Investors Raise Alarm on Prospect of More UK North Sea Drilling

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomePMN BusinessInvestors Raise Alarm on Prospect of More UK North Sea DrillingInstitutional investors are raising concerns over the prospect of UK Prime Minister Andy Burnham supporting more oil and gas drilling in the North Sea.Author of the article: You can save this article by registering for free here. Or sign-in if you have an account.UK Energy Secretary Miatta Fahnbulleh Photographer: Chris Ratcliffe/Bloomberg Photo by Chris Ratcliffe /Bloomberg(Bloomberg) — Institutional investors are raising concerns over the prospect of UK Prime Minister Andy Burnham supporting more oil and gas drilling in the North Sea.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an Account“If what you’re trying to achieve is the trifecta that most governments appear to be looking for in energy policy now, which is affordability, energy independence and decarbonization,” then increasing North Sea drilling “doesn’t achieve any of those,” said Laura Hillis, managing director for responsible investment at the £3.4 billion ($4.6 billion) Church of England Pensions Board.The comments come as the Burnham government signals it’s prepared to boost oil and gas drilling off the coast of Scotland. The prime minister, who has been in office for less than a month, told US President Donald Trump last week that the UK would take a “pragmatic” approach to its North Sea resources, suggesting it would be unwise to “ignore” the country’s untapped oil and gas potential.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againBurnham’s Labour government has yet to announce a formal white paper outlining its complete energy policy. His appointment of Miatta Fahnbulleh to replace Ed Miliband as energy secretary has added to speculation that Burnham will back pro-net zero policies. The government hasn’t decided whether to issue new North Sea drilling licenses. Bloomberg reported last week that Burnham is expected to approve more drilling at the Jackdaw field but stop short of authorizing new licenses, continuing former Prime Minister Keir Starmer’s policy.Hillis dismissed a key argument used in favor of drilling, namely the notion that safeguarding national oil and gas production instead of relying on imports aids Britain’s energy security.“I understand why this is very appealing to the average person who isn’t steeped in the details of energy markets,” she said. But in practice, oil is sold on the international market, so “it makes no difference to the prices that you pay.” What’s more, “it actually does very little in terms of adding to supply,” because the North Sea projects being considered “are very, very small,” she said. “They’re also very expensive.”Investors interviewed by Bloomberg said they will be closely watching Burnham’s energy policy as it evolves, given its importance to the UK’s economic outlook. They’ll also look for signs of whether he sticks with the course set by previous governments to move away from high-carbon energy sources or charts a new one.“Decisions on the UK’s energy future matter not only for energy security and the transition to a more resilient, lower-carbon economy, but also for creating the conditions for long-term investment and economic growth,” said Bruno Gardner, head of climate change and nature at Standard Life Plc. “For investors, the key requirement is a clear and durable policy framework that provides confidence to allocate capital over the long term.”This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.Miliband, who is now Burnham’s foreign secretary, had in his previous role as energy secretary resisted calls from some corners of business and politics to allow new drilling licenses, instead favoring a ramp-up of renewables. But he has also signaled pragmatism on the North Sea. Since replacing Miliband as energy secretary, Fahnbulleh has adopted a similar line, after meeting with executives from the oil and gas industry in Aberdeen.“We’ve got a community that used to be at the very heart of our energy sector that feels that they’re being hollowed out,” she said Monday on Sky News. “That can’t be allowed to happen. That is not something we will let happen under our watch.”Investors monitoring the developments say the latest heat waves should give the government pause before allowing more investment in the fossil fuels driving the emissions behind rising temperatures.“As we sit uncomfortably in heat-wave Britain, we are seeing and feeling undeniable real impacts of climate change on everyday life,” said Miranda Beacham, head of responsible investment at Aegon Asset Management. “The long-term implications from this are even more significant.”Investors now want to see the Burnham government “unlock the full potential of renewable energy we already generate and to transition away from a historic reliance on fossil fuel,” she said. “This requires investment in upgrading and expanding the grid, alongside reforms to planning processes and grid connection policies.”But for now, she said, “rather than helping to further address these challenges,” the government appears to be adopting a “reactive response that risks diverting attention from the structural barriers to the energy transition.”For Rhian-Mari Thomas, the chief executive of the Green Finance Institute, the conversation around the Jackdaw and Rosebank fields “risks becoming a distraction” from more fundamental challenges the new government will need to address.“While projects such as Jackdaw may support domestic energy supply and slow the decline in UK gas production, they do not change the need to attract private capital at scale into clean power, grid infrastructure, energy storage and the electrification of transport, heating and industry,” she said.—With assistance from Joe Mayes.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.