Environmental group Greenpeace recently lost its appeal against the Secretary of State for Business Energy and Industrial Strategy and the Oil and Gas Authority (along with oil companies, BP and Ithaca Energy (“the Interested Parties”)) to drill for oil at the Vorlich field in the North Sea. Greenpeace’s challenge was in relation to the granting of consent to develop a field within a licence area held by the Interested Parties.

Greenpeace argued that permits had been granted illegally, without taking the full climate impact into account. They stated that there were a “myriad of failures” in the consultation process, in particular a failure to take into consideration the impact that the consumption of the extracted and refined oil could have on the climate.

For more detail on the background to the case, please see Neil Smith’s blog anticipating the appeal here.

Although the appeal was quashed, the commentary suggests oil and gas operators need to be aware of legal challenge within the consultation phase. Lord Carloway also acknowledged the continuing role of oil and gas during the UK’s energy transition phase.

Decision

Lord Carloway found Greenpeace’s arguments “overwhelmingly technical and unconvincing”, the consultation process had been satisfied and the court highlighted that the matter of climate impact was political and not for the courts to decide.

As Greenpeace failed to raise the claim in the initial process, the court found that they could not be considered an “aggrieved party”. The arguments which Greenpeace sought to raise in relation to arithmetical errors and environmental effects are matters which could have been made the subject of representations and were not raised at the appropriate stage.

Lord Carloway commented that had there been non-compliance in the notification and consultation procedures, and Greenpeace had been substantially prejudiced by them, then it is likely that the court would have quashed the consent. It was noted that this is a permissive remedy rather than a mandatory one, so all the circumstances of the case would be taken into account.

It was found that the consumption of oil and gas by the end user was not a direct or indirect significant effect of the relevant project. Lord Carloway stated that “It would not be practicable, in an assessment of the environmental effects of a project for the extraction of fossil fuels, for the decision maker to conduct a wide ranging examination into the effects, local or global, of the use of that fuel by the final consumer”. Lord Carloway observed that the exploitation of the Vorlich field would have no impact on the current level of consumption, and so is unlikely to have any material effect on climate change.

The argument in relation to BP’s arithmetical errors was not addressed as the overall figures were correct.

Greenpeace plan to appeal to the Supreme Court.

The full opinion can be viewed here.

Impact on industry

The decision highlighted the recent trend for environmental campaigners to challenge oil and gas exploration. This serves as a reminder to upstream oil and gas operators to continue to remain compliant with the notification and consultation requirements throughout the licence consent application process in order to reduce the risk of a successful legal challenge.

Further, as the appellants were not considered an “aggrieved party” due to the timing of their claim, it is likely that the decision will result in environmental campaigners potentially seeking to raise challenges at an earlier stage. Operators should be wary of this and ensure compliance from the outset.

Lord Carloway also touched on the ongoing requirement for oil and gas in the UK economy, noting the present shortage of oil and gas supplies as a matter of public concern. This recognises that UK oil and gas production will continue to have a significant role to play in meeting the UK’s near-term energy requirements as the country seeks to meet its carbon reduction targets.

If you require any support in relation to any of the issues discussed in relation to the judgement, please get in touch with our energy experts.

For further legal analysis on the case, please see our Public Law blog here.

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