Ithaca CEO plays down Labour Party threat to oil and gas
Rosebank regulatory process still underway
FID on smaller Fotla project likely end-2023
The partners in the UK’s contentious Rosebank oil project are making progress on the regulatory process and working to gain political support amid threats of a moratorium on new projects by the opposition Labour Party, executives at independent Ithaca Energy said May 31.
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Presenting first-quarter results, CEO Alan Bruce played down reports that Labour, tipped for success at the next general election, would outlaw new oil and gas project approvals, and said there was time to overcome Labour’s “uncertainty,” with the vote likely some way off.
It follows reports that Labour leader Keir Starmer will commit to such a moratorium as part of the country’s move to net-zero emissions. A general election must be held by January 28, 2025, with pundits pointing to the latter half of 2024 and polls suggesting a Labour win.
Ithaca is a partner in both Cambo and Rosebank, the latter estimated at 325 million barrels of oil equivalent. The Rosebank operator, Norway’s Equinor, says it is keen to go ahead, despite the heated UK debate over hydrocarbons.
Bruce said Labour policy was not yet fully formed, and the company continued to talk with politicians about the implications for energy security, jobs, fuel prices and emissions.
On the regulatory process, he said the Offshore Petroleum Regulator for Environment & Decommissioning had completed questioning the Rosebank partners and was weighing the matter before passing it back to the main regulator, the North Sea Transition Authority (NSTA).
“It is not actually clear at the moment exactly what the Labour policy is … Various statements have been made in the public or interpreted by the press … a bit of uncertainty there and I think they are not really sure exactly what they mean yet,” Bruce said, adding there was “alignment” between the company and politicians on the UK being open for business and supporting growth and jobs.
“I think it is just a case of spending a bit more time together understanding the ramifications of various different policies… Still a long way off any general election at this point, so continuing to work collaboratively just to try and make sure we have got a consistent understanding of the implications of different policies,” Bruce said.
On the Rosebank regulatory process, Bruce said the partners were working through the approvals process and the project was “in good shape in terms of the maturity of engineering and all the physical work to be able to take [a] Final Investment Decision.”
Some of Labour’s trade union backers have criticized a potential moratorium on new North Sea oil and gas projects, while Conservative Prime Minister Rishi Sunak has pointed to the UK’s expected continued reliance on oil and gas for several more decades, saying in parliament on May 10 that Green Party calls for a moratorium were “economically illiterate”.
Polymer EOR
Ithaca, meanwhile, outlined progress on Phase 2 of the enhanced oil recovery project underway at its Captain heavy oil field, inherited from Chevron in 2019, which involves injecting polymers into the reservoir.
Injection well drilling at Captain is underway and the first boost to production as a result of the work will occur in 2024, with the peak impact in 2025, Bruce said. Captain produced some 22,000 b/d in 2022, according to NSTA data.
However, the company indicated an investment decision on the Marigold oil development now looked unlikely in 2023 as talks continue on a wider development that involves “unitizing” acreage held by Malaysian-owned Hibiscus Petroleum.
Ithaca said a final investment decision was still likely late this year on the smaller Fotla discovery, estimated at 16 million barrels of oil equivalent, which would likely be tied in to the Alba heavy oil facilities and could come on stream in 2026. Ithaca holds a 60% stake in Fotla.
Platts, part of S&P Global Commodity Insights, assessed the North Sea crude oil benchmark Dated Brent at $73.98/b on May 30, down $2.46/b on the day.
