Sir Ian Wood’s oil intervention was political


  By Martin Kelly

Yesterday afternoon at 15:15 an email popped into the generic inbox at Newsnet Scotland.  It was from Energy Voice – one of many outlets Newsnet Scotland subscribes to.

It was odd, as their usual daily email had arrived hours earlier – what was this?

The email message was marked ‘Exclusive’ and contained an interview with Oil Industry expert Sir Ian Wood.  Sir Ian was the author of the Wood report which in February had concluded that the Oil and Gas industry had to learn to cooperate more in order to maximise output from the North Sea.

The email though contained what appeared to be an explosive claim – Sir Ian was accusing the Scottish Government of having exaggerated the amount of oil still to be extracted, by an astonishing 60 per cent.

On the face of it Sir Ian’s claims were a damning criticism and surely a blow to the Yes campaign.  But when I viewed the accompanying video and read the article I became struck by the language adopted and the oddness of the figure being claimed by this respected figure.

Few people will know that Sir Ian had previously declined to come out for any side in the independence campaign – a stance I admired and one I felt sensible. The oil debate has been raging for decades and there was nothing to be gained by Sir Ian wading in.

His experience in the sector has elevated him above the Yes/No cut and thrust and the response from both sides to his February report was indicative of the high regard in which he is held.

However the language of his interview with Energy Voice jarred with this image and his claims the intervention was not political.

Sir Ian insisted yesterday that he had not been contacted by Better Together and was not taking sides in the referendum debate.  Yet slogans and phrases coined by Better Together pepper his Energy Voice interview and a subsequent article in Energy Voice.

He insists he is “proud to be Scottish and proud to be British” and talks of having “the best of both worlds” adding “There won’t be any going back” all classic Better Together phrases.  Indeed the ‘best of both worlds’ slogan was uttered by the oil tycoon several times.

My referendum alarm bells rang when he insisted he was voicing his concerns over oil forecasts despite fears he would receive “a rough ride from politicians or some fervent ‘Yes’ supporters”.  Better Together activists and supporters are notorious for citing the so-called ‘abuse’ they receive when they ‘out’ themselves as opponents of independence, and make no mistake, Sir Ian is very clearly in the No camp.

The article on Sir Ian’s interview was a disconcerting read, but the most bizarre part was his claim that there is only between 15bn – 16.5bn barrels of oil left to be extracted, the figures fly in the face of his own report.  It may well be accurate, but this isn’t the impression given in his own report which very clearly pointed to a 24bn figure.

In the February report, Sir Ian claimed the amount of recoverable oil was between 12bn and 24bn barrels.  If companies adopted a more cooperative approach coupled with advances in technology they could add between 2bn and 4bn more barrels.

His report concluded that “full implementation of the recommendations in this report … will put the UK in a much stronger position to get closer to the 24bn boe potential.”

Closer to 24bn barrels – it couldn’t have been clearer.

The conclusion was repeated throughout the report where the 24bn potential was the thrust.  Media and industry reports also cited the 24bn figure which has been circulating for almost six months without so much as a peep from Sir Ian.  Indeed the Scotsman newspaper reported that the  recommendations contained in the Wood report, “would put the UK in a “stronger position” to extract nearly all of the estimated 24 billion barrels still remaining underneath the North Sea.”

Even accepting 24bn is a high end target then, using the figures from his own report, the average still to come out of the North Sea is still 21bn barrels – considerably more than the 15 – 16.5bn.

The other puzzling aspect of Sir Ian’s intervention is the almost total absence of criticism of the UK Government and the OBR.  The last OBR estimate for recoverable North Sea reserves was published last month and gave a figure of 10bn barrels.

The OBR 10bn barrel claim was headlined by every newspaper and broadcaster as a ‘blow’ to the Yes campaign.  Indeed the BBC gave the OBR claims uncritical headline news coverage, calling the OBR forecasts a “significant blow to the Yes campaign”.  [Should not Sir Ian’s 15bn figure have been reported as a boost for Yes?]

Yet in his interview with Energy Voice there is barely a criticism of this pessimistic OBR figure.  Indeed Sir Ian goes out of his way to try to defend the OBR.

But what of Sir Ian’s February report and where did he obtain his own high-end figure of 24bn barrels?  His report actually used figures from the UK Government’s own Department of Energy and Climate Change (DECC).  DECC had estimated three figures; 12bn – 24bn and an upper figure of 35bn barrels.  Yes, the UK Government’s own department believes there is still 35bn barrels of oil to be recovered.

The Wood report adopted the mid-range DECC figure of 24bn as its upper figure.  In his interim report published by the UK Government, it actually gave a figure of 20bn barrels or more.

41 billion barrels of oil and gas have already been produced from the UK Continental Shelf (UKCS), and 20 billion or more could still to be produced. Sir Ian believes that implementing the recommendations of the review will deliver at least 3-4 billion barrels of oil equivalent (boe) more than would otherwise be recovered, worth £200 billion.

There appears no explanation as to why, in yesterday’s intervention, the oil tycoon used his own low-end figure of 12bn barrels then added the potential 3bn – 4bn barrels additional recoverables which his report said would be gained through industry cooperation.

Had he simply used the average of 21bn barrels, then of course the accusations of a 60% exaggeration by the Scottish Government would not have been possible.

The more we analyse what was said and when it was said, the evidence that Sir Ian’s comments were political grows.

When Sir Ian finally admitted on STV last night that he decided to intervene after reading the report by N-56 which criticised the oil forecasts of the OBR, it was the confirmation I needed that his interview was indeed political.

N-56 had earlier published a report that attacked the OBR, accusing the body created by George Osborne of under-estimating oil reserves by a factor of six.  The report was barely mentioned by the Scottish media and, in contrast to Sir Ian’s claims, was afforded a low priority by the BBC.

Sir Ian appeared on Radio Scotland this morning and appeared to contradict his own report by describing the 24bn figure as a “distortion”.  If true then the whole of the media were guilty of distorting his report when they published its findings because they highlighted the 24bn barrel figure – why did Sir Ian not step in and nip the so-called distortion in the bud instead of waiting six months to attack the Scottish Government?

There was one other claim Sir Ian made in his Radio Scotland interview.  He claimed his new figure included reserves yet to be discovered.  This appears to ontradict what he told the Energy Voice where he was clear that his 15bn-16.5 estimate did NOT include possible new discoveries, and could change if oil companies found new areas.

Sir Ian Wood’s new figures contradict estimates from Professor Alex Kemp who has suggested 24bn barrels could still be recovered.  It has also emerged that Tim Smith, the Vice President of BP, himself told a committee of MSPs that there was 27bn barrels of oil still to be recovered.  Both men insist production won’t, as claimed by Sir Ian, end in 2050, but will in fact continue beyond that.

Sir Ian himself is on record as having urged young people to move into the oil and gas sector telling them that they will have a job for life – what changed his mind is not clear.

Recent reports over oil fields to the east and west of Shetland ensured oil was making an impact on the referendum, and it was benefiting the Yes campaign.  Sir Ian’s intervention allowed the media to put a block on the Yes momentum.  By launching his attack on a Wednesday, it also ensured Unionist leaders at Holyrood could keep the attack going – allowing the BBC to repeat the story.

The Scottish Government, and the wider Yes campaign, seems to have been his target.  His comments on remaining in the Union and the ‘uncertainty’ of independence have ensured we have another figure who is no longer deemed neutral.