UK Approves Long-delayed Jackdaw Gas Field on Energy Security Grounds

LONDON, Oct 21 (Reuters) – Britain on Wednesday approved the Jackdaw North Sea gas field, ending years of legal and political wrangling as the Labour government seeks to balance its climate goals with energy security concerns.

Energy minister Miatta Fahnbulleh said the project would begin supplying gas by the end of this month, helping ease energy costs that have surged during the Iran war.

Higher energy prices have weighed on households and businesses, dragging on Britain’s economy and prompting US President Donald Trump to repeatedly urge Prime Minister Andy Burnham to expand North Sea drilling.

The government said Jackdaw would raise domestic gas production by about 6% at peak output and operate for up to 11 years, calling it “a source of national strength” during a period of global instability.

Jackdaw, at its planned peak production of 40,000 barrels of oil equivalent per day, would cover just under 4% of Britain’s daily gas demand, according to Reuters calculations based on government data.

“At a time when people are really struggling, it’s right that we look in a responsible way at maximizing the existing energy reserves we have in Britain that could help,” Burnham said.

NEW ENERGY WEALTH FUND

Burnham, who took office in July, has sought to balance pressure to tackle rising bills with demands from some Labour lawmakers to reduce fossil fuel use.

Trump said on social media the decision was “Great news for the wealth and prosperity of the United Kingdom, and the wonderful region of Aberdeen.”

Oil and gas production in the British North Sea goes back to the 1960s, generating tens of billions of pounds in tax revenue over several decades and was a pillar of Margaret Thatcher’s government. Hydrocarbon production has been in steep decline in the new millennium.

Alongside approving Jackdaw, the government announced a new Energy Wealth Fund with an initial £2 billion ($2.7 billion) investment to channel oil and gas revenues into the transition to cleaner energy.

The move aims to demonstrate that Britain remains committed to its climate targets despite backing a new gas project, following the country’s hottest summer on record.

The Green Party called the approval “climate vandalism.”

Fahnbulleh said bringing Jackdaw into production was compatible with Britain’s legally binding target of reaching net zero emissions by 2050.

Asked about the bigger Rosebank oilfield, slated to produce 70,000 boed primarily of oil, Fahnbulleh said she had yet to make a decision.

Both fields have been in limbo after climate activists successfully challenged their permits in the courts and forced the developers to resubmit applications that take into account the planet-warming emissions from burning, rather than just extracting, the hydrocarbons in them.

“Jackdaw is a gas field that essentially caters for the UK market, so it’s gas that goes into our homes and businesses here. Rosebank is an oil field that is predominantly about exports,” she told Sky News.

Even if both Jackdaw and Rosebank come onstream, their output would be small on a global scale and do little to slow the basin’s long-term decline.

Jackdaw is run by Adura, a joint venture between Shell SHEL.L and Norway’s Equinor EQNR.OL. Shell welcomed the government’s decision.

“Long-term energy projects depend on a competitive and stable investment environment, alongside timely and predictable regulatory decisions,” Shell said.

($1 = 0.7476 pounds)

(Reporting by Sarah Young and Kate Holton. Additional reporting by William James and Shadia Nasralla; Editing by Kate Holton, Mark Potter and Jan Harvey)

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