Day: October 28, 2026

From The Daily Sceptic

By Ben Pile

One of the most curious responses to the ongoing controversy around North Sea oil and gas is that permission for developments should not be granted because the wells are drying up. I’ve long argued that the authors of green arguments owe little to their maths teachers, but any sense of logic or proportion is often conspicuously absent. After a great deal of delay, the Jackdaw field has finally been given consent by the Government, though the Rosebank field looks set to be denied. This has increased the volume of chatter from green quarters, the angry flurrying of which further exposes its departure from reality.

Ahead of the Government’s Jackdaw decision, it was the Guardian that claimed that “Heat pumps and insulation would cut UK living costs more than new oilfields, study suggests.” The ‘study’, however, seemed to be merely a blog post published on the website of the influential green think tank E3G a week earlier. Rather than presenting any new research, the post collected some anti-North Sea development talking points, most of which were themselves scraped from other green blob-funded fake civil society organisations.

“North Sea revenues are declining dramatically,” claims E3G. In support of this claim, it produces the following alarming chart, which does indeed look volatile. It shows a precipitous decline in revenues at the start of the preceding decade, spiking again during the post-lockdown era, followed by a projection back to zero. “New licences cannot restore these revenues,” it asserts.

But E3G’s chart is misleading. Yes, revenues are volatile. But the causes of this volatility and its tendency towards zero are not direct representations of geological reality. This is shown by a chart of the same data on an axis that spans the history of North Sea oil and gas.

In 1984, the Treasury made £40 billion from North Sea oil and gas revenues in today’s money. These revenues diminished into the 1990s to levels we have today, before increasing through the 2000s, into the precipitous decline seen in the 2010s. So E3G’s argument is falsified by data of which it shows only a small window.

But what caused that volatility? There is obvious correspondence between oil prices and revenues. Revenue tracks oil prices through the 1980s and 2000s. Yet high prices did not produce big revenues in the 2010s. Another part of this story is the tax policy context. The Institute for Fiscal Studies (IFS) provides the data.

The IFS’s chart is slightly outdated – the Labour Government increased and extended the ‘Autumn Statement’ oil and gas tax regime, such that the figure is now 78%. But that’s not important to understanding the historical picture. It also puts the current regime in context: the North Sea has often been subject to quite punitive taxes – above 80% for nearly the entire 1980s. Wells developed after 1993 were taxed at increasing rates – from 30% in the early 2000s to over 60% by the early 2010s – mostly under the Labour government but topped off by Chancellor George Osborne in 2011.

High tax rates didn’t dissuade record levels of investment, driven by rising energy prices. According to a 2017 UK government analysis, between 2010 and 2014, capital expenditure nearly doubled. But very little of this went on exploration and appraisal; most went on developing existing assets. A 2015 analysis by Professor Alexander Kemp at the University of Aberdeen for the Scottish Government suggested that the 2011 tax rises “by reducing full cycle returns to investors could also have played a role in curtailing exploration and appraisal”. The subsequent collapse in energy prices then undermined business plans, and turned revenue net negative for the years 2015 and 2016.

Rising costs and diminishing geological prospects may certainly have played their roles. But with little more than 5% of total expenditure going on exploration at peak prices, the image painted by green organisations of a desperate scrabbling around for the last drops of oil and gas is hardly supported. The viability of North Sea prospects is a much more complex story, and one that is as much affected by politics as by the state of the resources. And it is notable, moreover, that this episode coincided with the shale gas and oil controversy, in which green blob-funded organisations launched high-profile anti-fracking campaigns to sour the public mood against hydrocarbon resources of all kinds.

With fracking and conventional energy production, the green claim is a curious paradox. At the same time as they demand the prohibition of further licensing, they argue that the resources are exhausted, or not economically recoverable. But if they are not viable, then why the panic about their exploitation bringing about ‘Thermogeddon’? They can’t claim that they’re concerned for the poor investors behind Jackdaw and Rosebank, who might lose their shirts.

The paradox doesn’t stop there. “Tax revenues from the North Sea were about £4 billion in 2025–26, but upstream tax relief and support measures amounted to an estimated £3.26 billion,” claims the Guardian. The issue upsetting the newspaper and the green lobbying outfit is that firms are able to write off costs for decommissioning, such as capping well heads. As decommissioning costs rise, the taxpayer may be left as the underwriter if energy companies find themselves underwater at the end of their projects’ lifecycles.

Decommissioning costs are rising. According to Offshore Energies UK, “Decommissioning accounted for 15% of total oil and gas expenditure in the [North Sea] in 2024 and is expected to rise beyond 30% by the end of the decade,” and “decommissioning spend could potentially overtake capital expenditure as early as 2028”. But caution, again, is needed before rushing to the conclusion that this is owed to inherent issues with oil and gas production or with geology.

For a start, all forms of construction (of which decommissioning is a subset) are increasing in cost. This has become a fetter on all forms of development, green or otherwise, and this drag on growth has become the focus of a new wave of civil society organisations (or think tanks), some of which are green blob-funded, but which invariably pin the blame on regulation.

Perhaps the most notorious example of cost explosion has been the Botley Road railway bridge at the edge of Oxford’s city centre. With an initial cost estimate of an already eye-watering £161 million, construction began in 2023 but hit problems. It was completed last month amid global controversy. “Why does it cost £237 million to build a railway bridge?” asked Sam Dumitriu, Head of Policy at Britain Remade, in the Spectator.

But Dumitriu’s question might be better asked of Britain Remade’s major funder, the European Climate Foundation (ECF). ECF and its parent organisation, the Climateworks Foundation, take credit for, among many other things, leading the development of the European Union’s 2050 roadmap – an agenda that was all but explicit in its ambition for the deindustrialisation of the entire continent, including Britain. That agenda required the dismantling of coal-fired power stations, and it required the dismantling of oil and gas production, not merely emissions-reduction.

Deindustrialisation costs, and in turn increases the costs of everything that industrial society depends on, including bog-standard railway bridges. And that takes us to the second point. The decline of the North Sea is a policy decision. It was signalled extremely clearly by the incoming Labour Government that no more licences were to be issued. And that included the fields that had been explored, but had not yet been fully developed. Most notably, this held up the Jackdaw and Rosebank fields, which were discovered in 2005 and 2004 respectively, and had not yet received full consent by the time of the change of government. That is to say that it was government policy to prevent the fruits of two decades of oil and gas exploration coming onstream. Moreover, those two decades have been years in which governments of all parties have made clear their intention to ultimately destroy the hydrocarbon sector. And that is almost certainly reflected in the economic data pertaining to North Sea capital expenditure, including the relative proportions of exploration of new fields vs expanding existing concerns, and vs decommissioning costs.

But perhaps simple greed motivates this irrational environmentalism. The Guardian offers no evidence but claims that “The Government’s £15 billion warm homes plan […] would slash £1 billion a year from household energy bills across the UK” and “would draw in a further £15 billion in private investment”. But private investment in the North Sea – and indeed in fracking – would easily rival that annually, and would moreover create the possibility of returning prices to their 2003 lows – and lowering domestic energy prices accordingly, by far more than taxpayer-funded subsidies. Even if it were free money, £30 billion would buy only something like two million heat pumps – a far cry from the 28 million homes and countless commercial and public buildings that need heating too. Deindustrialisation costs, and there’s a lot of money needed to meet green policy objectives.

If green policy, advanced on bullshit spun by fake charities like E3G and pumped into the public sphere by the Guardian, forces homes into spending £tens of thousands each, then £trillions of finance will be required from financial institutions. It can only be a coincidence, then, that the funders of the green blob, including the ECF’s and the Guardian’s ‘philanthropic’ grantors, are typically hedge funds and their proprietors with interests in ‘low carbon finance’ and suchlike. And if it wasn’t merely a coincidence – which it certainly was – that would make the green movement in toto nothing more than an extremely cost-effective financial services marketing and lobbying operation.