As oil majors exit the North Sea, the region’s new players bring a track record of lobbying against climate policy, polluting the environment, and committing alleged labour violations.
Companies with histories of environmental abuses and alleged labour violations, backed by private equity and with ties to foreign governments, stand to profit from North Sea oil and gas, new data shows.
Campaigners say the trend towards private ownership in the North Sea is potentially “catastrophic” for the UK’s plans for an equitable transition towards low carbon industries.
In March, the UK government ignored campaigners’ calls to end the issuance of offshore oil and gas licences and reverse its policy of maximising economic recovery of fossil fuels in the North Sea, leaving the door open for more privately-owned and less-transparent companies to purchase and profit from North Sea assets.
As larger players like BP and Shell offload these ageing assets, a new set of oil and gas producers – nearly a third of which are private companies – are taking hold of the UK’s energy ‘crown jewel’. Oil and gas production accounted for by private companies has more than trebled in the past ten years, from eight percent in 2010 to 30 percent in 2020.
Unlike the oil majors, many of these companies do not face public scrutiny, are not accountable to shareholder pressure, and have a lesser stake in the UK’s efforts to transition to a low carbon economy.
So who are these new North Sea players? Using data from the newly-launched interactive database Who Owns the North Sea? from think tank Common Wealth, DeSmog analysed 142 companies holding at least part-ownership of oil and gas licences in the North Sea. Of the 1,402 unique blocks in the region covered by Common Wealth’s map, 506 show a private or state-backed entity with a controlling stake.
“Shareholder activism or engagement strategies are severely limited when companies are privately held by ultra-wealthy owners or controlled by distant and often undemocratic foreign states,” said Mathew Lawrence, director of Common Wealth.
“Public campaigning is harder when the targets are often opaque, poorly known, or insulated from pressure; and the imperative to divest from fossil fuel ‘stranded assets’ that could harm corporate balance sheets in the decades ahead is less pressing if a company’s business model is explicitly maximising returns on their assets in the short-term,” he said.
The North Sea oil and gas industry became a net drain on taxpayer funds in 2016, with one report estimating that the UK government – and ultimately, taxpayers – has lost more £250 billion in 13 years by giving tax breaks to the industry. The UK’s tax regime makes it the world’s most profitable market for oil and gas producers to develop large fields, as of 2021.
DeSmog found owners that promote climate science denial, organisations accused of serious labour violations, companies with links to controversial projects like the Dakota Access Pipeline in the US, and state-owned fossil fuel companies with little incentive to help the UK reach its net zero goals, including China, Russia, and the United Arab Emirates.
“This shift towards private ownership in the North Sea is a gathering storm with the potential to be catastrophic for the prospects of a fair and rapid transition away from fossil fuels,” said Ryan Morrison, a Just Transition campaigner for Friends of the Earth Scotland.
In the cases of companies that have been shown to have acted in ways at odds with the UK’s social and environmental goals, he added, “the Government is standing by as these rogue firms, with no interest in the people likely to be impacted, gamble on extracting short-term profit from destroying the climate.”
Climate Denial and Anti-Climate Action Lobbying
A number of the new North Sea players have links to individuals and organisations known to promote misinformation on climate change and lobby against climate action.
Orcadian Energy (formerly Pharis Energy) is a UK-based oil and gas exploration company with interest in four North Sea licences. Steve Brown, Orcadian’s founder, regularly shared posts on social media from his recently-deleted Twitter account that cast doubt on climate policy and modelling, including content from the Global Warming Policy Foundation, the UK’s principal climate science denying group.
In May 2021, Brown tweeted out an article by Bjørn Lomborg – author of The Skeptical Environmentalist and Cool It, books that downplay the risks of global warming – about how “exaggerations about climate change” are “destroying our ability to make sensible decisions for the future”. Brown added: “This obsession with climate to the exclusion of many other issues will literally kill millions”.
In other tweets, he said the “climate emergency” was “fake” and claimed the main cause of climate change was solar activity, not greenhouse gas emissions, which he called “benign”.
Although the company has plans to reduce emissions when developing its latest heavy oil field and claims to be “fully committed” to the UK government’s 2050 net zero emissions goal, Orcadian’s company Twitter account also promotes a narrative popular with climate science deniers: that the world’s net-zero commitments will inevitably lead to poverty for millions. Orcardian recently tweeted about the International Energy Agency’s (IEA) recent “Net Zero by 2050” report, claiming that “If the world does this it will make energy poverty the prevailing state of being for all but the elites”.
Orcadian Energy did not respond when DeSmog presented these statements to the company, and Brown’s Twitter account was deactivated after DeSmog approached the company for comment.
Beyond promoting climate science denial, other companies have ties to organisations with histories of spreading misinformation about the fossil fuel industry or climate change.
Non-executive chairman of EnQuest, Martin Houston, which has an interest in 22 North Sea licences, is a council member of the US National Petroleum Council, an oil and natural gas advisory committee to the Secretary of Energy which knew about the dangers of climate change as far back as the 1970s but worked to publicly downplay the industry’s role.
Houston is also a member of the advisory board of the influential Global Energy Policy unit at Columbia University’s School of International and Public Affairs, which is funded by major oil and gas players including Exxon, BP, and Saudi Aramco.
Similarly, Jim House, CEO of Neptune Energy, which produces 12 percent of the UK’s gas supply and has interest in nine North Sea licences, served on the Upstream Committee of the American Petroleum Institute (API). The API is the US oil and gas industry’s largest trade association, spending over $98 million on direct lobbying activities since 1998 and funding organisations that oppose regulations aimed at tackling climate change.
In a recent undercover investigation by Unearthed, a senior lobbyist for ExxonMobil admitted that the company uses trade associations including the API as the “public face” for its lobbying efforts in Congress to secure favourable legislation on toxic “forever chemicals”. EnQuest did not respond to DeSmog’s request to comment for this story. Neptune Energy did not respond to DeSmog’s request for comment in time for publication, but has since told DeSmog that it does not consider its activities ‘rogue’ in any way and says that it is a “responsible owner of assets in the UK North Sea with robust corporate governance and carbon reduction policies in place”.