Greenpeace fails in attempt to challenge BP’s Vorlich Field

Mon, 18 Oct 2021

No5's Howard Leithead discusses the judgment in Greenpeace Limited v The Advocate General [2021] CSIH 53

Greenpeace Limited (“Greenpeace”) appealed to the Court of Session (Inner House, First Division) against decisions made by the Secretary of State for Business, Energy and Industrial Strategy (“the Secretary of State”), to allow the BP Exploration Operating Company Limited (“BP”) and Ithaca Energy (UK) Limited (“Ithaca”) to exploit the Vorlich oil field in the North Sea.

The Secretary of State decided that consent should be granted by the Oil and Gas Authority (“OGA”) under reg. 5(A1) of the Offshore Petroleum Production and Pipelines (Assessment of Environmental Effects) Regulations 1999 (“the 1999 Regulations”). Consent was then granted by the OGA under s.3(1) of the Petroleum Act 1998 (“the consent”).

Background

In 1981, BP was granted a licence to search for, bore for and “get” petroleum in the Vorlich field. By the time that the appeal was heard the licence was held by BP (80% as operator) and Ithaca (20% as non-operating party). A further licence was granted in 2009. Since 2016 it has been held by Ithaca.

On 9 March 2018, BP submitted an Environmental Statement (“the ES”) concerning the exploitation of the field to the Offshore Petroleum Regulator for Environment and Decommissioning (“OPRED”), for the which the Secretary of State is responsible. On 3 April 2018, BP applied to the OGA, on its own behalf as well as that of Ithaca, for consent for two new productions wells in the Vorlich field. BP then complied with various formal requirements. BP was notified of the grant of consent by the OGA on 20 September 2018.

In January 2019, offshore construction and installation commenced. Drilling operations began in June 2019 and were completed in November 2019. The works cost £230 million.

High Court

Greenpeace originally challenged the consent by means of an application for permission for judicial review in the High Court in London. On 5 February 2020, Lang J refused permission in respect of one ground: that the Secretary of State had failed to take a relevant consideration into account, the effect of the consumption of the oil on the UK’s carbon budget and its contribution to climate change.

In refusing permission, Lang J accepted the Secretary of State’s arguments, which included: (a) the impacts of the use of the produced oil were not material to the decision whether to grant consent for a development such as the Vorlich Field as the carbon budget for the UK is a complex and high level strategic decision; (b) the use of the oil to be produced was not part of the development for which consent was sought; (c) the development would not increase the use of oil; and (d) the scope of environmental assessment is a matter of judgment and it is well-established that it is for the decision maker to assess what information should be in an environmental statement within the constraints detailed in Directive 2011/92 (“the Directive”), and whether the information contained therein is adequate (see R (Friends of the Earth Ltd) v North Yorkshire CC [2017] Env LR 22, per Lang J at [22]). 

The Secretary of State, however, consented to judgment on several other grounds. On 3 April 2020, a consent order was executed to that effect and the Secretary of State undertook to publicise the OGA’s consent so that the time for an appeal under reg.16 of the 1999 Regulations could begin to run.

Court of Session

During the course of the High Court proceedings, it became apparent that the Scottish courts would have jurisdiction over any appeal (reg. 15 of the 1999 Regulations). Consequently, Greenpeace lodged an appeal against the consent and a parallel petition (claim) for judicial review in Scotland. On 1 October 2020, permission to proceed with the judicial review petition was refused by the Court of Session (Outer House).

In the appeal, the issues for the Court included: (a) whether BP, Ithaca, the Secretary of State, and the OGA complied with the requirements for publicity of applications as set out in the 1999 Regulations as these should have been purposefully interpreted as a consequence of the Directive on the assessment of the effects of public and private projects on the environment; (b) whether the environmental impact of consumption of the extracted and refined oil and gas, rather than the exploitation process, was a relevant consideration; and (c) whether the doctrine of res judicata applied to prevent consideration of the alleged failure to take into account the consumption of the oil as it had already been determined by the High Court and the Outer House in the permission decisions.

In his judgment, Lord Carloway, the Lord President, said that there was sufficient publicity of BP’s application and the other relevant matters and described Greenpeace’s arguments as “overwhelmingly technical and unconvincing.”

In considering the res judicata argument, Lord Carloway said that the permission decisions in the High Court and the Outer House were essentially administrative in nature. This, he explained, could not prohibit substantial argument in an appeal, such as this one, where there was no permission or leave requirement.

As to whether the environmental impact of consumption of the extracted and refined oil and gas was a relevant consideration, Lord Carloway noted that the relevant considerations that BP needed to take into account in preparing the ES were set out in reg. 3A of the 1999 Regulations. BP was required, he said, to assess the direct and indirect significant effects of the project on, amongst other elements, the climate, and the operational effects of the relevant project. These effects did not include, he said, the consumption of the oil and gas by the end user (R (Finch) v Surrey CC [2020] EWHC 3566 (Admin) applied).

Lord Carloway explained that, however broad and purposive an interpretation of the 1999 Regulations or the Directive might be attempted, the clearly expressed wording of the legislation could not be disregarded. It was, he said, the effect of the project and its operation that is to be considered and not that of the consumption of any retailed product ultimately emerging as a result of a refinement of raw material.

The Judge further said that the issue of what may be an obviously material consideration does not arise because the parameters of what is to be assessed are defined by reference to the effects of the project. And he agreed with the Secretary of State’s argument 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. Ultimately, he said, the issue was essentially a political and not a legal one.

Practical significance

Most of the issues raised in this litigation were procedural and are likely to be of limited practical significance. However, the issue of how to assess environmental impacts when producing environmental statements as part of the environmental impact assessment will affect those preparing future applications, or those considering challenging decisions permitting the extraction of oil. Courts in both England and Wales and in Scotland have made it clear that the effect of the consumption of the oil is not a relevant consideration.

Greenpeace is committed to ending the age of oil and it opposes the production of new oil. However, as Lord Carloway emphasised, this is a political issue and not one for the courts.

Richard Kimblin QC and Jack Smyth appeared for the Secretary of State in the High Court.

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