(Bloomberg) -- Shell Plc urged a UK court not to threaten the commercial viability of a North Sea gas field by halting its development, despite acknowledging that the approval process for the project was flawed.
In a case that’s likely to have significant implications for the future of the country’s oil and gas industry, Shell accepted that a legal error was made in the granting of its license for the Jackdaw gas field off the coast of Aberdeen, but asked Scotland’s top civil court to let the development continue.
Greenpeace and Uplift are challenging the approval of the Jackdaw and Rosebank fields because their environmental impact assessments only took into account greenhouse gases resulting from extraction of the oil and gas, not the much larger carbon emissions from the use of the fuels by consumers.
The environmental groups are demanding a halt to both developments until a new approval process can be completed. Christine O’Neill, representing Shell, said the company had “acted lawfully” throughout and asked the court to focus on suitable remedies, taking into account the significant time and investment already put into the project.
“Any suggestion that a temporary pause and recommencement of work at a later date is easy is simply flawed,” O’Neill said. Doing so would simply not be commercially viable, she told the Court of Session in Edinburgh on Wednesday.
The challenges to Jackdaw and Rosebank are being heard together, with developers of the latter project — Equinor ASA and Ithaca Energy Plc — due to present their arguments in the coming days. The outcome could have significant implications for the future of the North Sea oil and gas industry.
The UK government, under pressure to reduce carbon emissions and meet net zero targets, said earlier this year that it would not contest the case. That decision came after the country’s Supreme Court ruled that environmental impact assessments for oil and gas production facilities must consider the effects of burning the fuel produced, so-called Scope 3 emissions.
The Edinburgh court could take no action, or it could tell the companies to halt ongoing work and resubmit environmental impact assessments for fresh approval, potentially a costly and time-consuming process and with no guarantee of success.
Chris Pirrie, representing the UK government, told the court that “the current thinking of the secretary of state is not to begin the EIA process from the start, rather to ask for further information.” That thinking may change, depending on the outcome of the Scottish court case, he said.
Climate Impact
“Work must stop, no more, no less,” Ruth Crawford, who’s representing Greenpeace, told the court. Greenhouse gas emissions from Rosebank and Jackdaw would be “sizable and significant” and have a “substantial impact” on the climate, environment and human health, she said.
“Where a substantive error of law has been established, and where that error is material, and when it occurs on an issue of such significance as climate change, a presumption arises that unlawful decisions should be reduced and the rule of law observed,” she said.
While the environmental groups are not asking for work to be undone or equipment removed, they want further development to halt until there’s a new decision on the basis of a fresh environmental impact report that includes Scope 3 emissions. Otherwise, a crucial part of the decision making will never happen, Crawford said.
“Equinor and Ithaca should not be seen as the victims of an unlawful decision, they should be seen as the beneficiaries,” Alastair Duncan, who’s representing Uplift, told the Edinburgh court.
While Shell accepted that a legal error was made in the granting of its license, it told the court that its assessment had been made in good faith and in compliance with the law as it stood at the time. It therefore asked the court to take no or minimal action.
“We accept the Supreme Court’s ruling in the Finch case, but our position is that Jackdaw is a vital project for UK energy security and the project is already well advanced,” Shell said in a statement. “Stopping the work is a highly complex process, with significant technical and operational issues now that infrastructure is in place and drilling has started in the North Sea.”
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