Court Revokes Licences for Major North Sea Oil Projects
A court has revoked permission to exploit the UK's largest undeveloped oil reserve along with a second North Sea project in the latest blow to the country's rapidly declining fossil fuel extraction industry.
The ruling by Scotland's top civil court on Thursday overturns licences granted to Norway's Equinor and the UK's Ithaca Energy to exploit the vast Rosebank field west of Shetland, thought to contain 500 million barrels of oil.
Lord Ericht in the Court of Session also ruled that Shell could not produce gas at the Jackdaw field unless a new licence was granted.
Both sides had agreed the original permissions had been issued unlawfully given a subsequent UK Supreme Court ruling in a separate case that said the impact of burning fossil fuels must be considered when regulators issue licences.
However, the developers, who have already spent a combined £3 billion on the projects, argued they should still be allowed to go ahead given how far the schemes had progressed.
"The public interest in authorities acting lawfully and the private interest of members of the public in climate change outweigh the private interest of the developers," Lord Ericht decided.
Equinor, Ithaca and Shell will be allowed to continue work developing the fields but not extract oil and gas while the North Sea Transition Authority considers their renewed applications for licences.
The NSTA, which granted licences in 2022 for Jackdaw and in 2023 for Rosebank, will need to consider the effect of downstream emissions from the use of the oil and gas produced.
The Department for Energy Security and Net Zero is preparing to issue guidance "as soon as possible" on how the environmental impact of oil and gas production should be considered in licence applications.
Renewed applications for the Rosebank and Jackdaw fields will be assessed under the new system.
"Our priority is to deliver a fair, orderly and prosperous transition in the North Sea in line with our climate and legal obligations," it said.
Labour, in its election manifesto, pledged not to grant new exploration licences but also said it would not block existing developments from going ahead. The licences in the Rosebank and Jackdaw case are "consents to operate", which are different from exploration licences.
Equinor -- lead developer of Rosebank -- and Shell both pledged on Thursday to continue with development work, hoping that a revised decision would again approve oil and gas production at the two new fields.
The projects had been challenged by environmental campaigners Greenpeace and Uplift because downstream emissions were not factored into the NSTA's original decision.
Philip Evans, senior campaigner at Greenpeace UK, called the legal case a "historic win".
Tessa Khan, executive director of Uplift, stated that the ruling was a "significant win" which meant that Rosebank could not proceed without accounting for its "enormous climate harm".
The ruling stems from last year's UK Supreme Court decision in the "Finch" case, involving a potential oil well in Surrey.
The Finch ruling declared it unlawful for regulators to omit emissions from the eventual use of oil and gas from environmental impact assessments.
Regulators had specifically instructed the Rosebank and Jackdaw developers not to account for those emissions in their submissions.
Both Equinor and Shell welcomed the court's decision to let them proceed with developing the fields and gave no indication of whether they would appeal.
Production from the North Sea has declined in recent years, with investors complaining about costs including "windfall" taxes on their profits levied after energy prices spiked in 2022 following Russia's full-scale invasion of Ukraine.
