Member Info for Dumbly

At the half year results average production was 42.8 boepd, the guidance for 24 remained 41-45k boepd, and Magnus was averaging 15,163 boepd. Assuming Magnus output remained the same until the “early November” outage and it was over a few days before today’s Operations Update, then Magnus in this period would have been down around 225k barrels of oil in total. The message in today’s update is the company has gone from an actual 42.8 boepd average at 30/6/24 to a full year projection of less than 41k boepd at 19/11/24 “due to” an unexpected outage caused by a third party. This outage may have tipped the scales, but to present that the equivalent on an annualised basis of a 0.6k boepd loss from Magnus is THE cause to miss the LOWER point of the guidance range comes across as disingenuous. Compared with plans and expectations when the half year results were presented production somewhere else is down. Personally, this type of communications spin reduces my confidence in the company.

Or if they believe increasing EnQuest’s share of Kraken output could be done at this point better by buying Waldorf’s share?

Using a 2 week outage of Magnus to justify a whole year’s total production falling below guidance is worrying.

Likely Waldorf’s financial situation caused inability yo agree Kraken’s 2025 drilling.

A decision will be issued within 3 months, although the expectation is it will come sooner in the new year. I’ve already reached my ruling:

To remedy the error of law and to ensure that the decision-making process is informed by a comprehensive understanding of a project’s impact on the environment, an assessment of the impacts of greenhouse gas emissions, the downstream or scope 3 emissions, resulting from the eventual use of the oil and gas as fuel must be provided before commercial extraction of hydrocarbons can commence.

This required remedy does not alter the decisions to approve the relevant licenses or require the preparatory work to pause. This is for three reasons. First, per this ruling, an assessment of scope 3 emissions is required before any commercial extraction can commence. Without extraction there would be no downstream emissions. Second, the requirement is for an impact assessment. There is no acceptable or unacceptable level of downstream emissions to reference. Without such a reference point any decision by this court as to the acceptability or otherwise of the emissions would be completely arbitrary and out of scope for this court. The requirement is for the decision process to be informed, which it would be before extraction can commence. Third, with or without J&R proceeding to extraction, the projected consumption of oil and gas in the UK is far in excess of the projected production from the total UKCS. Aa a consequence, no production from J&R or export of any of its production would result in a corresponding import amount from production elsewhere. Therefore, with or without J&R proceeding to production, the downstream emissions in the UK (and worldwide) would not be materially different because downstream emissions are not driven primarily through the push of extraction but instead by the pull of consumer choices. Considering all of the above and that the companies acted to in good faith and according to the understanding of the law at the time, and the commercial damage implications, obliging an interrupting of preparations is considered wholly unjustified.

Tessa Khan, executive director of Uplift, said 80% of the UK's oil was exported. [The majority of UK crude is exported to NL for refining] due to lack of domestic refining capability.]

"There's no world in which you could have a robust environmental assessment that takes into account those downstream emissions [from Jackdaw and Rosebank] and decide that those environmental impacts are acceptable,".

What about a world where whether Jackdaw and Rosebank produce anything will not make any material difference to the amount of oil and gas the UK consumes?

Such weak arguments. What planet is Tessa Khan on?

And, UK oil and gas workers, suppliers to the industry, general suppliers, and all their dependents, worry. This, in the knowledge that as long as UK projected demand for consumption of oil and gas is greater than UK production, any reduction in UK potential oil and gas production will simply result in increased production elsewhere and greater net imports into the UK. Therefore, what happens with production in the UK will not make a jot of difference to downstream emissions caused by the UK. Actually, and ironically, increased UK production would… reduce total emissions.

Maybe this is a way out for the judge as it becomes a moot point because changes to UK production will not change UK downstream emissions (or, indeed, worldwide emissions). This on top of there not being any definition of an acceptable or unacceptable level of downstream emissions, just that it needs to be considered.

Doing this, as with the recent decision in The Netherlands concerning Shell, could also help the public better understand that first and foremost the driver for emissions is not drilling and extraction but… their choices as indirect or direct consumers and customers.

All agree there was an error of law.

The judge says he is being asked to say: "I accept this decision is unlawful but I give it lawful effect." and “It's a very difficult matter and it's a very important matter,"

The companies, with regard to the suggestion they could continue preparatory work while providing downstream emissions info to allow the government to revisit the decision, say they are not in the business of gambling.

Ed says he doubts he has the necessary legal power to revisit the decisions anyway.

Tessa stirs the pot.

The judge will issue his judgment in due course.

https://www.bbc.com/news/articles/ce89er3ekn0o.amp

Stumpy, hard to evaluate the state of play of this case but i can see positives in the BBC report.

The link with EnQuest is how this challenge’s outcome, in good or bad, could spill over onto plans for B&B. A bad outcome could embolden the activists whereas a good outcome could clip their wings.

Update after today’s court session: https://www.bbc.com/news/articles/cly2dxqd1pyo.amp

On a related matter, a sensible decision from the Dutch courts https://www.bbc.com/news/articles/cx240l9xq2yo

"Oil giant Shell has won a landmark case in the Dutch courts, overturning an earlier ruling requiring it to cut its carbon emissions by 45%"

"Shell has argued that it is already taking "serious steps to reduce emissions". It complained the original ruling was unfair as it singled out one company for a global issue, and said it was unrealistic to try to hold Shell accountable for its customers' choices."

The defence is to concede that the UK government made a legal error in granting the licences but the companies made their requests in good faith and the licences were awarded per the understanding of the law at the time, so before the Fitch ruling. Shell are using the energy security argument too. The companies will argue for the court to take only minimal or no action to remedy the error, pointing to the number of contracts already signed and the significant economic damage an unwinding would cause.

The 14 UK oil and gas projects with drilling licences from the government that are at various stages of seeking development consent from the oil and gas regulator, including B&B, and are also affected by the Finch ruling, and will be affected by the outcome of these current cases

The Finch ruling does not prevent authorities from approving projects, as long as they have considered their impact. The law does not specify what level of emissions is acceptable. Such an omission is understandable but makes it impossible to make an objective judgement. It is the consumption/burning of hydrocarbons which causes the emissions. If there was not a demand, they would not be extraction. Not extracting these hydrocarbons from the UK will not change the demand for hydrocarbons. Therefore, considering hydrocarbon demand projections, extracting or not hydrocarbons from the UK will have no incremental impact on emissions. Therefore, it is hard to see there is really a case to answer. Indeed, consuming in the UK gas extracted from the UKCS would have lower emissions than importing LPG. Harder to prove for oil but the emissions would be less here too. So, the only thing which can be said for sure, is that extracting these hydrocarbons from the UK would… reduce emissions. On this basis alone, case dismissed.

An interesting line of argument;https://www.ft.com/content/073da1a4-6f9c-485b-af42-ca23662edc3f

In theory, Bressay and Bentley are further along in the process than J&R, but I expect there will be spillover from the outcome of the current challenge.

Hehehe “Ed Miliband's like a mad prophet in a sandwich board”. This really sums him up. He’s now whistling both in the dark and the wind. Starmer appears to remain fully hitched to the madness, but he’s proved agile on u-turns. It will happen here too.

Apache's Q3 24 NS production was 25,000 boepd, 48% down on same period last year. Presumably, production could be increased back towards 50K and beyond 2029 if there was investment. Still feels there could be a possible fit with EnQuest. Could make things simpler for Apache. But first the government must get the message that a suitable replacement fiscal regime is needed NOW otherwise it will be too late to recover what is lost.

Regarding Apache this will also have to be considered and will put further pressure on the government: https://www.worldpipelines.com/special-reports/24092024/forties-pipeline-system-faces-early-closure-warns-chief-executive/

They are highlighting to the GOVERNMENT how the EPL can backfire.

When I question whether Apache's announcement could be a ploy I am not doubting that they intend to exit the NS. What I mean is that an alternative could be to sell their NS business to a company prepared to continue production past 2029. This may still be an option they are keeping open. My point is that by making this announcement they are highlighting to the company how the EPL can backfire. My guess is decom costs will significantly reduce the EPL payable until 2029, plus after 2029 there will not be any production from these fields so no tax, less jobs, more imports etc etc,

Yet more incoherence. See below. The CHANGES they just made to the EPL are to increase its rate and end date. These CHANGES make the situation worse for the industry! Incompetence and delusion.

"To that end we secured £24bn for green industries at the International Investment Summit and have made changes to the Energy Profits Levy that recognise the oil and gas sector’s role in the UK’s energy mix while asking it to contribute more to the transition - helping to fund GB Energy based in Aberdeen.”

https://www.bbc.co.uk/news/articles/cx27p91kpzdo.amp

Is Apache’s announcement as it appears or a ploy to highlight the EPL does not deliver the outcomes the government would like? Their decom costs can be used against the EPL. What tax to pay will be left compared with what there would have been if the fields had remained productive?

Could EnQuest make an offer to buy the fields? But… why do this before the government understands the consequences of their choices?

Come on Keir, Ed, help MAGA by importing from USA more LPG and oil instead of bothering UK workers to produce it. Additional benefits are LPG is more expensive than indigenous piped gas, less growth, GDP, and tax receipts, plus more emissions.

Reflecting on what RR said in the budget:

“Next, we committed to reform the Energy Profits Levy on oil and gas companies. I can confirm today that we will increase the rate of the levy to 38%, which will now expire in March 2030… …and we will remove the 29% investment allowance.

To ensure the oil and gas industry can protect jobs and support our energy security… … we will maintain the 100% first year allowances and the decarbonisation allowances too.”

A couple of observations:

1. How can they be “COMMITTED to REFORM the EPL” if they also say it will only expire after the next General Election when they cannot be sure w to still be in power? An increase in the EPL rate and the date is not a reform. A commitment knowing they don’t have certainty of the power to ensure it is delivered it is wishy washy, an empty promise.

2. If they really want to “ENSURE the oil and gas industry can protect jobs and support our energy security, simply maintaining “the 100% first year allowances and the decarbonisation allowances” will not cut the mustard. Some existing jobs will be protected but far from all, and production will decrease and be far from what it could be thereby weakening energy security.

It is very positive they have clearly stated their objectives, reforming the EPL and protecting jobs and supporting energy security, but there is not coherence between their objectives and their actions and plans. For coherence something more needs to change. My expectation is the industry will keep referring back to and focussing in on these laudable objectives whilst highlighting they will not be achieved unless there are further changes. The implementation soonest of a fair and progressive fiscal regime is required before it is too late to recover the situation.