OIL and gas pioneers have underlined the potential of the North Sea even as the Scottish Government has effectively written the area off in its long-awaited energy strategy.

The Government was accused of a “breathtaking betrayal” of the key oil and gas industry when it said there should be a presumption against new exploration in the North Sea.

The recommendation forms a key plank of the strategy that was published last week following long delays and is open to consultation until April.

The document was originally meant to be unveiled early last year but the Government prevaricated amid the turmoil that engulfed the energy market after Russia launched its full-scale war on Ukraine.

With oil and gas prices surging in response, consumers were left facing huge increases in their bills.

The UK Government decided it should encourage firms to increase North Sea production to reduce the country’s heavy reliance on imports. It launched an exploration licensing round which the regulator will today reveal generated a strong response from the industry.

Nicola Sturgeon insisted the crisis made it imperative to focus on renewables to help wean Scotland off its dependence on fossil fuels and tackle the threat of climate change.

After championing the oil and gas industry in the independence campaign of 2014 Ms Sturgeon now appears ready to alienate its supporters in the expectation there are more votes to be won by courting the green vote.

Ironically, Friends of the Earth Scotland said the energy strategy contained little new and criticised Ms Sturgeon for failing to set an end date to the use of oil and gas.

But while the strategy rehearsed familiar claims that Scotland could be a renewables powerhouse it outraged supporters of the North Sea industry.

The focus of their ire was government’s position on exploration, which will be required to help replace at least some of the reserves that are produced. Critics said this formed part of an apparent attempt to hasten the decline of the industry.

The proposed ban on drilling was justified on environmental grounds.

However, the Scottish Government also claimed it made sound practical sense as there probably aren’t big finds to be made in the well-worked North Sea.

“The waters off the coast of Scotland have been well explored and, as a mature basin, there are unlikely to be large fields which have not been exploited”, says the strategy.

That assessment seems hard to reconcile with the strategy’s claim that North Sea exploration activity could impede the drive to achieve net zero in terms of emissions.

It was also undermined last week by updates from firms that have enjoyed significant exploration success after defying the view that the North Sea is past it.

The first came from Deltic Energy. This was founded by Algy Cluff, who was a pioneer of North Sea exploration in the 1970s and decided to refocus on the area amid the slump that started in 2014. He decided he could enjoy success in areas whose potential had been under-estimated by others.

Deltic announced last week that it had found gas with a well on a bumper prospect that it reckons could open up a new geological “play”. The Pensacola well was drilled with Shell, which decided the find was encouraging enough to make it worthwhile to complete a full testing programme.

The giant bought in to the licence concerned in 2019 in a deal that signalled it saw lots to go for in the area targeted by Deltic amid tough times in the industry.

Shell went on to drill the Pensacola well despite the UK Government’s decision in May to impose a windfall tax on oil and gas firms, the rate of which was increased in November.

Shell and Deltic plan to drill a well on the Selene prospect.

Part of the appeal of prospects such as Pensacola and Selene is that they lie in an area of the Southern North Sea that contains infrastructure that can be used to develop fields at pace and with relatively limited environmental impact.

Since the windfall tax was introduced Shell has also shown its interest in the West of Shetland area by acquiring control of the undeveloped Victory gas find.

After opposing Shell’s plans to develop the giant Cambo oil field off Shetland, Ms Sturgeon left herself with wriggle room in the energy strategy in terms of the development of existing North Sea finds.

The strategy says the government will consult on what factors should be considered in assessing the impact of the development of fields that are already consented but not yet in production in the context of the global goals of the Paris Agreement.

It offers no judgement on Equinor’s plans to develop the giant Rosebank find off Shetland, which have outraged environmentalists.

Equinor has said Rosebank could account for around eight per cent of the UK’s oil production from 2026 to 2030 and support thousands of jobs. Some would say such figures show new North Sea fields could provide a big boost to economic activity in the UK while reducing its reliance on imports that may entail higher emissions.

The energy strategy notes: “UK extraction carries a relatively low carbon footprint compared to other producers.”

The UK Government has the authority to decide whether or not developments can proceed. However the Scottish administration could cause complications for firms in areas such as planning and make investors wary of committing to projects.

Those that try to develop fields face the prospect of legal action by campaigners who might look to disrupt operations offshore.

Shell pulled plans to develop Cambo in 2021 citing the potential for delays, despite achieving huge success with developments off Shetland amid the last downturn. In 2018 it started production from the giant Claire Ridge field. This lay undeveloped for years until advances in production technology helped to transform the economics of the project.

Israeli-owned Ithaca Energy has assumed leadership of the Cambo project.

West of Shetland was also in focus last week when a small independent that helped stoke interest in the area issued an encouraging trading update.

Hurricane Energy revealed that it generated $300 million revenues last year from the Lancaster field, which it discovered in 2009 and brought into production in 2019.

Lancaster lies in a layer of granite called the fractured basement, which Hurricane decided other firms had ignored unjustly. It has made other finds in the area.

Hurricane faced big challenges during the slump triggered by the coronavirus crisis. However, in recent weeks the firm has attracted bid interest, which indicates that firms see lots of potential in its assets.

Some may feel the progress made by Hurricane and Deltic lends weight to claims the Scottish Government may be writing off the North Sea too soon.

That prospect would be less of a concern if there were not such big questions about whether renewables can fill the gap that will be left when North Sea oil and gas production ends.

The recent performance of the renewables industry in Scotland has underlined the risks of relying on intermittent power sources such as offshore wind.

The Energy Statistics report that was released quietly by the Scottish Government just before Christmas showed total renewable electricity generation in the third quarter was well up on the same period of 2021. This reflected favourable weather conditions and the start of generation from the huge Moray East windfarm, which is owned by overseas investors.

However, total generation in the third quarter was still lower than in the same period in both 2020 and 2019.