The controversial Cambo oil and gas field 75 kilometres west of the Shetlands re-emerged as a probable extraction operation today, as Ithaca Energy bought out its majority investor. The project had been in doubt, following Shell’s abandonment of its 30% stake in December.
Under terms of the deal announced this morning, Ithaca Energy will buy Cambo’s 70% majority owner Siccar Point for an initial $ 1.1 billion, with a further $ 360 million to follow, dependent upon sales revenues realised and other contingencies.
Included in today’s deal are three more fields, including Siccar Point’s 20% non-operating share in Rosebank, another marine plot to the north east of Cambo. A final investment decision to begin production from Cambo and Rosebank is scheduled by Ithaca for next year.
Objectors during the UN’s CoP26 conference in Glasgow in November pointed out Cambo would likely imperil the UK’s Net Zero ambitions for 2050.
Surveys show the field, in waters a kilometre deep, has an estimated 170 million barrels of exploitable oil, enough to produce for 25 years, ranking it among the largest unexploited oil fields in British waters.
After months of equivocation, during CoP26 Scotland’s first minister Nicola Sturgeon declared her opposition to Cambo. Her partners in the Holyrood government, Scotland’s Greens, are also opposed, as is Labour at Westminster.
Yesterday’s energy security strategy by the Johnson administration signalled a return of North Sea hydrocarbons, together with offshore wind and nuclear, to front and centre of Britain’s transition by 2030 towards a supposedly less carbon-intensive energy mix. Johnson couched his enthusiasm for home-grown hydrocarbons with the promise of an offshore licencing task force.
Meeting the 2050 Net Zero goal, according to the strategy, will see Britain by mid-century still consuming gas at 25% of present levels. Extractable reserves yet to be used in British waters amount to 7.9 billion barrels of oil and 560 billion cubic metres of gas, according to yesterday’s document.
On new gas and oil extraction, D-BEIS and Johnson commit to speeding projects by “establishing …’regulatory accelerators’, providing dedicated, named project support to facilitate rapid development “which could take years off the development of the most complex new opportunities.”
“Electrifying offshore production” is held out by the paper as a solution “to ensure our gas remains the low-carbon choice”. It promotes emptying fields as reserves for carbon capture and storage.
Ithaca Energy was founded in Alberta, Canada in 2004. Three years ago it bought Chevron’s North Sea extraction business.
On Cambo’s emissions, Ithaca Energy’s chair Alan Bruce today claims the field can be operated at levels of carbon intensity less than half of the average UK field, and lower than global averages. Development of Cambo and its three sisters will be undertaken using the latest technology, and without a need for routine flaring.
Ithaca is pledged to reduce CO2 output by 25% within three years, the company adds.
A month before CoP26, Greenpeace erected a 12-foot oil-splattered statue of Johnson – pictured – near Downing Street, calling on him to block Cambo’s permitting.
Philip Evans, the protest group’s spokesperson on oil, said at the time : “Johnson must stop Cambo, and instead prioritise a just transition to renewable energy to protect consumers, workers and the climate from future shocks. If he doesn’t, he will be remembered as a monumental climate failure”.
