Business

Shell scraps plans to develop Cambo North Sea oilfield, citing economics not the climate

The company said its decision was based on the economics of the project and the risk of delay, and that it remained committed to oil and gas operations in the North Sea.

Shell, along with Blackstone-backed Siccar Point, was waiting for UK government permission to start developing the Campo oil field. The project, which will produce 164 million barrels of crude oil during the first phase of development, has become a flashpoint in discussions of the energy transition and the future of fossil fuel exploration in the oil and gas-rich North Sea.
The UK government, which hosted the recent COP26 talks in Scotland and has positioned itself as a global climate leader, has come under enormous pressure to reject the mega-project. Campo’s opponents argue that the expansion of oil production undermines the country’s goal of becoming carbon neutral by mid-century.

Shell owns a 30% stake in the oil field, while Siccar Point controls the rest of the project. The future is now in doubt.

“After thorough examination of the proposed Campo development, we have determined that the economic case for investment in this project is not strong enough at this time, as well as the potential for delays,” a Shell spokesperson said in a statement sent to CNN Business. Friday.

But the company made it clear that it plans to continue investing in oil and gas in the UK, saying doing so is “crucial to the country’s energy security”.

“We believe the North Sea – and Shell in it – has a critical role in the UK’s energy mix, supporting jobs and skills to enable a smooth transition to Britain’s low-carbon future.”

The International Energy Agency said in a recent report that investments in new fossil fuel infrastructure must stop immediately if the world is to have a good chance of reaching net zero emissions by 2050. Net zero is a state in which the world emits as few greenhouse gases as possible. , removes or replaces anything that you cannot prevent from entering the atmosphere.

Scientists say the world needs to reach net zero by mid-century to contain global warming to a critical threshold of 1.5°C above pre-industrial levels.

Prior to Thursday, Shell had expressed frustration with the lack of clarity on policy guidance from the UK government. In October, a British regulator halted Shell’s plans to develop the Jackdaw gas field in the North Sea on environmental grounds.

“Shell’s recognition that Campo economics is ‘not robust enough’ is the latest evidence that new fossil fuel projects are becoming increasingly challenging as the world grapples with the root causes of climate change,” said Simon Crane McGreen, head of analysis at the Energy and Climate Intelligence Unit, For CNN Business.

He added that with Shell announcing its withdrawal from the Campo project late on Thursday, the UK’s offshore wind sector announced two new turbine plants, which will create jobs and rejuvenate Scottish ports abandoned by the fossil fuel industry.

“Together, this highlights the challenge facing policymakers, of developing new, clean forms of energy while ensuring a fair transition away from fossil fuels for people working in these sectors.”

Cambo Player will try to move forward

Like many fossil fuel producers, Shell is being pushed through campaigns, political pressure and litigation to quickly decarbonize its business and achieve a faster transition to renewables.

A Dutch court in The Hague in May ordered Shell to cut its emissions by 45% by 2030, from 2019 levels, in line with the Paris Agreement, in a landmark decision that has inspired similar cases against other oil companies. Shell is appealing the decision.

Jonathan Roger, CEO of Siccar Point Energy, said his company was “disappointed with Shell’s relocation” but remained confident in the Campo project’s merits, noting its ability to create more than 1,000 direct jobs, and thousands more indirectly.

He said oil production at Campo would help the UK get oil more responsibly than become more dependent on high-carbon imports.

“We will continue to work with the UK government and broader stakeholders on the future development of Campo,” he said.

The environmental group Friends of the Earth, which campaigned against Campo, He said on Twitter: “The future of the project is now in grave doubt – as it should be. There is no need for a new oil field during the climate crisis!”

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