Ed Miliband is planning to encourage drilling in the North Sea despite a manifesto promise not to grant new licences on new parts of the British sea bed.
The energy secretary is looking at ways in which the government can allow companies to look for and produce more oil and gas without breaking Labour’s pre-election pledge not to issue new licences on new fields.
The plans, which will be announced in the coming months as part of a wider strategy for the North Sea, come amid pressure on one side from climate activists to stop all drilling, and on the other from Donald Trump to “drill, baby, drill”.
A government spokesperson said: “The strategy will set out how the government intends to meet its manifesto commitments to ensure no new licenses to explore new fields and maintaining existing fields for their lifetime.” They said the government would meet its manifesto commitments “in full”.
Miliband has been working on proposals for the North Sea for months as the government looks for ways to maximise the lives of existing oil and gas fields without allowing completely new exploration.
Labour promised in its manifesto not to grant any new licences on new fields, and ministers are now looking at how they can implement that while also gaining an economic return from the sizeable industry which already exists. Oil and gas companies employ about 30,000 people from their base in north-west Scotland.
Officials are understood to have looked at a range of proposals in recent weeks, including one that would incentivise companies to explore and drill in parts of the North Sea other companies have previously abandoned.
The plans were initially proposed in a paper published in August by Prof John Underhill, an expert in the energy transition at Aberdeen University. Underhill called on the government to issue “bespoke” oil and gas licences to companies to explore and produce hydrocarbons in places that have previously been deemed unprofitable.
The plan would involve incentivising companies that own infrastructure such as gas pipes to return to old fields in the hope of extracting more fuel. This could be married with a range of measures to make the industry less carbon-intensive, including banning the routine burning of excess gas, known as “flaring”.
Underhill has met officials from the energy department in recent weeks to discuss his proposals, which he says could be delivered without granting new licences on previously unexplored fields.
Underhill told the Guardian: “Bespoke permitting, tied to critical infrastructure, would speed up the process of evaluation and development of existing discoveries and undrilled prospects. A new permitting regime would extend the life of critical infrastructure, enable growth and protect jobs by enabling discoveries to be evaluated on a case-by-case basis and speed up the time from award to production.”
The plan is controversial among green campaigners. Tessa Khan, the executive director of the climate group Uplift, said: “While we remain distracted by ever diminishing amounts of oil and gas, we are missing the huge opportunities to create good, clean energy jobs in the UK, in domestic wind manufacturing in particular, that will last us long into the future.”
Officials are also working on plans to allow companies to explore new parts of the seabed from sites they already operate, in an process known as “tie-backs”.
Allies of the energy secretary said no final decisions had yet been taken.
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The oil industry claims it could extract more than 7bn extra barrels of oil and gas if given permission to explore and produce in waters close to those in which they already operate. However, environmental campaigners say this would recover “negligible” amounts of extra fuel while distracting from the shift to renewables.
Treasury officials believe that incentivising production would be one way to promote economic growth in the short term, while Labour is under mounting pressure from unions and rival politicians to protect the industry.
Trump used a speech at the UN on Tuesday to lambast the prime minister over the UK’s push to reach net zero by 2050.
The US president said of the UK: “‘They have tremendous oil left and, more importantly, they have tremendous oil that hasn’t even been found yet. And what a tremendous asset for the United Kingdom, and I hope the prime minister’s listening because I told it to him three days in a row – that’s all he heard: ‘North Sea oil, North Sea’”
As well as setting out the future rules for oil production in the North Sea, Miliband is likely to face a decision at some point over whether to approve two controversial new oilfields called Rosebank and Jackdaw.
Shell and Equinor, the oil companies developing the sites, have to reapply for environmental permission after a judge overturned their previous applications. If they do so, the decision on whether or not to grant it will fall to Miliband.
The energy secretary could allow those sites to go ahead without breaking Labour’s manifesto promise, given they already have licences and he would only be issuing environmental permission.
