The Forties Pipeline System, a vital network connecting 80 offshore gas and oil fields to the UK mainland, is facing potential early closure due to government tax policies. Andrew Gardner, chief executive of Ineos Forties Pipeline System, has warned that the system may shut down as early as 2030-2035, a decade sooner than initially planned.
This crucial infrastructure, responsible for transporting 29% of the UK's oil and 30% of its gas, was expected to operate until the mid-2040s. However, daily flows have significantly decreased from 1 million barrels of oil per day to just 200,000, with further reductions anticipated.
The pipeline system, originally constructed by BP in the 1970s and now owned by Sir Jim Ratcliffe's Ineos empire, has been a cornerstone of the UK's energy infrastructure for nearly five decades. Its potential early closure raises concerns about the nation's energy security and economic stability.
Gardner stated, "If Labour's tax policy stops our customers offsetting their drilling and other investment costs against tax, then volumes will shrink – and we're looking at 2030-35 as a more likely end date." This shift could have significant implications for the 500 employees working for the Forties Pipeline System.
The situation reflects the broader challenges facing the North Sea oil and gas industry, which has been in decline since its peak in the late 1990s. The UK government's push towards net-zero carbon emissions and the promotion of renewable energy sources has put additional pressure on the sector.
"Successive governments have taken a hostile position and a fundamentally dishonest position on the realities of oil and gas. We are going to need oil and gas for decades to come."
The potential early closure of the Forties Pipeline System follows the announcement of plans to shut down the Grangemouth refinery in Scotland by early 2025, resulting in hundreds of job losses. These developments highlight the complex balance between environmental goals and economic realities.
Critics argue that the government's tax policies may be counterproductive, potentially leading to a rapid decline in domestic oil and gas production. This could result in increased reliance on imports and negative economic impacts on communities dependent on the industry.
As the UK continues its transition towards renewable energy sources, the fate of the Forties Pipeline System serves as a stark reminder of the challenges involved in balancing energy security, economic interests, and environmental goals.