US energy policy change will have repercussions for UK oil and gas, says expert

Writing in The Scotsman newspaper, energy expert Bob Ruddiman of Pinsent Masons, the law firm behind Out-Law.com, said that the UK was "not immune" to the likely impact of US president Donald Trump's 'America First Energy Plan'. However, the North Sea was well placed to develop a positive relationship with the new administration, thanks to continuing investment opportunities and a highly skilled workforce, he said.

UK prime minister Theresa May became the first foreign leader to meet the new US president this week at the White House, with topics of discussion expected to include a potential free trade agreement and the importance of supporting the NATO alliance.

Ruddiman said that "energy security and collaboration" should also be high on the leaders' agenda, following the publication of Trump's plans to end American dependence on foreign oil by boosting production from shale oil, gas and 'clean' coal.

"The UK – and North Sea in particular - enjoys a world-leading position in subsea technology and a free trade agreement between our countries is vital if we are to continue to export skills and technologies to American markets, not to mention continuing the free movement, in both directions, of highly skilled technicians, engineers and support staff who keep the supply chains in both jurisdictions well oiled," Ruddiman said.

"Fortunately, on the investment front, interest in acquiring North Sea assets continues to generate activity and directives from Washington DC should not impact greatly as investors tend to take a global approach to portfolio building. Recent deals involving North American players include Suncor Energy taking a 30% stake in the Rosebank development offshore Shetland and Blackstone Energy Partners supporting acquisitive North Sea [exploration and production] company Siccar Point, which underlines a healthy interest in [UK Continental Shelf] assets as an attractive investment," he said.

The 'America First Energy Plan' announced this week by President Trump is based around "lower[ing] costs for hardworking Americans and maximis[ing] the use of American resources, freeing us from dependence on foreign oil". While most of the details have yet to be confirmed, Trump has committed to ending the previous administration's climate action plan and "achieving energy independence from the OPEC cartel and any nations hostile to our interests".

The new government will also "embrace the shale oil and gas revolution" while "reviving America's coal industry". It refers to an "estimated $50 trillion in untapped shale, oil and natural gas reserves", the revenue from which will be used to "rebuild our roads, schools, bridges and public infrastructure".

Ruddiman said that a "glut" of US-produced hydrocarbons could further drive down global oil prices. This could be damaging for a UK industry, whose "focus on increased efficiency and better sharing of assets and infrastructure is showing signs of paying off".

"It is accepted that compared to other global oil producing hubs, the North Sea is a relatively high-cost environment, but putting aside geo-political events outwith our control, the industry should be congratulated on the progress made so far and be encouraged to see out a programme which will deliver a sustainable and economically viable future," he said.