Drilling into the facts on North Sea oil and gas

As the debate over North Sea oil and gas intensifies, this briefing examines the main claims being made and sets out the evidence for why expanding new oil and gas drilling is not in the UK or Scotland’s national interest.

‍In Brief

• New drilling will do little to boost energy security. After 60 years, the UK has burned most of its gas and most of the oil is exported. By 2050 the UK will be almost 100% reliant on gas imports, even if new fields are developed and new licences issued.
• New drilling will not lower bills or protect workers in the long term, with the number of jobs supported by the industry more than halving in the past decade, despite the previous government issuing hundreds of new licences and approving new fields. 
• New drilling is incompatible with the UK’s climate commitments and the international goal of limiting temperature rise to 1.5°C.‍

The UK has burned most of its gas‍

The North Sea is a mature basin with reserves in terminal decline. Most of what’s left is oil, roughly 80% of which is put in tankers and shipped overseas, therefore doing very little to contribute to our energy security. After 60 years of drilling, the UK has burned most of its gas.

Industry claims that “half of the UK’s oil and gas demands could be met from the North Sea” are extremely misleading. They are based on a ‘no constraints’ scenario which the industry itself admits is “considered to be beyond realistic assumptions”. It would require massive tax breaks, bigger even than today’s generous allowances; sustained high oil prices, which hurt consumers and are anyway unlikely, with oil prices forecast to stay low for the foreseeable future; and major industry changes, which are highly improbable given the declining nature of the basin.

According to official projections – even if new North Sea fields are developed – the UK’s reliance on imported gas is set to rise from 55% today to 68% dependent by 2030, 85% by 2040, and 94% dependent on gas imports by 2050. If no new fields are developed, the UK would be 97% dependent on gas imports by 2050 – just fractionally higher than with new drilling. New exploration licences, which this Labour government has committed to ending, will make little difference, potentially reducing our gas import dependency in any given year by just 1-2%. 

Nigel Farage can want the UK to  be “self-sufficient in gas”, Kemi Badenoch can promise to max out the North Sea, and Donald Trump can urge us to ‘drill, baby, drill’, it doesn’t change the geology or economics of the ageing North Sea.

‍New drilling is a bad deal for UK taxpayers

‍North Sea oil and gas is increasingly uneconomic and an unattractive prospect for new investment without generous tax breaks. Former BP CEO Lord Browne has said it is “hard to believe that finding and developing the very limited oil and gas resources that remain will be economic”.

For years the UK has presided over one of the most generous tax regimes for oil and gas, leading to major oil companies paying negative tax.  In 2024, Shell reported a negative UK tax figure of £12.5 million while posting global post-tax profits  of £18 billion. 

Despite the windfall tax, generous tax breaks also mean the UK public shoulders more than 80% of the costs of developing new fields. In the case of Rosebank, the UK’s largest undeveloped oil field, assuming a base-case scenario with a long-term average oil price of $70 a barrel, Rosebank could result in a net loss of over £250 million to the UK Treasury, while the field’s owners Equinor and Ithaca would earn £1.5 billion in profit.

More domestic oil and gas production makes no difference to UK energy bills and will not ease the cost of living crisis. North Sea reserves are owned by oil and gas companies who sell them to the highest bidder at international market prices. North Sea production is too small to influence these prices.

‍New drilling won’t protect workers‍

The number of jobs supported by the oil and gas sector has more than halved in the past decade – from 441,000 jobs in 2013 to just 213,000 jobs in 2023, according to industry data – despite new field approvals and hundreds of new licenses being issued.  

Employment in oil and gas is set to decline regardless of the predicted levels of production from the basin. Even the enormous Rosebank oil field, the UK’s biggest undeveloped oil field, if approved, would support just 255 direct and 137 supply chain jobs in the UK on average over the lifetime of the field, according to its developer Equinor.  

Continuing to focus on new drilling over renewables distracts from the urgent work needed to create good, clean energy jobs to replace those being lost in oil and gas. Robert Gordon University research shows that it is still possible to deliver a transition where reductions in the oil and gas workforce are matched by increased levels of employment in adjacent energy sectors. Managing this ‘goldilocks zone’ is vital and requires urgent and substantial investment in domestic supply chains.  The best way to protect energy workers in the UK, and particularly Scotland, and the communities they support, is to create good, renewable energy jobs and support people into these industries with a long-term future.

Oil and gas firms aren’t investing in clean energy‍

The vast majority of offshore oil and gas companies operating in the North Sea are not shifting investment away from fossil fuels. Three quarters of North Sea operators plan to invest solely in oil and gas production between now and 2030. 

Contrary to industry claims that the windfall tax on oil and gas profits is threatening their ability to fund the UK and Scotland’s transition, the lack of renewable investment is a long standing issue. Since 2015, just six offshore oil and gas companies have invested anything in UK renewable energy projects. For some oil and gas firms, including Shell and BP, this is part of a broader pivot away from investing in renewables. 

This lack of low carbon investment has serious consequences for oil and gas workers, who are demanding clear pathways into renewable industries with a long-term future.

‍UK production is not better for the environment

‍Claims that UK gas production is ‘better for the environment’ than imports are extremely misleading. It compares UK oil and gas to the very dirtiest gas imports (LNG) which make up a minority of the UK’s overall imports. The majority of the UK’s gas imports come from Norway via pipeline, which are less than half as polluting than domestic gas production.

The idea that UK oil and gas is somehow ‘cleaner’ than imports relies on the sector doing much more to cut its own emissions. However, the industry is currently not on track to meet its targets to reduce emissions from production. These voluntary targets  have been described as “weak” by the Climate Change Committee.

Meeting climate thresholds means no new oil and gas fields‍

There is overwhelming scientific evidence that new oil and gas projects are incompatible with climate thresholds. The emissions from burning reserves in existing and planned oil and gas fields globally would exceed the remaining carbon budget for 1.5°C by a long way. Opening any new North Sea oil and gas fields is therefore inconsistent with achieving the global goal of limiting warming to 1.5°C. 

Whilst advocates for more oil and gas drilling claim that emissions from a single new oil and gas project are ‘a drop in the ocean’ compared to global emissions, this ignores the cumulative impact of new developments. The proposed Rosebank field would – if approved – create more CO2 than the 700 million people living in the world’s poorest countries produce in a year. 

The Climate Change Committee states that "UK policy on future oil and gas production should be aligned with Global Stocktake calls to accelerate the transition away from fossil fuels". While acknowledging that the UK will continue to need some oil and gas until it reaches net zero, the Committee is clear that: ‘this does not in itself justify the development of new North Sea fields’.

We are already overshooting critical climate limits. The damage that decades of burning fossil fuels has done to our planet is severe and only getting worse, whether that’s ever-more-frequent flooding and storms in the UK and Scotland, or lethal temperatures and wildfires around the world. 2024 was the first full year that the world's average temperature exceeded 1.5°C above pre-industrial levels. 

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