Onshore Oil and Gas

Tuesday 26th January 2016 Westminster Hall

09:30

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I beg to move,

That this House has considered the potential role of UK manufacturing in development of onshore oil and gas.

It is a pleasure to serve under your chairmanship, Mr Howarth. Shale gas exploration is a key issue in my constituency. Exploration licences have been granted to five operators in Thirsk and Malton, covering the vast majority of my patch. I receive dozens of letters and emails about fracking every week and I care passionately that, if it goes ahead, it is to the great advantage, not disadvantage, of my constituents.

As a local man, I understand why so many local residents worry that the peace and tranquillity of North Yorkshire, including the stunning North York moors, will be disturbed, and why they feel that their lives may never be the same again. I do not believe that that will be the case. As long as fracking is conducted in a balanced and measured way, the advantages for our local and national economies far outweigh the disadvantages.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman on obtaining this important debate. On his point about constituents who have concerns, how do we bring people along and convince them that there is no issue? What job of work needs to be done?

[Kevin Hollinrake]

I thank the hon. Gentleman for his intervention. That is a key issue, which I will come to later on in my speech.

The environmental reasons for moving from coal to gas are compelling. Global carbon dioxide emissions will be found to have declined in 2015, principally owing to reduced coal use in China and the US, and the Intergovernmental Panel on Climate Change and the US Environmental Protection Agency both credit the majority of the US reduction directly to the move from coal to shale. The World Health Organisation recently declared a state of emergency on air quality in many countries. It estimates that the cost of air pollution to the EU alone is a staggering £1 trillion and the human cost is even more dramatic: in 2010, about 600,000 premature deaths in the European region were caused by air pollution.

According to a report by the Health and Environment Alliance, coal-fired power stations are responsible for the following effects on UK citizens: 1,600 premature deaths; 68,000 additional days of medication; and 363,000 working days lost. Diesel cars and coal-fired power stations must become things of the past.

Geopolitically, domestically produced shale can help us develop a more effective foreign policy. Despite growing turmoil in the middle east, UK energy prices are falling in the markets, at the fuel stations and for our domestic energy. Traders can clearly see that the west is developing independent sources of energy and the British Geological Survey estimated that 10% of the predicted UK reserves could meet our gas energy needs for 40 years.

As with North sea oil and gas, fracking could lead to a new industrial supply chain. In 2014, 375,000 people benefited from employment and tax revenues of £2.1 billion resulted from the North sea oil and gas industry. Reports by the Institute of Directors and Ernst and Young indicate that shale gas could provide 64,000 jobs and £33 billion of domestic investment. Domestic is the most important word. This opportunity could spawn tens of thousands of jobs, and good jobs, too.

In my constituency, we have many world-class engineering businesses and a first-class training organisation called Derwent Training Association, which specialises in training top-quality light and heavy electronic and electrical engineers. Such businesses can be the innovators of the future, taking the industry forward and making it cleaner and more efficient. For example, it is possible to convert methane to hydrogen—a CO₂-free fossil fuel—and the University of Strathclyde has established the UK centre for hydraulic fracturing to develop quieter, more energy-efficient equipment.

Shale would offer significant opportunities for many UK industries. It is estimated that it would require 12,000 km of steel, worth £2.3 billion. Recycling of waste water by domestic businesses would also be required and that would be a £4.1 billion opportunity. Other opportunities include rig building and environmental monitoring. Our chemicals industry could also be a big winner by capitalising on cheaper natural gas liquids often found alongside shale deposits.

If the UK could demonstrate the success and environmental credentials of shale gas, we could export our knowledge, skills and technologies to other countries in Europe and further afield, just as we did with conventional exploration. We must not repeat the mistakes of offshore wind, where we are the market leader in generation but lack any significant supply chain.

In the future, power generation will be centralised, cars and home heating—probably using air source heat pumps—will be electric and battery storage will be commonplace. Some people will argue that a new fossil fuel is a backward step that will prevent the energy industry from innovating. I disagree. Yes, renewables should be part of the future, but subsidies will only hold back their efficacy. I think that we should have reduced subsidies more progressively, as has happened in the US, but the Government had little choice given the wild and unmanaged overspend overseen—or probably not seen at all—by the previous Secretary of State.

Let us think of the technology sector. Deep Blue is the computer best known for defeating world chess champion Garry Kasparov on 11 May 1997, but a modern smartphone is 30 times more powerful than Deep Blue and made without Government intervention or subsidy. Should not the Government simply set the parameters for CO₂ emissions and air quality and then let industry deliver the solutions? Is that not a better solution than paying homeowners unsustainable amounts of money to put solar panels on their roofs?

Of course, we can contemplate welcoming a new industry only if it is compatible with daily life in North Yorkshire. Last autumn, I paid a visit at my own expense to Pennsylvania to speak to local people, the US regulators, academics, protestors and operators about the impacts of the shale gas industry on the economy, the community and the environment. I did not see significant and widespread industrialisation of rural areas, but we do need to learn from early regulatory failures and carefully plan for the industry’s cumulative impacts.

We need a single regulator to make sure that there is a clear line of accountability. We need independent regulation and monitoring at every stage and, crucially, a rolling five-year local plan to co-ordinate activities. We need a local plan for fracking, covering a five-year roll-out and detailed solutions for key concerns. We also need traffic plans for the movement of heavy industrial equipment. Heavy industrial plant connected with shale gas, such as compressor stations and refineries, needs to be located in areas used to hosting industrial chemical sites.

We need minimum distances to settlements and schools and minimum distances between sites to prevent the industrialisation that many people are concerned about. We also need to consider the impact on other important parts of our local economies and, of course, the visual impact on our countryside, so we need buffer zones around our national parks and areas of outstanding natural beauty.

In an age of computer-generated imagery and simulated time-lapse photography, we can and must paint the picture for the public on how we can carry out fracking safely and discreetly, or risk years of delays owing to public concern. The effects on the economy and on job creation locally in Pennsylvania were positive, and I met various supply-chain businesses that were clearly thriving.

We must look at the whole picture. We cannot afford to ignore this opportunity. Under this Government, the economy is doing well and unemployment has come down, but we would benefit from having a clean, low-cost, low-carbon, home-grown energy source that supports domestic businesses, creates local, well-paid jobs and makes our economy and our nation strong by generating energy for generations to come.

09:40

[Angela Smith (Penistone and Stocksbridge) (Lab)]

As always, it is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate the hon. Member for Thirsk and Malton (Kevin Hollinrake) on securing this important debate on the role that manufacturing can play in the unconventional gas extraction industry.

This is not really a debate about whether the UK should develop a shale gas capability. The House has rightly focused on the need for a robust regulatory framework for such an industry, and it will no doubt continue to debate such important issues, but this morning’s debate is much more pragmatic. The question before us is clear: if the shale gas industry is going to develop within the clear regulatory framework agreed by the House, how do we best ensure that UK manufacturing can exploit to the maximum the supply-chain opportunities made available by that nascent industry? That pragmatic point is what is important to people up and down the country who have traditionally depended on manufacturing jobs to maintain their prosperity, living standards and family life. At its heart, this is about a debate that understands the importance of manufacturing to the UK economy.

In the US, which has had a shale gas industry for some time, one of the biggest winners has been the chemicals industry. Shale gas production in the US has seen feedstock costs reduce significantly, giving the chemicals sector a major competitive advantage over manufacturers in the EU and Asia. Shale gas ethane from the US is much cheaper than that from the EU, which is produced from naphtha, a refined form of crude oil. Cheaper energy, combined with cheaper feedstock, has kick-started investment in the US chemicals industry, attracting $138 billion of investment so far and funding 225 new projects.

In the UK, the chemicals industry is already a major exporter, with about £25 billion of exports. Yearly, it adds almost £9 billion to the UK’s GDP, as well as underpinning much of the manufacturing sector, including steel. In terms of competition, the chemicals sector could benefit greatly from a new source of domestic feedstock. It would benefit from lowers costs and, importantly, from shorter, more secure supply lines.

There should also be opportunities for many UK-based manufacturers in other sectors to supply an emerging shale gas industry. A report by Ernst and Young estimates that more than 39,000 indirect jobs could be created by UK shale gas extraction. It also suggests that the total spend involved in bringing UK shale wells into production would be £33 billion by 2032, which would include £17 billion on specialised equipment, such as high-pressure pumps and mixers. I note with interest that EEF has said that, although the majority of pumps are currently manufactured outside the UK, with some assembly done here, there is significant potential to increase UK production. However, if UK manufacturing is to benefit, it will be necessary to build the case for investment in those things, and that is my first ask to the Minister.

This is, however, not just about pumps; it is also about the sand that will be required for the fracking process. That will come from existing quarries and could generate a £2 billion spend in the UK from 2016 to 2032. This is also about the cement, for which there could be a nearly £1 billion market, and that cement could come from the UK’s four cement manufacturers. We cannot afford to dismiss that potential.

For me, as a south Yorkshire MP, however, the most exciting prospect lies in the opportunities the shale gas industry could create for steel manufacturing. Steel is in crisis. A global slump in demand, contractions in the oil and gas industry and the dumping of cheap, subsidised steel on global markets by the Chinese have combined with high energy costs and unsustainable business rates to create a debilitating sense of volatility in the industry. I acknowledge entirely that the industry must respond positively to the challenges it faces, but if UK steel is to develop a positive way out of its difficulties, it needs Government support.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

My hon. Friend is making a good case in relation to the UK steel industry, but the shale industry could help other integrated industrial sectors in the wider economy to develop, and one of those is carbon capture and storage. In a world where fossil fuels are getting cheaper, we should be using pots of funds originally used for renewables for CCS, and the Government should review their decision to get rid of it. In addition, non-conventional gas such as syngas, which comes from coal gasification—there are still tons of coal in the Durham coalfield under the North sea—could be less than 50% of the price of conventional gas. Those two pillars could lead to an industrial renaissance in some areas.

[Angela Smith]

I completely agree with my hon. Friend on both those points. On CCS, it is difficult for the Government to make progress on gaining public acceptance for the shale gas industry, and part of the argument against the industry has always been the emissions and the problem of using fossil fuels into the foreseeable future. CCS is one of the key ways we can deal with that issue and that argument. If there is to be a long-term future for any fossil fuel, the Government must think again about their abandonment of CCS technology.

We need to understand that the nascent shale gas industry offers one of those rare opportunities to create new demand for steel—something we badly need at the moment—and a new sense of hope that there is a positive future for one of our foundation industries. As United Kingdom Onshore Oil and Gas points out, the crisis that the industry faces will not be solved just by dealing with issues relating to energy and business rates, important though those issues are. It needs to be addressed by supporting UK steel to play a bigger role in manufacturing supply chains domestically and globally. This is about the Government supporting the development of a wider range of steel capabilities, by building the business case for the development of a UK shale gas supply chain.

What we do not need, as the hon. Member for Thirsk and Malton said, is a repeat of what has happened with the UK’s offshore wind industry, where we have missed opportunities to build a robust supply chain, despite our strength in the wind energy market. This time, the Government can get things right by working with industry and by supporting the building of a business case for developing shale gas. They can encourage confidence among investors and supply-chain companies and prevent the industry from meeting the fate that has befallen the green energy sector.

Steel’s opportunities as part of the shale gas supply chain focus on two main capabilities. First, as was pointed out earlier, the shale gas industry could need more than 12,000 km of high-quality steel casing, costing £2.3 billion. It could also need 50 drilling rigs, which would cost £1.6 billion to manufacture. So how do we make sure that we make the best of British, in meeting that potential demand? I suggest that we need first to identify the best means of making the UK contribution to the rigging requirements of the shale gas industry. That may or may not mean the domestic manufacturing of the rig components; but at the very least there is great potential for exploiting domestically the need to upgrade rig components to UK standards and to provide ancillary equipment. According to EEF, that market could be worth £1.2 billion. That is a good, practical, pragmatic way forward, which the Government could help to deliver.

As to the steel casing, the problem is, of course, that the UK manufactures welded tubing—not the seamless tubing required by the industry. UKOOG points out, however, that a significant amount of work is required on seamless pipes before they are ready to be used by the shale gas industry and that that could and should be done in the UK. That position is supported by EEF. I would prefer it if the necessary investment could be made to give a UK home to such a manufacturing capability once again; but, however we look at the issue, the Government have a role to play in supporting the steel industry to exploit the opportunities available and thereby to secure a better future for itself.

The Government need to support the establishment of the business case for all aspects of the shale gas supply chain, with particular urgency in relation to the steel aspects of that supply chain. As UKOOG points out,

“We are at the start of the shale journey and the steel industry needs help now.”

UKOOG has pledged to work with the Department for Business, Innovation and Skills to see whether any support can be given. That is incredibly helpful. What we want from the Minister today is a commitment to ensuring that that offer of collaboration from an industry that in a sense is new to the UK—shale gas extraction is new—is taken up enthusiastically by the Government; we want it to be translated into a supply chain strategy that guarantees that the best of British will lie at the heart of a successful, safe and environmentally sustainable British shale gas industry.

21:52

[Graham Evans (Weaver Vale) (Con)]

It is a pleasure, as always, to serve under your chairmanship, Mr Howarth. I congratulate my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) on securing this important debate. It is a pleasure to follow the hon. Member for Penistone and Stocksbridge (Angela Smith), who, in a campaigning speech, made some powerful points on behalf of her constituency and in favour of well-paid jobs and the future of the steel industry in south Yorkshire.

I am the chair of the chemical industry all-party group and co-chair of the energy-intensive industries all-party group. The UK chemical and pharmaceutical industries have a strong record as manufacturing’s No. 1 export earner. However, the fact that they are energy-intensive industries that compete globally means that their export success is critically dependent on secure and competitively priced energy supplies.

The chemical industry uses energy supplies both as fuel and as a raw material to make the basic chemicals that provide key building blocks for almost every sector of manufacturing and the wider economy. UK energy supplies are becoming uncompetitive and less secure. Supplies of North sea gas for use as raw materials and fuel are diminishing, and there is increased reliance on less secure supplies of imported gas. Our onshore oil and gas reserves offer an unrivalled opportunity to secure our energy supply for the future, crucially lessening our dependence on foreign energy markets while also creating tens of thousands of high-skill, high-wage jobs and generating billions in tax revenues.

The political realities in Russia and Ukraine, as well as parts of the middle east, show in no uncertain terms the increasing importance of energy security in the coming years. We cannot afford to be complacent. It is estimated that fracking has offered the US and Canada approximately 100 years of gas security, and it has presented an opportunity to generate electricity with half the carbon dioxide emissions of coal. Our shale reserves offer a stepping stone in our transition to a low-carbon future, especially the move from coal. Fracking can undoubtedly provide us with a legitimate, cleaner means of gradually bridging the gap between fossil fuels and renewable energy. Our energy security and the reduction of CO₂ emissions are critical considerations when we think about fracking as part of a broad energy mix, but I firmly believe that scientific and engineering evidence should be front and centre.

The safety and security of people, their homes and their businesses are paramount to any discussion. As I have said in the past, I cannot and will not support anything that may pose a risk to the health, safety and wellbeing of local residents, the natural environment, homes or businesses. Perhaps that is an area in which the Government need to do more to convince the great British public. I recently held two public meetings, in Frodsham and Helsby, where there is currently fracking exploration. I invited representatives of the Environment Agency, Public Health England and the Health and Safety Executive, together with a local property surveyor, representatives of Ineos with more than 50 years’ experience in the industry, and a rather sceptical professor.

The meetings were particularly well attended. It is interesting that the public bodies are relatively poor at getting points across. They are there to reassure the public, but they are reluctant public speakers. They are reluctant to engage face to face with members of the public, who have legitimate reasons to be concerned. People may have been told that their property will not be worth as much, that it may be susceptible to subsidence, or that their health may be at risk. There are many such stories—I regard them as scare stories, but they are based on what is said by powerful lobby groups such as Frack Free Dee, which point to what has happened in Australia and America in the past.

[Kevin Hollinrake]

I had a similar experience at a public meeting in my constituency. All the regulators were on a panel there, and it was clear that some questions and answers fell between the cracks. Does my hon. Friend accept that a single regulator with overall responsibility for the industry would improve public confidence?

[Graham Evans]

My hon. Friend makes a powerful point, and I agree. The three agencies involved are the Environment Agency, Public Health England and the Health and Safety Executive, and they go together as a threesome. If the Environment Agency says it cannot or will not attend, Public Health England and the HSE do not turn up. They go as a triple act. The people involved must of course be skilled in what their agency does, but I point out to the Minister that that should include being skilled in public speaking. That means speaking to the public in plain language, not jargon. People’s concerns are legitimate, but I also believe that there is evidence available to reassure the public. I am sorry to say that it is a struggle. We politicians are used to knocking on doors and being eye to eye, face to face, with the public, so we can argue and explain complicated issues to our constituents. However, the public agencies need to raise their game and stop using jargon.

[Kevin Brennan (Cardiff West) (Lab)]

The hon. Gentleman is making a compelling point. There was a day, obviously, when civil servants of that type did not engage at all with the public. Did he consider inviting a Minister to explain things, given that Ministers are responsible for policy and have the skills he is talking about?

[Graham Evans]

No, I did not consider inviting a Minister. It was a Friday night in the north-west of England, on a wild, windy and wet night. I would not expect my right hon. and hon. Friends to support me. We constituency MPs are perfectly placed. We are experienced enough, and we know the public and the area. I chaired the meeting, and I believe it is the role of the MP to do that, and to reflect all the concerns that exist. The public agencies are there to reassure the public, because not all members of the public believe what politicians say, but I also had independent people there. There was an independent professor there, who was a sceptic, but also a local businessman who was an expert in property values, and representatives of Ineos, a good local employer and well known chemical company.

Those public meetings were a great success. Despite the suggestion of the hon. Member for Cardiff West (Kevin Brennan), I would not expect a Minister to be at such meetings, but I would expect the public agencies to be there. My hon. Friend the Member for Thirsk and Malton made a good point, and we should have the expertise there to reassure the public. We are asked for guarantees; we cannot guarantee anything, but the whole point of the Environment Agency and Public Health England is to hold Government, the contractors and the companies to account.

I regard this as a first-world problem. We are a great manufacturing nation, and we need to keep it that way for high-wage jobs. When I became an MP in 2010 we had a wind farm application on Frodsham marshes, which went ahead. We also had four applications for energy from waste sites, otherwise known as incinerators, surrounding Weaver Vale. Two of those have planning permission, one is in operation and one is currently being built. Energy is clearly a thing of the 21st century in a constituency such as mine, which is part of Cheshire. Cheshire is regarded as a rural county, but it has expertise in engineering and chemicals.

The potential benefits of additional high-skill, high-wage engineering and manufacturing jobs and the increased security of our energy supply are too important to neglect. Hydraulic fracturing is an established technology and has been used in the oil and gas industries for many decades. The UK has more than 60 years’ experience of regulating the onshore and offshore oil and gas industry and is a world leader in the field. I believe that if the best engineering practices are used alongside a robust inspection system, fracking can be carried out safely in our constituencies. Engineering and chemical industries are a vital part of the northern powerhouse, especially if we want to ensure a high-wage, low-tax, low-welfare economy in the north-west of England.

10:01

[Stuart Blair Donaldson (West Aberdeenshire and Kincardine) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate the hon. Member for Thirsk and Malton (Kevin Hollinrake) on securing the debate. I read about his visit to Pennsylvania with great interest.

Onshore oil and gas operations use rigs, casing, pipework and other components in the drilling and stabilisation of wells. Those terms will be familiar to many of my constituents in West Aberdeenshire and Kincardine, and to many people throughout the north-east of Scotland who work in the offshore oil and gas industry. Indeed, unconventional oil and gas extraction already takes places to some extent in the North sea.

Furthermore, Scotland has a long history of unconventional onshore extraction. James “Paraffin” Young, who lived in my constituency in Durris for a time, was extracting shale oil in West Lothian as far back as the 1850s. At one time the industry employed 4,000 men, but the availability of cheaper forms of oil meant that it died out. I understand that concerns about the environment and the impact on public health were not taken as seriously in the 19th century as they are today, but the impact of unconventional oil and gas on our environment, communities and economy needs to be fully understood. That is why, on 28 January 2015, the Scottish Government introduced a moratorium on onshore unconventional oil and gas, including hydraulic fracturing. The Government also announced a programme of research into the issues surrounding it, as well as a full public consultation.

The moratorium will allow time for careful examination of the issues and proper engagement with the public in considering them. The comprehensive programme of research includes projects to investigate possible climate change impacts; a full public health impact assessment; further work to strengthen planning guidance; further tightening of environmental regulation; research on transport impacts; seismic monitoring research; consideration of decommissioning and aftercare; and economic impact research.

People who live near places where there could be onshore oil and gas extraction are rightly concerned about the potential impacts—other Members have mentioned that and given good advice on why local people may not need to be so concerned. That is why the Scottish National party-led Scottish Government are taking a pragmatic, responsible and evidence-based approach to the development of onshore oil and gas.

10:03

[Neil Parish (Tiverton and Honiton) (Con)]

It is a pleasure to speak under your chairmanship, Mr Howarth. I thank my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for securing the debate. He is quite a brave man—I can stand up and support fracking because it largely does not affect my constituency, but when fracking does affect a Member’s constituency, supporting it is a much braver thing to do. He made a measured speech, as did my hon. Friend the Member for Weaver Vale (Graham Evans). We have to ensure that the public understand what we want to do, because they want to be reassured that it will be safe.

I have made the point before in this Chamber that we sometimes miss a trick in this country. I spent 10 years in the European Parliament—do not blame me for everything that happened in Europe over that period. In France, for example, when they build nuclear power stations they ensure there are houses, roads, infrastructure and leisure facilities. I am not saying we can do all of that with the fracking industry, but we can make the industry more beneficial for local residents. That is what we need to do, because at the moment we are not really selling fracking very well. That is the trouble; we need to sell it.

[Tom Blenkinsop]

Carbon emissions are obviously a big issue surrounding shale or any form of fossil fuel extraction. We have to treat CO₂ as not only a waste product but a potential by-product, because the chemical industry already uses it as feedstock for a lot of different things, including agriculture, the bottling industry, the canning industry and the food preparation industry in general. It is the purest form of CO₂ when it comes through those energy-intensives. We need to educate people about the benefits of fossil fuels, the CO₂ from which can be sequestered and used again, thereby reducing the emissions that they create.

[Neil Parish]

The hon. Gentleman makes a good point, but we have to ensure that the people who will be living around the mouths of the wells, where the shale gas comes up to the surface, feel that there is a direct benefit to them. It is good to appeal to the greater good, but it is also good to appeal to those who will see the fracking most. That is the particular point I am making.

[Angela Smith]

Does the hon. Gentleman acknowledge that there are already plans on the table to return to local communities some of the investment and profit from the shale gas industry—something like 6% of the value of the gas extracted?

[Neil Parish]

I think there are such plans. There are various ideas, such as sovereign funds, but again, we need to explain to the local residents that they will get that money. One problem in the past with many such schemes has been that the money has not filtered down to the local people who have to live right next to the entrance to a shale gas resource. That is what I want to see.

We need to ensure that we explain the situation to local people and that they know there will be something in it for them—I know that may sound basic—and that they are doing something for the greater good. I will go on to talk about industry, but the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) made a really good point: fossil fuel extraction is necessary. We need only take the agricultural industry, in which natural gas creates ammonium nitrate, to see that it is hugely necessary.

My hon. Friend the Member for Thirsk and Malton made a point about having a single regulator, which is a good idea. It is about reassuring the public. The fracking will take place far underground and there is little or no chance of any problems with groundwater supply, but people are talking about those things. Those who are against fracking make much of them, so they need to be reassured. We must ensure that someone goes to the areas in question and presents the case strongly, so that people feel reassured about the safety of fracking. People can always cite problems in certain parts of the world, which makes it doubly important that we reassure people.

[Tom Blenkinsop]

The hon. Gentleman is being generous with his time. I want to back up what he is saying. He is a fellow North York Moors MP, where we have the Boulby potash mine in the national park. The mine goes more than 1 mile underground and 2 miles out under the North sea. Although it does not use the same technology, it goes through the same strata that the shale and gas industry will go through and is completely controlled. When large developments such as that occur, there is initially big uproar and upheaval, but the mine now employs more than 1,000 people. Although it is sadly letting people go, without it, the community would not have benefited from the well-paid jobs and solid employment they have reaped over the past 30 or 40 years.

[Neil Parish]

The hon. Gentleman raises an interesting point. I became very much involved with potash, because it is important in growing crops. We have such a massive amount of potash that we can probably produce enough not only for this country but for virtually the whole world. As he says, everybody has to be reassured that the processes can work together.

I am really heartened by this morning’s debate, given what I was expecting—perhaps I am tempting fate, as Members may yet come in with the opposite view. I often think that when we are talking about shale gas, it is easier to support those who are protesting against it. They make an awful lot of noise and have a fair point to make, but they get almost undue attention, and I think we have to be realistic about the potential for shale gas and the resource that we have.

To pick up on a point that my hon. Friend the Member for Weaver Vale made, we are potentially very reliant on gas from Russia, given that it may well come through Europe to Britain. We also import an awful lot of frozen gas from the middle east by tanker through Milford Haven. All those routes are susceptible to problems, and we will need a lot of gas in future. As we reduce our carbon emissions, there will still be a great need for gas. I think about 40% of our heating in this country comes from gas, and when people have gas in their homes, they expect to be able to turn on the gas boiler or gas fire. It would be wrong of people on all sides of the political debate not to allow shale gas to be got out of the ground, although we have to make sure that the controls are there, that we can do it safely, and that local communities feel that they get huge benefits from it.

We will continue to need gas as we decarbonise, particularly for heating and manufacturing. If we are not able to extract shale gas, the UK will have to import. In 2014 the UK imported 48% of its gas needs, and in 2030, without shale gas, it will import three quarters. Shale gas is still in its exploration phase, and if production is successful, it could vastly reduce gas imports. National Grid projects that it could meet about 40% of UK gas demand by 2030, but we need to get the process up and running if we are ever to hit that figure. We have to make shale gas extraction much more acceptable to local people, and we need to have a single regulator.

Additionally, shale gas extraction has the potential to create more than 64,000 jobs, which would not only help our long-term economic plan but ensure energy stability, which, with our ever-growing population, is a matter of increasing concern. Furthermore, the shale gas industry could help to revitalise our struggling steel industry. If shale gas extraction were to take off in the UK, the industry could need more than 12,000 km of quality steel casing, which would cost in the region of £2.3 billion. I have looked into that, and it is interesting that the type of pipes that are needed are not manufactured in this country. If we were to go into shale gas in a big way, we could invest in the steel industry to get it back up and running.

[Tom Blenkinsop]

The two tube mills in Britain are in Corby and Hartlepool, and they could easily be adapted to produce non-welded tubing. Of course, there is also a very good site in Teesside that is no longer being used. Again, that site could be adapted to provide non-welded tubing if virgin steel were produced once again there.

[Neil Parish]

I agree with the hon. Gentleman, because a way of supporting our steel industry would be to make sure that we produced British steel that went into the British shale gas industry. We would also be certain that the steel pipes that we produced were of great quality. We should be able to reassure the general public about the quality of that steel piping, so it could be a win-win situation.

In the US, having abundant cheap shale gas has helped to attract $138 billion of investment in the chemical industry, which is funding something like 225 new projects. The US has also brought a huge amount of its manufacturing back to that country because of its supply of shale gas. I do not believe the UK has quite the resource that the US has, but it will make a significant difference.

This has been a good debate, with many ideas being raised that I hope the Minister will take on board. My final point is to repeat what I said at the beginning: we have to make sure that the plans are acceptable to local people and benefit them. We have to bring out into public exactly what safety measures are being put in place, and we have to make that argument clearly in public meetings. We should ensure that we bring shale gas out of the ground in this country, to create better energy security in the future.

10:16

[David Mowat (Warrington South) (Con)]

I congratulate my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for leading the charge on this. It seems that the key word in this debate is “manufacturing”, and it is good to have a discussion that focuses on that. I thought that the hon. Member for Penistone and Stocksbridge (Angela Smith), in particular, made an extremely good speech, not only about the shale industry and manufacturing in that area, but the impact on manufacturing generally. It is very hard to have a march of the makers when we have higher electricity and feedstock costs, and generally a higher cost environment than our competitors, particularly those on the eastern seaboard of the US. Those points were well made.

I support the shale industry, which I have spoken about in the past. I completely agree that the concerns of local MPs—I have a fracking site in my constituency—need to be listened to. The industry needs to be well regulated and safe. I will come on to—what did we hear?—the “pragmatic and responsible” position apparently taken by the SNP.

I completely support the need for good regulation and local involvement, but I also have to say that sadly, in my view, the shale industry in the UK is not going to take off with the current prices of oil and gas. At $28 a barrel, the US shale industry is closing down and it has much more significant economies of scale than we have—the cost is something like $50 or $60 a barrel over there, and the gas price is linked. There will have to be closures. Frankly, in Aberdeen, we are seeing the impact of $28 a barrel. That is only just starting to hit Aberdeen, because $28 is higher than the operating cost in the North sea, let alone development and exploration.

I will put that caveat to one side and turn to the manufacturing potential of the industry—I hope I am wrong, however, and that perhaps prices will increase. We do not know.

[Angela Smith]

I thank the hon. Gentleman for his kind comments. Is it not also the case that the shale gas industry is much more fluid, dynamic and has much lower start-up costs than the oil industry, for instance, and that, in the long term, shale gas probably has a better future?

[David Mowat]

All that is true—and it is much more tactical, quicker and goes on from one to another. It does not have the big up-front development costs of, for example, North sea platforms. That is true, but it is also true that the wells do not last as long. The fact is that in the US, the shale industry is a $50-a-barrel industry, and at $28 dollars, that industry is in trouble. That is the whole strategy that the Saudis are taking and is what they are trying to achieve. They are going to be successful unless other things make them stop.

The title of the debate, however, is “Onshore Oil and Gas”—not shale. I say that because it is worth remembering that we have an onshore oil and gas industry. We have drilling and have had it for the past 30 years in places such as the New Forest, without the level of controversy that appears to surround this industry.

Other Members have talked about this, but let us examine briefly what has happened in the US shale industry. The industry has reduced the cost of gas by two thirds and has been converting—unfortunately, this also might stop—liquefied natural gas import ports to become LNG export ports. Equally important, the US has met any climate change target that anyone has given it. It did not sign up to Kyoto, but it would have met it by miles because of the displacement of coal by gas in its carbon emissions.

I want the House fully to understand that if the world were capable of taking out all coal and replacing it with gas, which is a big ask, it would be equivalent to increasing the amount of renewables in the world by a factor of six. That would be real progress in emissions. When political parties talk about carbon emissions—we heard about that earlier—without giving cognisance to that fact, it is frankly disingenuous at best.

[Kirsty Blackman (Aberdeen North) (SNP)]

On emissions and greenhouse gas, it is relevant to think about methane emissions when natural gas is used instead of coal. We need to consider that, and not just the carbon emissions.

[David Mowat]

That is a strong point and I agree with it. It is extremely important that, as in the US, there are no methane emissions. We have seen over and again in places such as Pennsylvania that methane is not emitted and that some of the scare stories are not true. I am sure that when the Scottish Government conduct their pragmatic and responsible review of the industry they will find that out for themselves.

In the US—I will not repeat my points—there are two elements in what cheap energy can do in manufacturing. The US has created around 200,000 jobs in that industry but, more important, the estimate is 1 million jobs in the onshoring chemicals industry in the US eastern seaboard. The transformation is extraordinary. It is re-shoring industry from Asia, China, Europe and, frankly, the UK.

Organisations make marginal decisions—this is not about closing Teesside and moving it to the US. When it comes to the marginal decision of where to open the next production unit, it will not be in Grangemouth, Teesside or Runcorn, but in Pennsylvania or Cleveland because that is where energy prices and feedstock prices are so competitive that more money can be made. We need to be cognisant of that. We sometimes talk in this House as though it is a new industry, but it is not.

The question arises—it is a fair one—of whether that applies to the UK. I have heard it said many times that things are different in the UK. It is true that we have a smaller manufacturing base and a much smaller chemicals industry, so perhaps it will not be so dramatic. People sometimes say, “Well, US gas prices have reduced by 70%, but that can’t happen here because we are on a European grid.” Generally speaking, when there is more of a commodity, the price falls. It is true that we have a European gas price and a European hub, but we had a global market for oil and look at what shale eventually did to the oil price. We are still living with that.

[Tom Blenkinsop]

I take on board what the hon. Gentleman is saying about a sheikhs versus shale fight, but the reduction in general fossil fuel prices, because of the online, downstream effect of renewables in the last 10 years, has also had an effect on driving down fossil fuel prices. The future of shale could be very beneficial to energy intensives because of cost, which is at least 50% cheaper than conventional gas. In addition, most of those industrial sites in Britain are located close to where those feedstocks are found.

[David Mowat]

I meant to say at the start that with current prices where they are, I do not think we will see a massive upkick in the UK’s shale industry. I think that will happen where shale is available near a chemicals site—INEOS in Runcorn and in Grangemouth is an example—because the costs and economics are different.

[Tom Blenkinsop]

Rather than seeing shale as a means by which to reduce consumer prices for heating boilers, for example, we should also have an industrial strategy that targets the use of shale gas for cheap energy-friendly intensives because that would be a cheap benefit.

[David Mowat]

My point was more about feedstock. I have no problem with an industrial strategy along those lines, although I make the point gently that the million jobs that were created on the eastern seaboard of the US were the result not so much of industrial strategy, but of a massively cheaper economic model and business case and all that goes with that. We need to learn from that.

The Chairman of the Select Committee on Environment, Food and Rural Affairs, my hon. Friend the Member for Tiverton and Honiton (Neil Parish), made a number of points about the fact that we are running out of gas. This is not principally a discussion about whether we should have gas versus renewables. It is gas versus coal, as I said earlier, in environmental terms. Gas production is now 70% lower than five years ago and we are importing it from Qatar and principally from Norway, but increasingly from Russia. Centrica has a contract with Gazprom and around 10% of our gas will come from Russia by 2020. We need to understand that and be comfortable with the implications.

[Alex Cunningham (Stockton North) (Lab)]

I am sorry I was not here for the start of the debate. The hon. Gentleman has talked a lot about the proximity of supply and forward gas production over the years. Will he talk a bit about coal gasification, which could be so important and is so close to Teesside and the north-east, for our energy-intensive industries?

[David Mowat]

I am not sure whether that was a request for me to talk about coal gasification. I will not because I have been talking for 10 minutes, but I agree that it is a complex market and an opportunity for Teesside. Our country’s industry base in Teesside is extremely important to all constituents there, and I completely agree with that.

On Wednesday, I had dinner with the head of Ernst and Young in the UK and I said that one thing that annoys me about parliamentary debates is that we quote reports from people like Ernst and Young as though they are some sort of gospel. We all say, “That’s what they say, so it is true and I will go with that.” It said in its recent report that it estimates that 64,000 jobs will be created in the shale industry alone, 6,000 direct and the rest in the supply chain, steel and so on. I return to the US experience where more jobs were created in the industries that benefited from the lower feedstocks than in the direct industry—the chemicals industry and so on.

[Angela Smith]

I thank the hon. Gentleman for making that important point. Does he recognise that the steel industry unions are one of the biggest supporters of the shale gas industry in the US?

[David Mowat]

I think the steel industry unions are right, as are the chemicals and aluminium industry unions. The US, unlike the UK, still has an aluminium industry, principally because energy prices there allow it to happen.

[Neil Parish]

The US has reduced its gas price hugely to attract the industry. When we extract shale gas, will we reduce our gas price or will we keep it the same? That is an interesting point because, if we are to encourage the industry properly I suspect we will have to reduce our gas price.

[David Mowat]

Gas prices are set by the market. We have a spot price for gas which is set in the European gas market. People have made the point that the European price will not decline in the same way as in the US. That may be true, but I make the point again that they could have said that about oil and shale oil. We have seen what has happened there. Clearly, the more there is of something, all other things being equal, the more the price falls. Fuel poverty is not the subject of this debate, but many people are living in fuel poverty in our country and we should all be keen to have lower energy prices.

Before I close, I want to pick up on the pragmatic and responsible points made by the Scottish National party. All of us as Members of Parliament have a leadership role in our communities. We heard my hon. Friend the Member for Thirsk and Malton exercising his leadership role. Of course he faces pressures in terms of the environment of the Yorkshire dales, but he also understands that we need jobs in our country and we need to create wealth. Importing gas at scale from Qatar, Russia and Norway takes jobs away from our country and has an impact on industries in Cleveland and so on. That is the exercise of leadership. “Leadership” is an important word, and all of us in this place need to exercise leadership. Saying that we are going to have a moratorium on this activity because that is responsible and pragmatic when the reality is that this industry has been going for 10 years and can go to Pennsylvania, like my hon. Friend did, and have a look—it can do all of that—is what I would describe as negative leadership, and it is populist politics because there is a body of people out there who are receptive to that; and that is not what any of us were elected to this place to do.

[Mr George Howarth (in the Chair)]

We have approximately 30 minutes left. That should be adequate time for the three Front Benchers, but I caution them that the hon. Member for Thirsk and Malton (Kevin Hollinrake), who moved the motion, has said that he would like a few minutes to sum up at the end.

10:30

[Kirsty Blackman (Aberdeen North) (SNP)]

It is an honour to serve under your chairmanship, Mr Howarth. I thank the hon. Member for Thirsk and Malton (Kevin Hollinrake) for bringing this debate to the House; that is very much appreciated. I am delighted to follow the hon. Member for Warrington South (David Mowat), because he picked up on a few points from the SNP and this is a good time to discuss those. I am also pleased that my hon. Friend the Member for West Aberdeenshire and Kincardine (Stuart Blair Donaldson) said some of what I was planning to say, because that means that I can get through my speech a bit faster.

My hon. Friend laid out the SNP position. We are looking at a comprehensive programme of research, and the consultation is due to end in spring 2017. Mary Church, head of campaigns for Friends of the Earth Scotland, said:

“This framework for reviewing shale gas fracking and coalbed methane looks like a well designed process, over a sensible timescale…undertaking a thorough review of unconventional gas cannot be rushed.”

If we are to exercise leadership and take the public along with us on this issue, a comprehensive review and a moratorium in the meantime is a sensible approach.

[Graham Evans]

The hon. Lady quotes Friends of the Earth. Is that the same Friends of the Earth that distributes misleading information to the general public by direct mail?

[Kirsty Blackman]

I have never received any misleading information from Friends of the Earth, so I cannot answer that point.

I want to make a few points about fracking. I do not understand what the hurry is. As the hon. Member for Warrington South mentioned, the gas price is pretty low at this point. The risks are not that well known yet. Fracking has been undertaken on an industrial scale really only since the very late 1990s and early 2000s. It does not have a body of evidence behind it. In terms of the rush to do this, the UK Government are trying to paint this as a gas versus coal debate—looking at our energy needs in terms of gas versus coal—but we have been shouting about other things. We have been making the case for things such as renewables and putting them front and centre. I do not think that this is a gas versus coal debate, no matter how much the UK Government try to paint it as such.

[Angela Smith]

For the record, the term “fracking” is not that helpful to the debate, but surely the key point of today’s debate is the importance to the future of UK manufacturing of giving this industry the support that it needs to get going. On that basis, there is surely a sense of urgency around all this. UK manufacturing needs new industries and new activity in order to grow.

[Kirsty Blackman]

I appreciate that point and I will come on to manufacturing; I just wanted to answer first a few of the points that had been brought up throughout the debate. “Fracking” is the term that my constituents use and the term that is recognised throughout the UK. That is why I was using it.

It has been mentioned a lot that we should ensure that controls are in place and there is proper regulation. The Scottish Government’s point of view and the direction that we are taking is that we want to prove the safety first and, if we do decide to do this, ensure that the controls are in place after that.

[Kevin Hollinrake]

During the moratorium, what evidence has been collated about the safety or otherwise of shale gas?

[Kirsty Blackman]

We are still in the process of researching this. The research does not finish until later this year, and then in 2017 the public consultation will finish, so we are not at the point in time at which we will be publishing the evidence. I think that that is reasonable. It is reasonable to look at the research properly before we bring it all together—

[Tom Blenkinsop]

Will the hon. Lady give way?

[Kirsty Blackman]

Not now. I want to make some progress because I do not have long.

I want to talk briefly about carbon capture and storage, which is very important for reducing carbon emissions; that is not just about moving from coal to gas. I have mentioned already the issue in relation to methane emissions. I understand that there is some evidence that methane emissions are relatively low, but I would like to see the body of evidence brought together in a report on unconventional oil and gas.

I also want to talk briefly about the supply chain and the benefits in that respect. I represent Aberdeen, where we have been feeling the effects of the oil crash for much longer than a few weeks or months. For the past year, contractors have been finding it very difficult to get jobs and redundancies have been being made. In terms of the supply chain and supporting jobs in the UK, particularly in manufacturing around the supply chain, renewables would be very helpful. Also helpful would be looking at supporting the oil industry as it is now. I understand that the unconventional onshore oil and gas industry would bring jobs, but we need to protect the jobs that people currently have and are currently losing.

[Tom Blenkinsop]

I thank the hon. Lady for giving way; she is being generous with her time. The argument that I have certainly tried to make is that to have the industry that provides the solutions for renewables, which we still need to keep pushing hard for, we need the cheaper energy in order to retain the industry—so that we onshore that industry. For a steelworks to go forward and development to become cheaper and more efficient, it needs cheaper energy; and it is only the steel industry that provides the slab that is then rolled into tubes for monopiles that go into wind turbines, for example. It is the only onshore solution and it needs that cheaper energy.

[Kirsty Blackman]

I appreciate that. I am not sure how much the onshore oil and gas industry will affect the price of energy. I did not know a huge amount about the chemicals industry and things like that; a point was made about feed. However, we do have the lowest oil price for a long time, and natural gas is at a 10-year low as well, so energy prices should be cheaper as things stand, without the need for fracking.

[Tom Blenkinsop]

rose—

[Angela Smith]

rose—

[Kirsty Blackman]

I do not want to give way again.

I am concerned about the rush to fracking. The UK Government will not get a major tax take from it, because of the current position with the prices. We should not be rushing to do it. In terms of my constituency and protecting jobs in the north-east of Scotland, we need to be looking at supporting the conventional, established offshore oil and gas industry, as well as supporting renewables. The Government need to rethink their renewables obligation changes.

10:38

[Kevin Brennan (Cardiff West) (Lab)]

We have had a very interesting debate. I have certainly learned a lot by listening to contributions from hon. Members on both sides of the Chamber. I thank everyone for that and congratulate the hon. Member for Thirsk and Malton (Kevin Hollinrake) on securing the debate. He told us that fracking—I am sorry to use that term—was a big issue in his constituency. Nevertheless, he made the case in relation to clean air, strategic interests of our economy, the industrial supply chain and jobs, including in the steel industry, tax revenues and exports. He slightly deprecated Government intervention in the economy, I think, by giving examples of economic progress where that had not happened. Then he outlined a whole series of Government interventions that he thought were necessary for this industry to work appropriately in the context of his constituency, so I think that there is a balance to be struck in relation to what the Government’s role is in developing a new industry of this kind.

[Kevin Hollinrake]

The deprecation that I expressed was more about providing short-term subsidies that are then withdrawn, rather than thinking long term. The interventions that I suggest are long-term interventions that would control and regulate the industry.

[Kevin Brennan]

I understand that, although I think that there is a case to be made for saying that some of the subsidies that the Government have withdrawn could have been planned in a longer term way. We will leave that point, however, because is not the subject of our debate.

I praise my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith), as other hon. Members have done, for her speech and for campaigning assiduously, particularly on behalf of the steel industry and her constituents. She put the case very well. Whatever we may think about the industry, the House has taken a decision, although it may not be the one that we wanted. There are clearly opportunities for British manufacturing, so we have to take a pragmatic approach and plan accordingly. We need a strategic approach to ensure that UK plc and jobs in the UK benefit to the greatest extent possible from the development of the industry. My hon. Friend outlined the potential for the UK chemicals industry and for manufacturing in general. She made some good points about the pumps that would be required for the industry, about sand and cement and about the steel industry. I congratulate her on her contribution.

The hon. Member for Weaver Vale (Graham Evans) described a public meeting in his constituency. I understand the difficulty of getting the message across. Energy generation is one of the great “wicked issues” of politics. We all know the rule in politics: everybody wants cheap, plentiful, clean energy at the push of a button, but nobody wants it to be produced anywhere near to where they live. Those two things, as we all know, are incompatible. We are required to wrestle with such wicked issues every day as constituency MPs, Ministers and leaders in our community and across our country. The hon. Gentleman was quite right to point that out.

I believe that Ministers might have a more direct role than the hon. Gentleman seems to think in taking the message to the public. That is part of Ministers’ responsibility, and they should not duck away from taking on difficult issues. In my experience, when Ministers take such responsibility, in the longer term they produce results for the Government in question—not that it is my duty to give them advice on how to win elections. I certainly think that Ministers have a direct role, although I appreciate that the Minister might not wish to spend his Friday nights in the way in which the hon. Gentleman described.

The hon. Member for West Aberdeenshire and Kincardine (Stuart Blair Donaldson) gave us an interesting insight, in his brief contribution, into the fact that the industry had its place in the 19th century. Shale was exploited in his constituency in the 19th century, so it is not a new concept.

The hon. Member for Tiverton and Honiton (Neil Parish) told us about his experience in Europe, and told us not to blame him for the bad things that have gone on there. Yesterday, other hon. Members and I attended a dinner with the aerospace industries. Since the start of the European collaboration that is Airbus, the European share of the commercial airline market has gone from 18% of the world market to 50%. It was made absolutely clear to us last night that that would not have happened without European co-operation and our membership of the European Union, so it is not all bad.

The hon. Gentleman described his friend the hon. Member for Thirsk and Malton as brave, and I am sure that he is. I am sure he would be equally brave if his majority were 456 rather than 19,456. He is quite right that it is always tough to have to wrestle with concerns from one’s own constituents.

The hon. Member for Warrington South (David Mowat) made, as ever, an informative and expert speech. He pointed out—this is the elephant in the debate—that the current wholesale price makes it substantially more difficult for the industry to get going than might otherwise be the case. He made a well-informed and interesting speech, in which he pointed out the potential for other industries.

We had a speech from the SNP spokesperson, the hon. Member for Aberdeen North (Kirsty Blackman), who laid out her party’s position. I wish my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) had made a speech. He made many interventions, all of which were interesting and, as ever, informative. We slightly missed out, but he did give us the benefit of his interventions.

It is my responsibility to set out our position as a party. We have already laid out the conditions that we wanted to see in place before the industry developed further, to ensure the implementation of the protections that hon. Members have expressed concern about. I will not go into great detail on that, because we have not got time. Given that the UK will rely on gas, on any estimate, until at least the 2030s and possibly beyond that—we are very reliant on imported gas from Norway and Qatar, as was pointed out during the debate—we support exploratory drilling, but it must not be at any cost. We made that clear in the amendments we tabled last year to the Infrastructure Bill. Despite conceding some of those points during the debate, the Government have somewhat reneged on them since the general election. We laid out a large number of conditions that we thought were necessary before exploratory drilling could go ahead. I will not list them now, because of the time, but they are well established on the record. That remains our party’s policy.

We have criticised the Government for allowing communities to decide whether they want onshore wind farms but not extending the same community involvement to this industry. There are questions about the appropriate level of local concern over a strategic industry of this kind. In relation to onshore wind, the Government have rather undermined their argument about the industry by the position that they have taken. I will not press any further on that point.

The development of this industry offers great opportunities for manufacturing industry in this country. One might call it “manufracturing”, as some have done. The Government must acknowledge that unless they bring forward an active industrial strategy, those opportunities will not be realised. We have heard about opportunities that have been missed with other industries, including offshore wind, because of a failure to understand and exploit the supply chain opportunities of a developing industry. There is a great danger that the same thing will happen in relation to this industry as it develops, unless there is an active industrial strategy. That must be driven by the Government being prepared to pull every lever at their disposal and bring all the appropriate parties together in the same room, as the previous Government did, for example, with the creation of the Automotive Council. In fairness, that was carried on beyond 2010 and is still in existence. It has brought tremendous benefit to UK manufacturing by getting industry and interested parties together and encouraging them to understand that there is a commonality of need, even where people are in competition with each other, for the sector.

[Tom Blenkinsop]

On the subject of an integrated industrial strategy, the comments of the hon. Member for Warrington South (David Mowat) about the east coast of America are quite interesting. The Obama Administration underwrote a lot of those projects with stimulus funding, which is part and parcel of the Obama Administration’s industrial strategy.

[Kevin Brennan]

On this side of the Atlantic, we tend to think that the USA is a laissez-faire society, but when we go there and see the reality of policies, not only at federal level but at state level, we soon find out that the picture is very different from our assumptions. Next time, I hope that my hon. Friend will prepare a speech, because we will not let him intervene so many times, no matter how interesting his contributions are. We look forward to hearing from the Minister about what he will do to make sure that the Government pull every possible lever.

[Mr George Howarth (in the Chair)]

Order. Before I call the Minister, I advise him not to take the Opposition spokesman’s suggestion of addressing us, as Queen Victoria accused Gladstone of doing to her, as though we were a public meeting.

10:48

[The Minister for Skills (Nick Boles)]

It is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) on securing the debate. I had the advantage, or perhaps the disadvantage, of arriving in the Chamber this morning almost wholly ignorant on the subject. This Chamber, at its best, is the best university seminar in the world, and I will leave after an hour and a half a lot more knowledgeable on the subject.

Particularly important and welcome is how constructive and responsible the debate has been. Not a single contribution has been out-and-out anti-unconventional onshore oil and gas drilling. Concerns have been expressed and different approaches by different Governments in the country have been outlined, but nobody has suggested that onshore drilling does not potentially have a role to play in our future.

Interestingly, the focus—especially from Conservative Members—has been on the role of the Government and their various agencies in helping people to cope with change, the unexpected, and the things that baffle and worry them. I congratulate all my hon. Friends on the role they take as Members of Parliament in bringing people together, securing the contributions of relevant experts and helping to lead their communities. The hon. Member for Cardiff West (Kevin Brennan) observed the scale of the victory of my hon. Friend the Member for Thirsk and Malton in the last election, but I am sure that he would be as brave in leading his community wherever he was elected and with however few votes over his nearest opponent.

The suggestion of a combined regulator is interesting. There might be a more practical approach than merging regulators, which would be pretty complicated. I will ask Ministers—I suspect it will be those in the Department of Energy and Climate Change rather than the Department for Business, Innovation and Skills, but it might be a combination of the two—why all three agencies have to send people to meetings. I will ask whether it is possible to have people who, despite being employed by the Environment Agency or the HSE, can speak to all the different aspects, rather than, as my hon. Friend the Member for Weaver Vale (Graham Evans) pointed out, the agencies having to travel in packs. That seems slightly inefficient and suggests that there is not a joined-up view and that things can get lost in the cracks.

The Government’s policy on shale is that it can make a significant contribution to energy security, environmental protection and economic growth if it is managed carefully and regulated responsibly. Both Government and Opposition Members have mentioned the desire to arrive at just that balance, between recognising the opportunity and dealing with the risks and legitimate concerns.

On energy security, my hon. Friend the Member for Tiverton and Honiton (Neil Parish) mentioned that we currently import more than 50% of our gas, and my hon. Friend the Member for Warrington South (David Mowat) pointed out that by 2020, 10% will come from Russia. In the 2020s, based on current projections without the development of domestic sources of onshore gas, we will import more than 70% of our gas needs. Many Members have made the point that gas will always be a major part of our energy mix—or if not always, at least for the foreseeable decades. It is therefore important that we have a secure supply of it, ideally from domestic sources.

[Alex Cunningham]

I am pleased that the Minister has expanded his knowledge this morning. Does he plan to become equally knowledgeable about coal gasification? He could become an advocate for that part of the energy mix as well.

[Nick Boles]

The hon. Gentleman tempts me. No doubt if he secures a similar debate on that subject, I will have that opportunity. I am sure he is right that we can help to reinforce the competitive advantage of our existing chemical and steel industries, and others, through all sorts of innovative ways of securing energy supplies that are more environmentally sensitive than previous ones.

On the vital question of environmental protection, my hon. Friend the Member for Warrington South made the powerful point that, if all the world’s coal were replaced by gas, it would contribute the equivalent of a sixfold multiplication of the world’s renewables industries. Gas is a fossil fuel and, in the long run, we all hope not to be reliant on fossil fuels. Nevertheless, the transition from coal to gas is probably the most dramatic thing we can do to enable us to cut carbon emissions and prevent further climate change. That is why the Government are so keen to see the development of shale gas in the UK. There are substantial reserves, which will assist us in achieving our environmental objectives and providing economic security.

[Kirsty Blackman]

What about the possibility of supporting offshore oil and gas companies to extract gas from more difficult high-pressure, high-temperature wells, for instance, rather than putting the efforts into shale gas?

[Nick Boles]

In this constructive and responsible debate, I do not want to enter into partisan criticism. The hon. Lady and the hon. Member for West Aberdeenshire and Kincardine (Stuart Blair Donaldson) represent seats in Aberdeenshire, which, of all places in the United Kingdom, has a great understanding of and reliance on the oil and gas industries. It was extraordinary that they did not mention the Scottish election that is coming up in the spring, as that was perhaps one consideration that informed the timetable of the SNP’s no doubt responsible and serious moratorium on the development of the industry.

It was extraordinary that the hon. Member for Aberdeen North (Kirsty Blackman) said that the industry has not been in existence for very long and therefore we do not know whether it is safe, when she also mentioned that it started in a serious way in the 1990s. I wish that the 1990s were not as long ago as they are, but they are 20-odd years ago. The failures of the previous Government mean that we have lost a huge opportunity by being slow. We do not want to continue that irresponsibility.

I thought the most interesting part of the debate was the discussion about the vital interplay between the potential of unconventional oil and gas and coal gasification, and the competitiveness of industries that are fundamental to the UK’s prosperity and employment in the north-east and elsewhere, which face a challenging time. We have heard, in interventions by the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) and in the excellent speech by the hon. Member for Penistone and Stocksbridge (Angela Smith), about the dramatic effect that access to much cheaper and more local gas supplies has had on the chemical industry in the United States, and how vital it could be here. We have also heard about the opportunity that it would create for our hard-pressed steel industry if it were able to supply the dramatic needs estimated in the Ernst and Young report—£2.4 billion of steel tubing, and drilling rigs worth an estimated £1.65 billion. If the steel industry were able to take part in that and the chemical industry were able to benefit from the cheaper costs, we could benefit dramatically. Thanks to my hon. Friend the Member for Thirsk and Malton, we have heard a powerful case for a responsible, regulated and measured approach, but not for a moratorium. I congratulate him on securing the debate.

10:58

[Kevin Hollinrake]

Once again, it is a pleasure to serve under your chairmanship, Mr Howarth. I apologise for my initial lack of knowledge about protocol. I am grateful to Government and Opposition Members for the constructive way in which the debate has been dealt with. I am also grateful to the Minister. I quite understand that onshore oil and gas is not his normal brief, but skills and industry is, and we have heard compelling cases from Members on both sides of the House about the opportunities for the steel, chemical and engineering industries. There are huge opportunities for jobs for young people, which would give them a chance in life as young engineers. I welcome the recent announcement by the Secretary of State for Education that schools will be required to direct young people to engineering as well as to university, which will be key.

We need clear regulation. People have concerns about who they would go to if something went wrong—would it be the Environment Agency or the Health and Safety Executive? Having a single regulator, or a lead regulator, would deal with some of those concerns. We also need a clear, well articulated plan. The shadow Minister mentioned my majority. That is a clear case in point. We need to ensure that Members of all parties—whatever their majorities—are willing to support onshore drilling on the basis that it is the right thing for the UK and a real opportunity for UK manufacturing. It is incumbent on the Government to clearly illustrate how that can be done in a way that eases local people’s concerns.

Motion lapsed (Standing Order No. 10(6)).