UK Oil and Gas Industry

Alan Brown Excerpts

Thursday 19th April 2018 Westminster Hall

[Colin Clark]

Also, the trade unions and their representatives have to be very careful that they base what they are saying on science, not anecdotal evidence. I have heard one or two things said that made me very worried; I will not say that it was scaremongering, but they undermined people’s confidence in what is absolutely essential. The people who work in the oil and gas industry do not want to see helicopters grounded; they want to be safe and they want to be confident about how they get back and forward from the rigs.

I would like to mention two projects by the Oil and Gas Technology Centre. It has a great ambition for an underwater innovation centre, which is very important to the sub-sea sector. That is a very big part of the constituency of my hon. Friend the Member for West Aberdeenshire and Kincardine (Andrew Bowie), who is no longer in his place. It is also about to create the newly announced decommissioning centre in Newborough, in my constituency, which is trying to be the centre of decommissioning technology and ability, so that the UK plays a key part in it and we do not move it elsewhere.

In monetary terms, Vision 2035 aims to create £1 trillion of revenue over the period to 2035 only. The Oil and Gas Authority has a potential upper level of 20 billion barrels of oil, and that expectation is based on barely a quarter of what there could be. We want to see the supply chain double to £500 billion over that period. That is an absolutely enormous part of the UK economy paying tax, contributing and investing in people. Through collaboration, the maximum economic recovery that has been developed by the industry could provide £400 billion. Again, that is just up to 2035. The collaborative effort between Her Majesty’s Government and the Scottish Government shows that when we work together, businesses and jobs benefit. That is pretty well what all our constituents would expect us to do.

The private sector is beginning to have tremendous confidence again in the oil and gas industry. In 2017, there was a staggering $8 billion of merger and acquisition activity in the sector; Chrysaor invested $3.8 billion to purchase Shell assets, and that was before transferable tax history. There was also activity in the supply chain that included Wood Group and Amec, which together are to become a FTSE 100 company, and GE and Baker Hughes, which plan to float on the New York Stock Exchange. They are mammoth businesses investing in a lot of people. The variety, size and type of M and A deals last year signal confidence in the UK continental shelf.

We live in a free market economy where Government must create the right conditions for growth, which is why we are here today to address the Minister. Anti-business rhetoric of demonising job creators, overregulation or punitive taxes all damage growth, as does demonising hydrocarbons by suggesting that they are somehow a thing of the past that we should not be getting involved in. Achieving inward investment requires a dynamic economy with flexible labour laws, hence our historically low unemployment. High taxes destroy investment and job opportunities.

Government must be very conscious of what they are doing. We need to grow the whole economy, not just take more slices out of bits of it. Past Conservative Governments have made mistakes on that very point, particularly in the oil and gas industry. Deirdre Michie said:

“We need more exploration if we are to get close to recovering the three to up to nine billion barrels”

of oil.

Whenever we speak of oil, the figures are absolutely enormous, as is its economic impact: as I said earlier, 1 billion barrels of oil is £50 billion of contribution to the economy.

The UK has signed up to significant carbon reduction. Hydrocarbon production is presented by parts of the media and politicians in this place—I have heard them on many occasions—as part of the problem. Renewables have become a large part of electricity production, but there is twice as much energy transferred by the gas ring than there is by electricity because, apart from on a hot day like this, this is a country that needs heating in our homes. Natural gas produces half the greenhouse gases that coal does. The UK continental shelf industry is part of the solution, not the problem. Each and every one of us gets up in the Chamber as often as we can to remind people that the industry is a very valuable part of the economy.

As the Minister mentioned, the Oil and Gas Technology Centre sees the future being hydrogen and carbon focused, with unmanned facilities and reusable structures. Already, BP in the Quad 204 is putting into practice sub-sea automated structures and vessels, as opposed to rigs. This is a rapidly changing industry—we are changing skills.

I would like to mention a Government elsewhere with a lot of Scots people who moved there many years ago: New Zealand has announced that it will not allow any new offshore development. They are simply offsetting their responsibilities to overseas. They are somehow going to oversee their responsibility for energy, so they are just moving it to a different jurisdiction, where they will have no idea what the ethical and safe practices will be. That is simply pushing away their responsibilities.

Oil and gas are part of the transition, but they are part of our economy, potentially for centuries. They are an incredibly important raw material. As somebody said to me, “You don’t make electric vehicles with wood”—not yet at least. Hydrocarbons, oil and gas and plastics are a major part of those industries. I want people to remember that it is our throwaway culture that polluted our seas, not the existence of hydrocarbons. Already, the UK has slashed emissions by transferring to gas.

I heard recently in a Committee that some would suggest that oil and gas should not be part of the so-called ethical pension funds, should not be considered for green finance, and that somehow we should just turn off the taps and stop using hydrocarbons. Not only is that unrealistic, it is a fairy tale and completely luddite. Hydrocarbons have driven the industrial and green revolution. We would not be where we are if it were not for our use of hydrocarbons. That does not mean that we did not mistakes.

Life would be a lot harsher and the population would be a fraction of what it is. I worry when environmentalists say that, because I wonder whether they are basically saying that there are too many people on this planet and we cannot sustain them. I do not quite know how they will work out which economies should carry on developing and using hydrocarbons, and which developing and third-world economies will somehow be deprived of the development that the western world has enjoyed. Oil and gas has been pivotal in transforming the carbon intensity of the power sector, with cost-effective emission reductions achieved through a significant switch from coal to gas.

I would like to briefly mention fracking, without being overtly political. Everybody should remember that hydraulic fractioning of rock formations has been used in the North sea for 30 years. It has been done very safely and under the jurisdiction of Governments of various parties, who have been very careful how it is delivered. I do not really want it to get into the general narrative that somehow that is not safe, because that would suggest that what we are doing offshore, perhaps thousands of feet below the rigs, is not safe.

Well construction and the UK continental shelf has been absolutely at the top of the industry. Directional drilling and hydraulic fractioning has been developed in the North sea, so we should not just discount it. I ask the Scottish National party and the Scottish Government to remember that there is a science and a very good background to what we have done in the North sea. However, I respect the right of communities to say that they do not want onshore fracking. I also respect the right of communities to say they do not want onshore wind. But let us be frank: it is about nimbyism. They do not want it in their backyards. That is what it is about, rather than a denigration of the science and technology of those sectors.

Deirdre Michie said recently:

“As we move to a lower-carbon economy, the UK needs to meet as much of its domestic demand for oil and gas from indigenous resources”.

I would like to thank UK Oil and Gas, Deirdre Michie, the Oil and Gas Authority, the Oil and Gas Technology Centre, and also local organisations and companies that have fed into what we are speaking about. We can see the importance and scope of the industry, which has the potential to produce more than £1 trillion of revenue for the Scottish economy and to all economies of the north-east and the rest of the UK continental shelf. That is absolutely enormous.

The industry has longevity and huge strategic importance. Particularly at these times in the world, when we consider where our energy is coming from, our own gas supplies are of incredible importance and we should be investing in them, if for no other reason than to give us energy security. We must remember that the basin still employs 300,000 people in highly paid and highly technical jobs that drive other areas of research in the economy.

Will the Department for Business, Energy and Industrial Strategy ensure that we have an energy policy that recognises that, on the Department’s own figures, oil and gas will still provide two thirds of total primary energy by 2035? Oil and gas must be a vital component of that policy, which should consider affordability, security of supply and environmental sustainability.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

I assume that the hon. Gentleman also supports the call for an oil and gas sector deal as part of the industrial strategy.

[Colin Clark]

The hon. Gentleman must have read my speech—ah, there is a camera behind me! Yes, there should also be a sector deal focused on transformational technology, underwater engineering and decommissioning that drives technology with spin-outs to the wider economy. That is so important with regard to STEM subjects alone. It worries me that young people—students and kids who are still at school—say, “Has the oil and gas industry got any future?” One young man said to me that he was going to work in the car industry, building cars with steering wheels. I said, “Nobody will be driving them in 10 years’ time, but we’ll still need oil and gas, so I would stick to the oil and gas sector.”

My third ask of the Department is to support the high-tech and highly productive supply chain, which has the potential to double its share of the global services market. I ask Departments more broadly to ensure that the UK continental shelf remains fiscally competitive and that we have UK frameworks that strengthen the UK internal market, which is essential to oil and gas.

BEIS has long supported the industry, and we appreciate that one of the Minister’s first visits in her current post was to Aberdeen.

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[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Sharma. I congratulate the hon. Member for Gordon (Colin Clark) on securing this debate and thank the Backbench Business Committee for granting it. There have been only three speeches by Back Benchers and several interventions by the hon. Member for Stockton North (Alex Cunningham). Perhaps it would have been better if more people could have been here to participate; I suspect that the fact that it is Thursday afternoon has something to do with it. However, the good thing is that that has allowed much more informed speeches to be delivered, without time constraints. That is to the benefit of what we have heard today. I never seem to get the luxury of speaking from the Back Bench without a time limit and not having to use my red pen.

First, we heard from the hon. Member for Gordon. There was not much that my hon. Friend the Member for Aberdeen North (Kirsty Blackman) and I would disagree with. Typically for a Westminster Hall debate, everybody spoke in unison about the importance of this sector and its bright future. However, I do not think the hon. Member for Gordon had to defend himself for using the phrase “the north-east”. He should not have to stand up and clarify that he meant the north-east of Scotland. If he wants to call it the north-east, he should stick with that and not defend himself.

The hon. Gentleman mentioned that there are 233 companies in his constituency alone working in the oil and gas industry. That is a fantastic statistic, which shows the importance of the sector to his constituency and the wider Aberdeenshire area. He correctly said that the oil and gas industry should not be seen as a stopgap measure while we decarbonise the economy and that it still has a bright future. I echo that sentiment. He highlighted the resilience of the industry, which is why it still has that bright future.

The hon. Gentleman also mentioned the skills gap and the need for training, so I am sure he will welcome the fact that the Scottish National party provided an apprenticeship guarantee while the industry was going through a hard time, as well as a £12.5 billion innovation fund. He and my hon. Friend the Member for Aberdeen North both mentioned the issue that people leaving school and looking into future careers might be concerned about moving into the industry. I echo what they said: there needs to be a drive for the educational understanding that there is still a bright future—an engineering future, with actual opportunities. That is true not just in the UK, but in other countries, as we heard from the hon. Member for Banff and Buchan (David Duguid), who undertook employment abroad and saw the different cultures and experiences that that brings.

My hon. Friend the Member for Aberdeen North and I disagree with the hon. Member for Gordon on fracking. I also clearly support the SNP Government’s taking the decision to ban fracking. It must be remembered that it was done on a cross-party basis. The Labour party and the Lib Dem party support it, and on a wider basis the Green party supports it as well. The hon. Gentleman said that our position is nimbyism, but I would suggest that it is not. The fracking ban has widespread public support in Scotland, and lobby groups elsewhere in the UK would like to see fracking banned. That is before it comes to their doorsteps, if it even does, so that is not nimbyism—it is about people who have concerns about fracking.

I understand that there are some similarities between fracking and the technologies used in the offshore oil industry, as the Minister highlighted, but they are not completely the same; I got a briefing paper from the Library when a constituent raised concerns about why we were banning fracking while still allowing offshore extraction. There are differences. The modern fracking technology was developed from 1999 onwards in Texas—that shows it is different from the offshore technology; they were developed at different times. Interestingly, it was developed in Texas, but Texas has now banned fracking. That tells us that there are widespread concerns across the world. The Minister said this is ideological, but it is not. The Scottish Government took an evidence-based decision, and they stand by it.

My hon. Friend the Member for Aberdeen North agreed with most things that the hon. Member for Gordon said. She highlighted that one aspect we have seen with the dip in the oil price is that the fat in the system has been trimmed out, and that that needs to be captured. The hon. Member for Banff and Buchan touched on that as well, while also speaking about the work of the Oil and Gas Technology Centre.

My hon. Friend, like other hon. Members, highlighted the importance of Vision 2035 and of allowing developing companies to grow further and to retain their expertise and investment in the UK, rather than being sold off. That is a very important point. The hon. Member for Waveney (Peter Aldous) spoke about resilience in the supply chain. Helping these companies to grow would clearly help the supply chain and the industry’s sustainability.

My hon. Friend finished with what she said were a couple of asks of the Minister. I am a wee bit concerned that, as our economy spokesman, she miscounted the number of asks. It was more than couple! I counted that she asked for: support for a sector deal for the oil and gas industry, which every other hon. Member mentioned; the challenge fund decision; post-study work visas; and consideration of the right to stay regarding the residence of some people who are working abroad. She also highlighted the issue with customs. I think that was more than two asks, but I support her in them.

The hon. Member for Waveney said that there are still half a billion barrels to recover. He highlighted the importance of Vision 2035, and that there has been a drop in development drilling. We need to ensure that picks up for the future. He supported the sector deal and understandably focused on the East Anglian coast and what he called the “southern North sea”. It was a thoughtful contribution regarding the possible collaboration between the different sectors—oil and gas, offshore wind and transmission—and the co-location for generation. That should certainly be looked at. I like the concept of seeing that area as an energy basin and a resource. I would support that.

It was good to hear that the hon. Member for Banff and Buchan has experience of working in the industry. There is nothing better than parliamentarians who can share expertise and insider knowledge of an industry to help to do policy development in a more informed manner. He touched on Peterhead power station in his constituency and said that one of the issues with the carbon capture scheme was not having the surrounding infrastructure. To me, that suggests a policy deficiency. Allowing the development of a potential carbon capture and storage scheme in that location and then pulling the plug without getting to the end, capturing the knowledge and developing the technology that could be applied elsewhere, is a weakness of the Government. They should reflect on that. He highlighted the benefits of not returning to inefficient working practices. I am sure the industry wants to ensure it does not do that.

As other hon. Members have said, there is no doubt that oil and gas has been a success story for both Scotland and the wider UK. There has been a long history with onshore oil. It was first discovered and extracted in Scotland in 1851. Then in 1896, England discovered natural gas. I would just like to point out that, yet again, Scotland was ahead of the curve when it came to hydrocarbons. In fact, fracking was invented in Scotland. Towards the end of the 19th century, fracking was undertaken in the firth of Forth; but we have seen the light and changed our ways, and I support the Scottish Government’s ban.

I will concentrate my remarks on the offshore oil industry in the North sea and Aberdeen area. It has been developed since the 1960s and has been a great success story, which has turned Aberdeen into a global city. It has provided well-paid careers for people and has allowed many, such as the hon. Member for Banff and Buchan, to seek adventures and opportunities abroad. It has also allowed Scottish and UK companies to develop their expertise here and then move abroad. They then develop that expertise abroad, which channels money and resources back to the UK.

The oil and gas industry has been so successful that it has generated approximately £330 billion in production tax alone for the UK Treasury. However, at this point I will bring a bit more negativity to the debate. Some of that money has been frittered away. We do not have the legacy from it that we should. Aberdeen’s infrastructure is a case in point.

My hon. Friend mentioned the construction of the western bypass. That could have been done years ago. We could have channelled some of this money into that years ago. If I was to start with a blank sheet of paper and plan how to exploit the natural resources of the North sea using Aberdeen as a hub, a motorway network extending to Aberdeen would be built. That is money going to the Treasury that could be spent better. I am sure that Members from the north-east of England would say the same. The motorway network up the north-east of England took too long to develop. Meanwhile, while oil was generating significant money, we built the channel tunnel to France and a high-speed rail link from London to the channel tunnel. Yet the infrastructure in the north of England and in Scotland was sadly lacking. There was a deficiency, with the money going to the Treasury but not being distributed across the UK.

We should also have had an oil fund. The answer to that request has been a consistent no from the UK Government. Yet Norway’s oil fund, which was started in only 1990, sits at £780 billion. That is a fantastic legacy. Norway is also using and investing it wisely. It has the highest proportion of electric vehicles in Europe. It has invested massively in the renewables sector. It is decarbonising the economy while still wisely managing its oil and gas resources. That is forward planning that the UK Government could still do. We need to look at that.

[Colin Clark]

The hon. Gentleman has to recognise that the population of Norway is 3 million, 4 million or 5 million people. He also has to recognise that the economy is significantly smaller. The whole of the United Kingdom—the different parts of it—has benefited from the moneys that we have made from the North sea. Those have been invested, predominantly economically, and have paid for the downturns while the British economy was not doing so well. I think that it is a bit unfair to make that contrast. Blessed Norway has almost twice the reserves that we have, so there is a contrast in terms of population and investment.

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[Alan Brown]

I will come to the management of the downturn, but I think the hon. Gentleman has helped to make the case for an independent Scotland, so I thank him for that. I was not going there; I would not have touched on an independent Scotland, but I thank him. I still stand by the fact that, in my opinion, the money was going to the UK Treasury and was not distributed to the areas that were generating the wealth.

Interestingly, when it comes to fracking, in 2015 the UK Government promised a shale wealth fund of up to £1 billion for the north of England where fracking is proposed. Perhaps that is a lesson learned. It reinforces the omission of not setting up an oil fund for the benefit particularly of Scotland and other areas of the UK that extract oil and gas.

In Scotland we became used over the years to the scare stories about oil running out before yet again we discovered new oilfields. If we want to talk about not seeing it as a stopgap measure, we obviously need to watch how politicians talk about oil reserves. I certainly appreciate that everyone in this room has been very positive about the reserves that are there, the amount that could still be extracted and the future of the industry. However, other politicians sometimes try to exploit the concept that oil is running out, and we need to be careful about that.

[David Duguid]

It should be recognised, as I tried to point out in my speech, that it is fair to say that the easiest oil and gas low-hanging fruit to get has been got. There is a future for oil and gas, but, as I said, we cannot use the same behaviours and technologies as before, which is why it is important for Governments and industry to pursue the developments in technology and changes in behaviour required in future to exploit what is left, which is not so easy to get as what came before.

[Alan Brown]

I do not disagree. Clearly, the industry has shown a lot of innovation over the years and will continue to do so, and obviously it needs to do so to get additional extraction. My hon. Friend the Member for Aberdeen North gave the example of partial decommissioning to allow the technology to be input for enhanced extraction. That is something that industry is looking at now, and I am sure it will continue to innovate.

We know that prices can be volatile; we have had to deal with that over the years. Oil bottomed out at just under $12 a barrel in 1997 before rising rapidly to $91 a barrel by 2008. That was under a UK Labour Government. If I go back to legacy issues, I wonder what happened with that money, because there was no way oil projections at that time were going to be based on the oil price increasing dramatically. It was such a windfall with that massive increase in price, but I do not think we have seen the benefits of that, either.

On the point made by the hon. Member for Banff and Buchan about managing the downturn, we have been consistently told that we need the broad shoulders of the UK, but if we look at the support that the UK Government have implemented in the past few years, the spring 2016 Budget reduced the supplementary charge back to 10%, which was a welcome measure. The Red Book predicted that that would cost £1 billion, and yet nearly three times that was given away in inheritance tax to millionaires. That shows skewed priorities.

In the spring 2017 Budget, there was nothing specific for the oil and gas industry, except one paragraph promising another discussion paper. However, it did confirm the lowering of corporation tax. Despite what everybody says about how it grows the economy and creates more tax, the Red Book predicted that that would cost the Treasury £24 billion over the lifetime of this Parliament. That was the Government’s Treasury prediction. Let us think what could be done with that £24 billion in terms of infrastructure investment or additional support for the oil and gas industry. In my opinion, it was a lost opportunity.

In the November 2017 Budget, a measure was introduced: transferable tax history. As my hon. Friend the Member for Aberdeen North said, that was genuinely welcome. It is predicted to bring an additional £70 million in revenue to the Treasury, so it was not a difficult decision. That decision supports industry, but it helps the Treasury, so it should have been taken long before. We are still awaiting the appointment of the oil and gas ambassador first promised by David Cameron in January 2016, so the Government really need to provide additional support for the industry.

Yesterday I raised this matter in the debate on industrial strategy. The oil and gas sector deal has been supported by every colleague here today, but I was disappointed that the ministerial response from the Despatch Box yesterday never mentioned the oil and gas industry or Scotland and did not pick up on the point that I had made, along with my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry). I hope today’s Minister will respond. I am sure she is working on the oil and gas sector deal and is positive about it, but it would be good to have that confirmation.

I must repeat my disappointment about the pulling of the CCS fund. That must be a lesson for the Government going forward because it scared the industry and scares away other people trying to make private investment. Again, the Minister has spoken positively about the future of CCS, so it would be good to hear her reinforce that when she sums up.

I appreciate time is moving on, Mr Sharma, so I will try to hurry up, but I want to mention another renewable energy project that has been developed at Grangemouth and would support the Grangemouth refinery: the Grangemouth renewable energy project, which has been successful in the CfD auction. Because it contains biomass, the whole premise of the project is based on securing renewable heat incentive funding as well. The UK Government are looking at retrospectively capping the amount of RHI funding available to projects to 250GWh. That would put the Grangemouth renewable energy project at risk, so I urge the Minister to reconsider, because the project is so innovative. It is a world leader, it would support the Grangemouth refinery, and it could develop industry for export and help grow the UK economy.

We have heard some impressive contributions. All have concluded that the oil and gas industry has a bright future, and I certainly echo that. I look forward to hearing the Government’s response.

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[The Minister for Energy and Clean Growth (Claire Perry)]

Thank you for your chairmanship, Mr Sharma. I also thank the members of the Backbench Business Committee and its Clerks, who have provided us with an opportunity for an excellent debate. I agree that this was a quality debate, not a quantity one, and perhaps if we had more of those we should all be the better for it. I heartily congratulate my hon. Friend the Member for Gordon (Colin Clark)—and he is a friend—on securing the debate, and on an exemplary speech. It was thoughtful, detailed, clear and extremely well informed. Clearly he and other hon. Members in the Chamber have a strong constituency interest, and we debate the issue frequently because we are all passionate about the oil and gas industry and agree about the great value that it brings to the local and national economies.

I asked for and was able to keep the oil and gas brief when I became the Minister for Energy and Clean Growth because I think it is an integral part of the transition to a lower-carbon economy, as well as an enormous provider of productive employment and benefits to the economy, historically and in the future. It was striking to hear the comments of my hon. Friend the Member for Waveney (Peter Aldous), who perfectly combines those two interests, given his chairmanship of the all-party parliamentary group for renewable and sustainable energy and his frequent strong support for the industry.

We also heard excellent speeches from the hon. Member for Aberdeen North (Kirsty Blackman), who cares passionately about the issue and speaks up for it frequently; from my hon. Friend the Member for Banff and Buchan (David Duguid), who I was delighted to hear, because it is always wonderful to hear from somebody who actually knows what they are talking about—we all know what we are talking about, but some of us know more than others—from the hon. Member for Kilmarnock and Loudoun (Alan Brown), who gave a typically doughty defence of Scottish independence and managed to slip in some telling points that I will respond to; and from the hon. Member for Southampton, Test (Dr Whitehead), who I seem to spend a lot of time debating such matters with.

I will not detain hon. Members too long, because it is a lovely sunny afternoon, but I will make a couple of important points. I and the Government fully recognise the importance of the industry to the UK, historically, currently and in the future. It has been an enormous provider of revenue to the Treasury, of centres of excellence in terms of innovation, and of hundreds of thousands of jobs.

It is striking that in the past few years, we have stopped talking about the industry as a declining force, and started to talk again about the opportunities for it in the North sea and other areas. We have now realised that we can integrate those fuels into a lower-carbon economy. There are also incredible opportunities, such as decommissioning, which we in the UK can own as the world faces the same questions about the future of the industry.

There are encouraging estimates of what is left. Vision 2035 has led industry to say that there are between 10 billion and 20 billion barrels of oil equivalent left in the continental shelf, which could be worth up to £1 trillion. If we continue to responsibly explore and extract those hydrocarbons, use them in the most economically effective and responsible way, and work on decarbonisation, there is a great opportunity for north-east Scotland and the whole of the United Kingdom.

The challenge of the security of supply has been interesting in the past few months. The beast from the east, the changes to storage facilities in the UK and the discussions about diplomatic relations with other major gas-producing nations have led to conversations about the security of supply that we have not heard in the past few years.

In fact, indigenous gas production meets 46% of our gas demand and contributes to the balance of trade. We are clear that we have robust gas security for the future, but we may be able to increase the effective extraction of gas from the UK. I do not want to make the debate about hydraulic extraction, but I am convinced that we must soberly test the science, as we are doing through the exploratory phrase, to understand the size of the opportunity and whether it can be extracted, not in a wild west, Texan sense—that is not how we do business in the North sea base or anywhere else—but in the most environmentally responsible manner in the world. We want to test that. We have to be clear that that makes an important contribution to our energy security and our future economic prosperity.

As has been mentioned, I jumped on a plane as soon as I could and went straight up to Aberdeen—I did not drive up the motorway network, because it was not there, and it would have been a long way from Devizes even if it was. Aberdeen is a wonderful city and an amazing place to visit. Looking at the productivity map of the UK, the contribution that fishing, originally, and now this extraction have delivered is clear.

It was heartening to sit down with people from the Oil and Gas Technology Centre at the Oil and Gas Authority and talk to them about what they have been through. It has been a very tough time. They would say that they perhaps took decisions a little hastily—unfortunately, there have been job losses in the local economy—but as a result of going through that trial, the industry is in a better place than ever. It has the resilience to face any future changes in oil prices and an understanding of what it needs to do to build a more sustainable supply chain, and the co-investment that is coming together around the technology institute is very exciting.

It was also heartening to talk to the people from the OGTC about operational decisions, such as how they pulled together through the Forties pipeline interruption to deliver that back on stream more quickly. Of course they will always be competing, but the recognition of what co-working can mean is incredibly impressive.

The OGA has been a driving force for that. I pay tribute to its work, and to that of the offshore petroleum regulator for environment and decommissioning, which never gets enough credit. It is a superb operation with lots of civil servants from the Department for Business, Energy and Industrial Strategy working extremely hard and doing a very good job of regulating and ensuring the safety of the industry. We are aware of the painful losses that have been suffered and we are determined to work together to make the industry more resilient.

Hon. Members have spoken about the uptick in mergers and acquisitions activity, some of which predated the transferable tax history. I am told by industry that that has been such an important part of getting assets out of the hands of those for whom it might not be economically effective to extract, because they have global interests, and putting them into the hands of smaller operators.

Related to that, there has been an interesting surge in technological investment in things such as reusable tiebacks that enable companies to extract reserves in a more nimble way. That innovation and technology is really exciting. It is excellent that those lobbied-for tax changes, which were passed by a Conservative Government, are delivering. As the hon. Member for Aberdeen North said, there is renewed investment in innovation and drilling—people are getting out there and exploring.

Some of those changes will unfortunately lead to further restructuring and there may be job losses. We all want to build up a healthy ecosystem for the industry that will extend to a broader region and offer additional employment opportunities, particularly in new technology.

The Wood review, which we commissioned, suggested that we should establish a strong independent regulator. That is working well. We are committed to the driving investment principles that have underpinned that success, and we now have a globally competitive tax regime, which places the UKCS in the top quartile globally in terms of post-tax returns.

In total, the Government have provided £2.3 billion of fiscal support to the sector so far. We also committed another £40 million for new seismic acquisition, which has been managed by the OGA, and we co-funded the Oil and Gas Technology Centre through the Aberdeen city deal. I echo the point that the hon. Member for Aberdeen North made about that; it was a brilliant example of co-working. When we put aside our national, local and political boundaries, it is incredible what we can deliver in local areas. That has been a real success.

In response to the debate, I will announce three further things. First, I understand the comments about an ultra-deep water port, which we talked about in our manifesto. We are immediately commissioning a UK-wide scoping study, which will work closely with my Scottish Government counterparts, because they have kicked off a piece of work in Scotland and we want to ensure that we incorporate it. It is important that we look across the UK. If we can get an ultra-deep water port that is economically effective, it could have a material impact on our ability to attract decommissioning business.

Secondly, not for the first time, I listened with concern to the issues about helicopter safety. I understand that it is the only way for people to commute to work, as my hon. Friend the Member for Gordon said. I will write to the Civil Aviation Authority to ask it for reassurance that the measures it introduced on helicopter safety are working, and for what further assurances it can give.

Thirdly, on the issue that the hon. Member for Aberdeen North and others raised about customs treatment, I will instruct my officials to seek clarity immediately from their Treasury colleagues and to write to the industry and to all hon. Members present by the end of the month, so there can be no lack of clarity about what is required.

We have talked a lot about the industrial strategy. Trevor Garlick has done a fantastic job in getting the sector together and pulling together a series of interesting proposals. As I have said before, we must not define a Government’s willingness to work with an industry on the basis of there being a big-bang sector deal landing on people’s desks. Much of the financial and fiscal support that we have given to the sector is part of a broader sector partnership that we are committed to taking forward. However, there are some very interesting specific proposals in that deal. One that strikes me is for the decommissioning opportunity, which I am very keen to explore quickly and to bring forward. The House has my commitment that we will do that.

I believe we all share the view that environmentally rigorous extraction of oil and more particularly gas, and the use of that fuel, absolutely has a place in our low-carbon transitions. Our current assumptions are that we will continue to use gas. I understand the question of carbon capture and storage; we have debated it before and I will not run through the debate again. I will only say that we now have private sector partners with very deep pockets who are prepared collectively to invest in that technology through the oil and gas climate initiative; we did not have such partners before.

We also understand that we not only need to decarbonise generation; we also have to put that work within a cluster, so that dealing with industrial emissions can be put into the same infrastructure and framework. There are only five places in the world where CCS plants associated with generation are running purely on subsidy alone, which is effectively what we have been asking for. The other 16 places rely on enhanced oil recovery as a revenue source. Even the Norwegians, who have the sovereign wealth fund that we have talked about, find it very difficult to get pure subsidy for CCS through their Parliament. That is why I have set up the carbon capture council, which is headed by the best brains, including some of our friends from north of the border, to try to work out how we improve the technology in a cost-effective way. What is the irreducible core of cost and risk that Government have to take in order to move this technology forward?

The CCS cost reduction task force is specifically looking at cost reduction proposals and also committed £100 million for innovation, because without that technology we will not decarbonise either generation or industrial emissions, and I want us to lead on CCS.

In conclusion, this is a vital—

[Alan Brown]

I thank the Minister for giving way, especially when she is just winding up. I raised the Grangemouth renewable energy project and the possible application of a retrospective cap on the amount of renewable heat incentive money that the project can claim. Is that something that she can reconsider? We do not want to put this project in jeopardy.

[Claire Perry]

I would be very grateful if the hon. Gentleman wrote to me about that, so that I can consider that question and give him a more detailed reply. By the way, if I have missed out any points that were raised during the debate, Members should please feel free to raise them with me and I will try to respond to them.

It has been wonderful to have this debate on such a sunny day. It is 18°C in Aberdeen—I have just checked—so it is a slightly more balmy place than usual for people to head home to. This has been a really fantastic opportunity to reiterate all of our collective support for this industry, which has delivered so much, not only to the north-east of Scotland but to the United Kingdom. I want people to be in no doubt that we are committed to making sure that, yes, we do the economic extraction—I think that I have described it as being down to the last drop—but that we also think carefully about how we use this fuel in a low-carbon economy, and make the appropriate investments in the future. And once again, I commend my hon. Friend the Member for Gordon for raising this matter in the House.