THURS EVENING – WHAT NEEDS DEBATING?

Audio recording of whole Thurs evening session

Trevor Stack (chair, conference organiser)

George Frynas said this afternoon “what frustrates me is that no one is talking about the real issues” – I would add to that that no one is talking about the real issues in a joined up way

> I hope you agree we  have been doing so in past 2 days – feel made fantastic start of joining up…

  • issues: talking about health and safety without environment without global resposibilites etc. is going nowhere
  • people: handful of like-minded people in a room is only every first stage > need to get full range of people together, as we have in past 2 days, however uncomfortable it may be at times
  • countries: essential to link Scotland and UK to rest of world, and have heard fantastic accounts of Norway, Nigeria, Kazakhstan, Bolivia…

I think you will also agree that much joining up still to do: of…

  • issues: e.g. heard last night how unlikely it is we will keep temperature within 2 degrees of current, while hearing at other points of conference the “good news” that there is still plenty of oil to extract!
  • people: we need to include still more people in our discussion, such as civil servants, media owners and managers (since media reporting of issues came up in discussion), foreign politicians…

+ university management: as Charles Hendry mentioned yesterday, UK universities are training many postgraduates from countries like Nigeria, Kazakhstan, which is very good business for our universities –  but are universities doing enough to prepare foreign students for addressing some of serious issues raised in conference, on return in home countries?

  • countries: although included many countries in discussion, very little on China – now major competitor in Africa and other parts of the world (and even in North Sea): is this a game-changer in global politics of oil & gas? if so, how?

Wonderful discussion and hope will continue beyond walls of King’s College

  • already has life beyond through
    • media coverage
    • twitter feed and summaries on blog > I do hope others will write – and use hashtag #ukenergypolitics to link
    • not impossible to have future event

John Paterson (conference respondent)

Professor of Law, U Aberdeen 

Speaking as oil & gas lawyer: Director of Centre for Energy Law, U Aberdeen

One person asked why talking about renewables when about oil & gas but then find that when talking about health and safety then leads on to talking about industrial relations and then about environment etc. > need for whole damn thing

All politics is local – when it comes to energy and environment, all about us: voting, consumer choices etc. are all ultimately about us and our decision-making

> importance of desire and imagination

  • when talking among lawyers, familiar territory but when get to precautionary principle, finds up against science so need to talk to scientists; similarly, scientists when coming up against legal issues > becomes dialogue of deaf
  •  when return to reality, come up against
    • immediate concerns of mortgage, pension, etc. and for many struggle to pay fuel bills!
    • but also
      • corporate people have to think about shareholders – legally bound to serve interests of shareholders
      • politicians need to think about power: usually in cycle of 3-5 years

> therefore lots of reasons why we don’t look to bigger picture

…and so often finally take action when things actually go wrong, e.g. industrial accident – when political imperative to do something: but what done is often not quite right because not focused on big picture either

  • though even when something goes wrong, we may not do anything, just as our response to global financial crisis has been fairly minimal

> lessons from financial crisis for politics of oil & gas:

1. Corporate governance: in theory, shareholders will be sensitive to issues in corporate governance because will create risk which places investment in hazard

but institutional investors are interested in money because we demand of them returns on our stocks and shares or pensions or trustfunds: therefore ignore issues in corporate governance as long as still return for shareholders

> tends to be ‘rational’ only to point that something goes wrong… as it did in case of financial crisis

2. More regulation in itself won’t work: also shown in case of financial crisis – regulations existed but not being applied

Williamson (economist): In theory, all rights in corporate governance accrues to those who bear residual risk – if employee have contract, if consumer protected as such, if supplier protection in contract law… but shareholders don’t have any protection – which is what gives control rights

> but Williamson then argues that actually other parties have residual risk, too, including employees and consumers, and yet don’t have control rights

Going back to energy and environment: risk in relation to environmental damage is not equally shared out… borne disproportionately by poor > ‘environmental injustice’

> could we not propose distribution of control rights in terms of who bears environmental (and related) risk, too? this is, after all, kind of argument that should appeal to corporate figures, since it is pitched precisely in their terms

Dick Winchester (conference respondent)

Energy consultant and columnist, Press & Journal

Technical background in subsea technology, came into oil & gas from Royal Navy in 1974, driving undersea vehicles then supervisor then manager; since 1997 consulting on technology, due diligence etc. > his take from business, technical standpoint

In event of Independence, oil companies likely to just get on with business, as do elsewhere

As it is, most of UK oil industry is foreign owned and much of supply side is American and Norwegian

e.g. UK has no offshore drilling company we pretend to be high-tech nation but we don’t have these things > companies could up sticks and leave

vs. Norwegians: who decided to control as much of own industry as possibly could

Quote graph showing relative expenditure on R&D by different governments, showing UK much below French and others

vs. Norwegians, again: developing other sectors, too, such as building ships – which no longer in UK, partly because UK financial services have viewed as too risky

Independent Scotland does give possibility of changing culture and attitudes…. which will have to do whether independent or not

  • agrees with Malcolm Webb that will last 30-40 years
  • not sure whether state oil company, even though most countries in world do have one
  • need to take risks which Norwegians have done – including some of technology that used in UK
    • and in fact renewable sector is worse – large-scale enterprise is almost all foreign owned

Industry is extremely complex: found health & safety discussion very interesting

  • had always considered oil platform structures to be safe, until Piper Alpha – which was therefore huge shock to him

Discussion

John Corral, Aberdeen City Councillor:

  • was Thatcher the start of the demise of our engineering?
  • how do we change mindset of money people

Mark Strachan, Masters student in Oil & Gas: should govt put money into R&D? or private?

> DW not that govt puts nothing into R&D

> JP constraints about finance are crucial to what talking about: may be that capital is about to be released from banks, but meanwhile warnings from IMF and others that not sufficient capital adequacy: appalling situation in which only way out is growth

John McNeish, coorganiser: suggests networks of workgroups to keep discussion going

Simon Pirani, Oxford Instit for Energy Studies: technology is important – on Wed evening, RMT delegate said appreciated important of climate change, but worried about jobs; and same is true about technology – need to link up with everything else

Nick, indep researcher

  • in relation to climate change, not so complex: we have to leave 2/3 of known fossil fuels in ground

> JP important that we can have this discussion whereas in other parts of world not possible… where even legal systems are just organised corruption

> DW how to recreate argument for renewable when getting shale gas out of ground so cheaply?

Mike McCaig, RMT union: in Norway, govt intervention was key from start – need to get back to this… in oil industry, everything is cheap as chips – build it in Korea or wherever else cheap – when flagged up in Upstream, Malcolm Webb says we can’t have protectionism… but about keeping the work in this country

> DW best thing we do here in UK is smaller scale stuff

James Bream: to JP – what would need to happen to make paradigm shift?

> JP

  • struck by lack of logic in current system: not logical that residual rights only with one group
  • oil industry friend says Referendum debate has been good for industry because much more interest in government

> DW only independent member of Scottish Energy Advisory Board – no affiliation so can ask awkward questions… and proposed forum between university, industry, etc… in course of which DW staggered to find how well universities has kept capabilities hidden

Costa, Masters student in Oil & Gas: North Sea has now exceeded life of production: is future in renewable, shale gas etc,?

Owen Logan, co-organiser: doubts about JP’s ‘solution’…

  • speaking to capitalists in their own language of risk… but as lawyer will not just find himself up against other lawyers devolving risk outwards?
  • danger of imagining Hollywood-style apocalyptic future is that leaves us unaware of slower environmental damage is being done

> JP

  • thinking in terms of ‘energy workers’ instead of ‘oil workers’ is one way forward
  • in terms of discussing with global capitalism, can talk in terms of risk that carrying on the way we are

Michael Heaney: if identified that poor carry risk, should put poor in boardrooms alongside directors… if don’t want that to happen, next time that quantitative easing, give money to poor so that not carrying risk and don’t have to put in boardrooms

Vice-Chairman of Capturing the Energy project:

  • for last 40 years have underestimated rate of growth of industry and at some point will undestimate rate of decline of industry
  • oil companies will comply with whatever host country wants, provided it’s worth them doing it… but Norway etc. more cohesive

?? is it possible to address issues while dominant economic system is capitalist?

> DW

  • hopes will change before get to point of environmental catastrophe
  • problem with companies is that not capitalist enough – just passing on profits to shareholders rather than investing capital

Anna Zalik:

  • how about German model?
  • Carbon Capture Storage Shell-Chevron project will come online in few years, and has had massive govt funding, but skeptical about results

John McNeish: about Norway

  • not paradise: only homogeneous in appearance, but same issues with immigration, class, race etc.
  • labour unions still have central role
  • Norway did not follow Japanese but own history – in 19th century built concessionary structure for hydropower that still in place today

What to do next?

  • John McNeish: finds encouraging that recently much more debate about these issues than in previous years as well as organising campaigns etc…. suggests linking up to existing networks e.g. at Rice University
  • Trevor Stack:
    • invite Oil & Gas UK fora as well as Scottish Energy Advisory Board to join us at University, making use of University as platform to hold such broad debates
    • engaging young people including students and school pupils, for example while following Scottish government’s directive to engage pupils with Referendum
  • Janet Stewart: Not to forget humanities, e.g. Petrocultures project
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