A UK energy firm is about to begin drilling in the largest oil field found in the North Sea for at least 20 Years despite a crackdown of net zero on the industry.
EnQuest has plans to bring on two fields that have the capacity to produce 500,000,000 barrels of crude over the next decade.
The sites will reignite a political battle about the future of the North Sea in which Labour had threatened to block any new production, citing environmental concerns.
Energy companies have warned that their planned intervention could lead to the UK cutting off its energy supply before it can find a replacement.
The “Kraken Cluster” that results will have combined reserves greater than Rosebank and Cambo, controversial fields west Shetland that attracted the ire of environmental campaigners. Cambo was found in 2002, and Rosebank two years later.
Rosebank, a project that is expected to produce 350 million barrels, was granted a production license last September, after months of political turmoil. Cambo has 170 million barrels worth of oil but is in limbo after 2021, when Shell withdrew from the project due to the backlash against the environment.
The announcement comes at a time when Labour is planning to raid the UK oil and gas sector for £11bn as part of its proposals to extend and increase the windfall tax. Funds will be invested in “clean energy to reduce bills for families” and to increase the windfall taxes.
The party also proposes to ban all new oil and natural gas drilling licenses.
As governments rush to achieve net zero, energy companies are being urged to reduce oil and gas production while increasing investment in renewables.
Wael Sawan warned that the world faces energy shortages without more investment in oil and gas drilling.
EnQuest’s two new sites Bressay and Bentley are so close together that they can be all connected to the same production systems, based on the giant ship, which is already serving as an oil platform floating for the Kraken area.
EnQuest stated that Bressay is “one of Britain’s largest undeveloped oilfields” and the estimated oil in place ranges between 600 million to one billion barrels.
The oil-in-place measure is the total amount of oil in the reservoir. However, the amount of Bressay’s extraction will likely be between 200 and 300 million barrels.
Bentley, the nearby second field, is believed to be larger and capable of producing over 300 million barrels. This puts it on par with Rosebank.
These amounts are on top of the 137,000,000 barrels that have already been extracted from the original Kraken Field. The cluster is capable of producing more than 700,000,000 barrels.
Offshore Energies UK (the industry trade body) said that continued investment in UK energy projects, including oil, was necessary to secure the UK’s energy supply and to support hundreds of thousands jobs.
It is believed that most of the oil will be exported. This is partly because there is no pipeline connecting to the Kraken oil field, so it’s likely that its oil will be transported by ship to whatever refineries purchase it.
EnQuest will be the one to benefit most from the taxes it pays. Jeremy Hunt is the Chancellor and he has set a windfall tax of 75pc on profits.
Craig Baxter of EnQuest said: “EnQuest is exploring ways to advance the development of Bressay and Bentley.
EnQuest has committed to supporting energy transitions in the UK. Any future field development will take place in line with EnQuest’s commitment to reach net zero scope 1, and 2 emissions by the year 2040.
Mr Baxter said that the gas extracted initially from the Bressay Field would be used as a fuel to power the Kraken operation, replacing diesel fuels which are currently used. This will reduce emissions.
He said: “This will significantly reduce Kraken emissions by replacing diesel, which is currently used to power the field operations.”
A Department for Energy Security and Net Zero spokesperson said: “Data from the independent Climate Change Committee show that we will still need oil and natural gas for decades, even if we reach net zero by 2050.
“We are supporting the UK oil and gas sector with annual licensing rounds. We support around 200,000 jobs and generate billions of tax revenues for public services, and to help with the cost-of-living and retain the skills and expertise required for the green transformation.
“Even with the new oil and natural gas licenses, it is clear that there will be a controlled decline in UK production. This decline will be projected at 7pc annually, and will not result in us becoming a net exporter, or increasing carbon emissions beyond our legally-binding carbon budgets.”