Harbour Energy to develop North Sea gas field despite threatening to pivot away from UK
Harbour Energy has been given the go-ahead to develop a new gas field in the North Sea, despite previously warning investors of its plans to pivot from UK markets.
The largest domestic fossil fuel producer has received approval from regulators to produce gas supplies from the Talbot gas field, which is calculated to have 18.1m barrels of oil equivalent supplies.
It is located 173 miles off the coast of Scotland, with Harbour aiming to begin development drilling this spring, according to previously submitted documents ahead of its approval today.
Production is expected by the end of 2024, which will be routed back to its platform via a new subsea production flowline.
The decision was rubber stamped by both the North Sea Transition Authority and the Offshore Petroleum Regulator for Environment and Decommissioning, with the government eager to boost domestic development to reduce its reliance on overseas energy following Russia’s invasion of Ukraine.
It even included North Sea oil and gas exploration in its supply security strategy despite hiking the windfall tax.
While the approval of the site is not a surprise, it does follow Harbour announcing plans to readjust its business plan and shift its resources to overseas projects – with the company currently relying on the UK for 85 per cent of its revenues.
It complained that the Energy Profits Levy – an additional 35 per cent hike on North Sea oil and gas projects – helped wipe out its £2.1bn profits, with the company announcing post-tax earnings of just £7m despite soaring oil and gas prices.
Overall, it priced the windfall tax as a £1.3bn hit, the biggest penalty it suffered among other levies.
Harbour investment a boost for UK energy goals
Harbour declined to comment on the latest announcement, despite holding a 67 per cent interest in the project, with Eni holding the remaining stake.
It first submitted an environmental statement for the scheme last May and later greenlit capital to fund the development alongside the Leverett appraisal well in August.
Greenpeace UK has criticised today’s announcement, and argued it undermines the government’s plans for a ‘Green Day’ to compete with the renewables agenda in the US.
The group’s climate campaigner, Philip Evans, said: “The government is approving new oil fields the same week as its so-called ‘Green Day’ – no wonder ministers are trying to rebrand it. They’ll claim it’s in the name of energy security but, since the oil and gas belongs not to the UK but the company extracting it, and will be sold on the open market to the highest bidder, this couldn’t be further from the truth.
“If the government was genuinely serious about securing the future of energy in this country, they’d throw everything at homegrown renewables – which just so happen to be the cheapest form of power there is. This, along with improving energy efficiency, upgrading our outdated grid and increasing storage capacity, so we’re geared up to cope with future demand, is the only way to lower bills and secure a safe future.”
The news is a vote of confidence for the North Sea, with Harbour pulling out of the licensing round in January for new projects.
Enquest and Total have also pared back investment plans in recent months for the North Sea, while Shell revealed it’s considering new investments on a case by case basis.
Looking ahead, the North Sea industry is hoping the government brings in a price floor for the windfall tax – which will kick in when oil prices drop below “normal levels” – which has not yet been agreed between government and the industry.
City A.M. understands the government has conceded to industry amid concerns Equinor would reconsider its funding pledges for the massive Rosebank oil and gas field.
Equinor has confirmed to City A.M. it is going ahead with the project, with the growing possibility it could be approved as soon as this week.
A spokesperson said: “We are committed to develop the Rosebank field. We and partners hope to make a final investment decision and award the first contracts this year.”