Plans to close a crucial terminal in the North Sea have sparked a bitter legal row over claims it will damage British oil and gas production.
French energy giant TotalEnergies’ proposal to decommission the Gryphon terminal, which serves four offshore oil and gas fields, has sparked a claim from a rival operator.
Nobel Upstream, which operates two of the fields dependent on the Gryphon, has launched a judicial review in a last-ditch effort to halt the process.
However, instead of suing TotalEnergies, Nobel Upstream filed a claim against the North Sea Transition Authority (NSTA), which signed off on the closure.
It has warned that if TotalEnergies is allowed to close the Gryphon, it will not only be forced to abandon its two fields, but also leave the North Sea entirely.
TotalEnergies is attempting to retire the Gryphon amid declining production levels.
However, Nobel Upstream has claimed that the closure was implemented prematurely and violates NSTA rules requiring shared installations to remain open.
It has also claimed that the decision will mean hundreds of millions of pounds of oil and gas will remain untapped in undersea fields.
Nobel Upstream said it has launched a legal challenge against the NSTA’s “unlawful” decision to prematurely cut UK oil production.
It accused the NSTA of failing to act in accordance with the law, which calls on it to “maximize the economic recovery of hydrocarbons from the United Kingdom”.
The decision to decommission the Gryphon, which is awaiting final approval from the Department for Energy Security and Net Zero, is likely to set a precedent for many North Sea producers. That’s because the vast majority rely on shared infrastructure to survive.
Perhaps the largest shared terminal is the Ineos-owned Forties Pipeline System, which takes output from up to 80 separate fields across the North Sea.
When it closed for repairs two years ago, so did the fields that depended on it, leading to a sharp drop in British oil and gas production.
Meanwhile, the Gryphon is anchored 200 miles northeast of Aberdeen above the Gryphon oil and gas field, although it also receives production from three other fields including the Tullich, Maclure and Ballindalloch. The gas is exported directly to mainland Britain, where it feeds into the national gas grid to support power stations and heat millions of homes.
In total, the Gryphon supplies approximately 1% of the total gas production in Great Britain.
Ashley Kelty, a senior analyst at investment bank Panmure Liberum, said the NSTA was set up to regulate oil and gas production from Britain’s surrounding seas – with a duty to ensure “maximum economic recovery”.
He said: “The NSTA’s job was simple when it was established: to ensure efficient oil and gas production. But that goal is now at odds with the UK’s net zero ambitions, meaning the NSTA is increasingly conflicted.
“The big risk is that if this vital infrastructure is lost, it will trigger a cascade of other shutdowns and accelerate the decommissioning of many more offshore fields. Britain will leave so much oil and gas in the ground to import it instead.”
Britain uses around 60 million tonnes of oil every year – just under a tonne per person – mainly in the form of petrol and diesel for vehicles.
About 75 billion cubic meters of gas are also consumed, much of which is used to heat the 25 million homes equipped with gas boilers.
Total Energies did not respond to requests for comment, but its plans to dismantle the Gryphon were outlined in a recent submission to the NSTA.
Commenting on the decision to challenge the NSTA, Nobel Upstream chief Larry Bates said: “This course of action is a last resort. Nobel Upstream has worked in good faith with the UK oil and gas regulator [NSTA]and the operator of the fields in which we have invested. However, our public engagement over the past eighteen months has not yielded reciprocity.”
Nobel is backed by the Association of British Independent Exploration Companies (Brindex), which warned that punitive windfall taxes introduced by the previous government and additional taxes threatened by Labor were driving energy giants like TotalEnergies out of the North Sea.
Robin Allan, chairman of Brindex, said: “Maximizing the economic recovery of UK oil and gas in the national interest is a statutory duty of the NSTA. British oil and gas production means British jobs, British tax revenue and British energy security.
“The government’s proposed changes to the tax regime put new developments at risk and a manifesto has been set out to ‘manage existing fields throughout their life’, meaning any threat to existing production must be taken very seriously.”
The NSTA and the Energy Department declined to comment.
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