planet, we must accelerate the process of weaning ourselves off our dependence on fossil fuels. This is the greatest opportunity we have to showcase how Scotland is moving away from its long tradition of dependence on fossil fuels to embrace the new world of low-carbon energy.”

But Mairi Gougeon, Scotland’s minister for rural affairs and the natural environment, warned what would happen if energy exploration and production ceased.

“Suddenly ending production would have an absolutely massive impact on communities and jobs, especially in the northeast of Scotland and in constituencies such as mine, Angus North and Mearns, where thousands of people depend on the sector,” she said. “Doing that would also not help to reduce greenhouse gas emissions globally, because we would become reliant on imports until we were able to reduce the demand for oil and gas in Scotland.”

The North Sea energy industry supports about 270,000 jobs across the U.K., with about half of them in Scotland.

The Scottish Parliament Information Center said in a blog the government in ensnared in a “policy paradox” due to its advocation of extracting more North Sea oil and gas extraction while also committing to a reduction of carbon emissions.

Noting energy accounts for about 10% of Scotland’s economic output, the blog said despite its stated commitment to climate activism, Scotland remains “one of Europe’s largest extractors of fossil fuels.”

Mark Ruskell, a spokesman for Scottish Green Party, praised the blog.

“It is good to see Scottish Parliament researchers back up exactly what we’ve been warning the Scottish government about,” he said. “Their policy on oil and gas is completely contradictory to declaring a climate emergency. They pretend that unlimited extraction of fossil fuels can continue past 2050 while they tackle the climate emergency. The Scottish government needs to stop waving its targets about and wake up to what a climate emergency means.”