Kemi Badenoch’s promise to “maximise” oil and gas extraction has put clear North Sea water between her party and the government.
Given the scant reserves that remain beneath the UK continental shelf however, the plan may be literally scraping the barrel.
In the first concrete policy consequence of Ms Badenoch’s declaration that net zero (a policy introduced by her predecessor Theresa May) is “impossible”, she says the current ban on new oil and gas licences will be scrapped in the event she wins power.
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Echoing Donald Trump’s faith in fossil fuels, she told a conference in Aberdeen that North Sea oil and gas will be the “cornerstone of Britain’s future”. Given the long-term decline of reserves, that may be a stretch, even by the Conservatives’ numbers.
Shadow energy secretary Claire Coutinho says maximising extraction could generate £12bn in tax revenues over the course of this Parliament but she concedes it would not bring down prices for billpayers determined on global markets.
And while the oil and gas sector would jump at the chance to explore the potential of new reserves, the data suggests it could be a case of ‘drill, maybe, drill’.
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North Sea oil and gas was the UK’s greatest windfall of the last century but production of oil and gas peaked in the late 1990s and, after a few years when we were net exporters, has been in steep decline since.
The reserves are far from empty but they are much reduced and cover only around 50% of domestic demand. The impact of tapping undeveloped and undiscovered fields meanwhile is marginal.
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Regulator the North Sea Transition Authority estimates an annual decline in extraction of around 10% and says around 3.75 billion barrels of oil equivalents (BOE) of oil and gas remain untapped. That’s a relative drop in the ocean of fuel extracted since the 1970s and would add only a few thousand BOE to the more than one million extracted every day last year.
The oil extracted is also harder and therefore more expensive to extract and of lower quality, which explains why many of the oil majors have already left the North Sea fields to more speculative players. None of which is an argument against further extraction as long as you are willing to accept the cost and the consequences.
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Energy Secretary Ed Miliband’s primary motivation for the ban on new licences was to cut emissions, but here the same arguments apply. A marginal amount of extra oil and gas can only contribute marginal extra emissions, which would in any event be lower than from imported fuels we are going to need anyway.
A more balanced policy, as championed by the governments of David Cameron, Liz Truss and Rishi Sunak, as well as Boris Johnson and Theresa May, was to transition away from fossil fuels while allowing North Sea reserves to be explored down as long as is profitable.
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Ms Badenoch is right that the North Sea will be the cornerstone of the UK’s energy future, but what happens above the surface will be more consequential than what lies beneath.
Wind power is already the engine room of the grid, providing 30% of the UK’s electricity last year, but accessing that capacity at a pace and price we can afford is the key question facing politicians on all sides.
Until now the energy transition has been relatively painless but the bill, for building and maintaining new renewable generation and a grid that can handle it, while adding nuclear facilities and keeping a gas network on standby, is about to land.
