A raging debate currently persists regarding the future political economy of the UK Continental Shelf (UKCS) in relation to the prudence of new field developments in the province. Leading up to the COP26 global summit in November 2021, this debate had sharply centred on the pending application for consent to develop the Cambo field in the west of Shetland region of the province. Opposers of the field have called for a rejection of the application for consent to develop the field, citing the recent IEA and UN IPCC reports urging significant reductions in petroleum developments globally. Proponents of the field however argue that oil and gas remain vital to the UK economy as it transitions to net-zero. The controversy surrounding the field has led to the withdrawal of Shell Plc from its partnership with SP Energy on the Cambo project. Shell Plc cites economic viability concerns for its withdrawal. Industry observers however speculate that the field is commercially viable, and that Shell Plc’s withdrawal is predicated on other considerations. This paper examines the economic viability of the Cambo field, finding that the field is inherently economically viable as per the established benchmark requirements for three commonly used investment metrics. Consequently, the paper recommends that the UK Government approves the application for consent to develop the field, contingent on a stringent carbon emissions reduction programme for the field being implemented. This recommendation is consistent with a ‘just’ approach to energy transition, as well as the UK’s policy of maximising economic recovery (MER) from the wider UKCS province.
|Place of Publication||Aberdeen|
|Publisher||University of Aberdeen|
|Number of pages||25|
|Publication status||Published - Feb 2022|
|Name||Discussion Papers in Economics and Finance|
- Energy Transition