Onshore Oil and Gas

Alex Cunningham Excerpts

Tuesday 26th January 2016 Westminster Hall

[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.

--- Later in debate ---

[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.