News

Sep 09, 2023

From North Sea revival to renewables, Aberdeen sees corporate interests triumph

While transition to wind energy could benefit the local area, private interests

While transition to wind energy could benefit the local area, private interests are set to create wealth elsewhere

Giant primary-coloured oil platform supply vessels fill almost every bay in Aberdeen's tightly packed city centre port. For the two marine traffic controllers sitting at the very top of the glass tower overlooking the congested harbour, it is like an enormous high-stakes round of the classic computer puzzle game Tetris.

"It's been busy all morning. We’ve only got a couple of berths free [in the north harbour] and the south harbour is full already. There are a few vessels out at sea waiting for berths," says one of the controllers.

Below the marine operations centre, a small army of dockers are loading the vessels’ bare backs with containers of machinery, PPE, water and food supplies. "We are a good barometer for the oil and gas industry. When there is new drilling or maintenance, it is these vessels that are called into use," says Roddy James, the port's chief commercial officer. "And our forecast for the year is showing an increase of about 15% of where we were last year."

After a decade of confusion and stasis, Aberdeen's fortunes have been transformed by the government's response to the invasion of Ukraine, with its focus on securing domestic oil and gas supplies. While the already heavily plundered North Sea is in natural decline, ministers are determined to slow the decline by boosting production and developing new fields. In October more than 70 companies applied for 115 licences to search for new fields and reopen closed wells in 258 areas of the North Sea. Some of the successful projects, which will be announced later this year, could be producing in as little as 14 months.

James, a former deep sea oil platform diver who grew up in Aberdeen, couldn't be more upbeat: "Prior to Ukraine, we would have been talking about how we survive … and now it's all about revival."

But for many this new spurt of prospecting is desperately problematic. In 2021 the International Energy Agency calculated that the world could afford no new fossil fuel exploration if the world wanted to stay within safe limits of global warming. The 6bn barrels of oil and gas that officials have calculated could be profitably extracted from the North Sea would release 2.5bn tonnes of CO2 – seven times the UK's annual emissions.

And even as the prime minister, Rishi Sunak, trumpeted the Aberdeen expansion, the Labour leader, Keir Starmer, appeared to grasp the problem and committed to no new exploration in the oilfields, throwing his lot in with the people hoping that the city can reinvent itself as the energy rather than the oil capital of Europe. Right now, the city feels poised, like so many industries and countries, at a critical fork in the road.

UK ministers and oil industry leaders set out their grand vision for the future of the North Sea more than two years ago: the North Sea Transition Deal promised a "prosperous future" for communities dependent on the oil industry, with reskilling for workers and new jobs in renewables. The plan – a partnership between business and government – focuses on large-scale stuff. Carbon capture, usage and storage (CCUS), offshore wind and hydrogen are set as the way forward. The decarbonisation of the oil industry will lead, according to the deal, to up to "40,000 direct and indirect supply chain jobs in decarbonising UKCS [United Kingdom Continental Shelf] production and the CCUS and hydrogen sectors".

The Scottish government, which doesn't control production in the North Sea, has drawn up its own just transition plan, which has just gone through a consultation. It too promises any changes will benefit workers and communities. Holyrood has committed £500m over 10 years to help communities in the north-east and Moray move away from carbon-intensive industries as part of the plan. Some of this money is being channelled through a national investment bank into the expansion of Aberdeen's port, which supporters of the scheme claim will enable it to play a bigger role in decommissioning old rigs as well as wind turbine servicing. But campaigners have complained much of the funding is going to business groups, often backed by fossil fuel interests, rather than to communities and workers. One of the largest awards went to the Energy Transition Zone (ETZ), a not-for-profit company, chaired by oil tycoon Ian Wood. The firm is developing CCUS, hydrogen production and offshore wind in Aberdeen.

The oilworkers themselves have, as you would expect, mixed feelings about the future. At the Aberdeen heliport, where they are ferried on and off the rigs, they are keen to get home – the hardest part of the job is being away from family and friends. "I’ve got a six and a three-year-old. They find it tough and so does my wife, especially by the third week away," oil worker Dan says. "You have your ups and downs."

Video calls can help but they also remind riggers of what they are missing. "I’ve worked with guys who were out in the North Sea in the 1970s. All they got was one 10-minute phone call. Now they can have instant contact. But they don't know if it's better or worse," says Dan. "You can have too much information."

The money can be good when the industry is booming. Some in the pub are earning £60,000 to £70,000 a year. But crashes can be brutal, sending the guys who were driving a BMW back home to live with their parents.

Despite the insecurity and the hardships, there is pride in supplying the nation with energy in the midst of an energy crisis. "Jackdaw and Cambo [oilfields] have been given the green light now. We’re being told to get out there and drill them. It's because of Ukraine," says Dan. "We’ve got the gas and oil so we may as well use it – rather than buying it in."

There is unease about the climate crisis, alongside a feeling of powerlessness familiar to many. "Of course, I worry [about a warming world]. I’ve got two kids," says John. "But what I can do? I recycle. I try not to use the car. I walk when I can. I get the train. I try not to fly … I do my little bit." But few are in a position to switch to the renewable sector. "There aren't the jobs at my level," says Andrew, 34, whose red-rimmed, dark eyes tell their own story of long shifts in harsh conditions. "Oil requires more people to run and maintain the equipment as opposed to your wind turbines, which are pretty self-sufficient when they are up and running."

Around Aberdeen, there are scores of energy producers, including some of the biggest names in the industry such as BP and Shell. Despite months of requests, none are prepared to take the Guardian to see offshore exploration or even meet to discuss their involvement in new gas and oil projects. Wood Group, founded by Wood, is one of the few willing to make the case for the industry it loyally served for more than six decades; like a few others the company emerged from the fishing industry to become an engineering contractor providing the skilled workforce needed to operate oil rigs in the boom years of the North Sea, and now spans more than 60 countries and employs about 35,000 people.

Last year the company secured half a billion dollars worth of contracts for oil and gas projects in the North Sea, and the firm's order book is growing again. "We expect oil and gas to grow by about 6% out to 2025 in the UK," says Steve Nicol, the group's executive president of operations. "I definitely feel energy security has had a major impact on the outlook for oil and gas."

Just over half of the firm's revenue comes from oil and gas. But it expects an increasing proportion could come from hydrogen and carbon storage in former oilfields. "I care as much about the planet as everyone but there aren't enough renewable energy solutions at the moment," he says. "If people want heat and light in their homes then we will need oil and gas for some time. We can't just stop oil and gas."

Nicol feels oil producers are often unfairly maligned. "There is a bit of demonising of the oil and gas industry," he says. "But the firms we work for will probably have the biggest impact on energy transition." Of a story earlier in the week about the fact that the company took a $430m (£346m) transition loan but has reduced its renewable work, the company says: "Wood's business was repositioned following the sale of the Built Environment business in 2022 and following this change, we paid down two-thirds of the bank loan value. This change was a contributing factor to the reduction in our sustainable revenues in 2022. However, we have stated that we anticipate significant growth in sustainable revenues from sectors such as hydrogen and carbon capture, utilisation and storage through to 2025 and beyond."

Stuart Payne, the new chief executive of North Sea Transition Authority, which assesses applications for licences to drill, sees no contradiction between this role and his other duty, which is to enable the country to reach net zero by 2050. He says fossil fuels still meet three-quarters of the UK's energy demand and will continue to play an essential role for decades to come: "It's a transition, not a cliff-edge."

The authority is aware of 26 new oil and gas projects, with 19 operators drawing up field development plans to start producing oil and gas. Payne maintains it is better to produce oil and gas in the North Sea as it is less carbon intensive than imports, which make up half of the oil and gas used in the country: "Imported liquefied natural gas has a carbon footprint two-and-a-half times the gas we produce off the east coast of England and Scotland."

The government only allowed the latest licensing round to go ahead after it passed what it called a climate compatibility checkpoint. However, the checkpoint only takes into account the emissions created during fossil fuel production, not the far larger emissions from the burning of oil and gas, which account for 95% of the total emissions produced.

Payne says his officials are carrying out their own additional assessments of production emissions but concedes they cannot examine the full carbon cost of the oil and gas, known as scope three emissions. "I accept that excludes scope three emissions. But that's what I can control and that's what I make a difference on."

Dutch physicist Erik Dalhuijsen, founder of Aberdeen Climate Action, disagrees with the central premise from both Payne and Nicol that new fields are necessary to meet demands. Dalhuijsen works by day on petroleum reservoirs but refuses to work on new projects and is pressing the industry to run down hydrocarbons as fast as possible. "They are assuming demand is immutable," he says. "A big home insulation programme would reduce total UK emissions by 15% to 35% and would remove a large part of the energy demand."

And Michael Lazarus, the senior scientist tasked with updating the UN Environment Programme's assessment of oil, gas and coal production plans agrees with Dalhuijsen. "Governments are planning twice the amount of production of fossil fuels that is consistent with a 1.5C pathway," he says on a video call from his home in Seattle. "If they’re serious about meeting their climate pledges – and the UK has a very ambitious one – they need to put measures in place for a decline in production. This goes in the opposite direction. It further puts climate goals at risk."

The government and the industry may want to focus the public attention on developing new oilfields to meet demand in the UK. But, in fact, most of the oil produced in the North Sea is refined abroad and all of it is sold on global markets. This has impacts way beyond these shores. "When you increase production, prices go down," says Lazarus. "That drives demand and slows down the transition away from oil dependence."

The example he gives is simple and stark: if the UK produces, say, 100 additional barrels of oil it may import 100 barrels less but another 20 or 50 barrels are going to be consumed elsewhere and in the UK because prices will fall slightly. "This needs to be reckoned with and built into models," he says. "If you’re having an honest conversation about what are the effects of producing more oil in the UK … it needs include the fact that there's going to be more oil consumed in the world as a result."

If countries make the necessary, urgent energy transition, many of the new fields will not be needed by the time they are producing. They will only be profitable, adds Lazarus, if the governments across the globe fail to make the switch quickly enough. "It is like betting against the world."

These growing tensions are all on show in the battle over the St Fittick's Park, on the eastern fringes of the city. The wetland in Torry, the poorest neighbourhood in north-east Scotland, has been created by local residents, and is perhaps Aberdeen's most unlikely beauty spot. Reeds flap and bend in blasts of salt-edged wind. Grey and blue light catch in watery beds, where ducks dip and preen. Birds shelter in a young woodland of oak, dark green pine and silvery birch trees. However, plans published by the ETZ mean a third of the wetland would be turned into a green industrial hub.

"St Fitticks is the only park we’ve got. It is stunningly beautiful. The wildlife and flowers are second to none. They’ve got no right to touch it," says Betty Lyon, 66, a retired union organiser, who has spent almost her entire life in Torry. "It's only place we’ve got left to get some fresh air for our children."

The Friends of St Fittick's Park group sees the latest threat as another corporate-driven incursion. "The oil industry is using the language of transition to carry on as they have always done and control the pace of change," says Scott Herrett, a resident who also works for Friends of the Earth. "A lot of oil and gas interests are involved in the ETZ."

Herrett wants to see a very different, grassroots-led transition. "We need to ensure that the people most affected, like this community and oil workers, are part of the decision-making, not just consulted," he says. "Then we need to ensure the costs and benefits of the transition are fairly distributed. But at the moment the cost for this development is being paid by the people of Torry."

Some of the millions of public money spent on the ETZ could insulate thousands of homes in Torry, the group suggests. "These houses are cold and damp," says Adrian Crofton, 51, a local GP, another supporter of the campaign." I write regular letters about damp homes asking for people to be moved."

The ETZ says it understands concerns about the loss of green public space, which it is seeking to minimise, but the land is needed to transport large components from the quayside in order to ensure Aberdeen capitalises on the opportunities provided by green energies, such as offshore wind. It says the rest of the park will be improved and that the Scottish government's presumption against further exploration is counterproductive, as it will just lead to higher carbon-heavy imports.

Across the fast-flowing River Dee, Jake Molloy, who heads the offshore energy branch of the RMT and sits on the Scottish government's just transition commission, also questions the route of the transition. "It's bollocks," he says, shaking his head. "We haven't produced a single turbine. We haven't manufactured a single blade. We don't have any battery storage. We don't have the [grid] capacity. We’re not retrofitting our homes. We are doing nothing … apart from waiting for some magical investment genie to come along. It is absolute bollocks."

Worker representatives are in the minority on the advisory bodies overseeing the changes and new renewable infrastructure is likely to remain in private hands, with only one offshore wind turbine owned by a UK government-funded research centre. All the Scottish offshore territory auctioned for wind schemes at the start of the year went to fossil-fuel majors, private energy companies, and operators owned by other states, with one study suggesting there are no guarantees supply chains will even be developed in Scotland.

The RMT has travelled the length of Scotland's east coast in an effort to recruit offshore renewable workers but in all but one port found only one or two small crew transfer vessels. The largest workforce was in Wick, where they were three transporters taking 10 to 12 workers out to the country's biggest windfarm. "That was it," says Molloy.

Most of the jobs are in turbine manufacturing, which invariably takes place elsewhere, and installation is frequently carried out by sometimes low-paid international crews. "There are vessels coming from all around the world from the Philippines, China, Malaysia, Bulgaria and Romania," says Molloy, who has a right to board ships docked in ports to speak to workers. "We are finding guys working for a few dollars a day."

Instead of publicly owned windfarm operators creating jobs and wealth for the entire country, the RMT says Scotland's seabed is being sold off to private interests. It feels like a repeat of the North Sea oil boom to Molloy, who was a fresh-faced 21-year-old plumber when he first went offshore.

"We have not really benefited from oil and gas," says Molloy. "Compare that to Norway, where the entire welfare state is funded by the sovereign wealth fund [which was created with oil profits]. We have the chance to do the same with renewables … but it is passing us by."