Offshore Helicopter Safety

Debate between Alex Cunningham and Colin Clark

Wednesday 6th February 2019 Westminster Hall

[Colin Clark (Gordon) (Con)]

It is a pleasure to serve under your chairmanship, Sir Henry. I congratulate the hon. Member for Stockton North (Alex Cunningham) on securing such an important debate.

Oil and gas is of enormous importance to Gordon, to the constituencies of the hon. Member for Aberdeen North (Kirsty Blackman) and my hon. Friend the Member for Banff and Buchan (David Duguid), and to several other constituencies in the north-east of Scotland. Aberdeen International airport is the transit hub of the UK continental shelf oil and gas industry, with the busiest heliport in the Western world, if not the entire world, and I am very proud to say that it is in my constituency.

As the hon. Member for Stockton North recognises, the oil and gas industry supports 280,000 jobs in the UK. Along with the Norwegian sector, the UK continental shelf is considered the most safety-conscious offshore industry in the world. Industry and regulators recognise that helicopters are the only practical means of transporting the workforce to and from the rigs; as he well knows, it takes up to an hour and a half in a helicopter to get to the rigs, let alone to the operations in Orkney and Shetland.

There are many areas that we can agree on. I have visited dozens of oil and gas businesses and all the helicopter operators, and as the hon. Gentleman says, they all live by the same motto: “The safety of our workforce comes first. If there are safety concerns, helicopters do not fly.” We all recognise that the North sea is a hostile environment and that hydrocarbons pose serious hazards, but what is important is how we manage the risks. Helicopters are essential to the North sea— without them there would be no industry—so we all want a safe means of transport to and from the rigs. It is important that public confidence be maintained, particularly among those who work offshore, many of whom live in the north-east.

There is excellent workforce engagement. As the hon. Gentleman mentioned, Step Change in Safety has various safety initiatives that have brought the various parties on board. Workforce engagement has come a long way in the past 20 or 30 years: operators, oil and gas producers, the supply sector, the trade unions and offshore workers meet regularly, and Step Change has been instrumental in giving everyone an equal voice. It is worth mentioning that trade unions represent only 10% of the North sea offshore workforce.

The industry has an excellent track record of engaging with the entire workforce. It has very high salaries, is technologically very advanced, is important to the economy of Scotland and the entire UK, and has inclusive umbrella representation. The Oil and Gas Authority, which looks after deals in the sector, tries to encourage organisations to work together—that is a big part of the extension of oil and gas in the North sea well into the middle of this century. There is a new national decommissioning centre in Newburgh, which is also in my constituency, and a planned national subsea centre. Oil and gas is an industry in which the companies and the workforce are encouraged to co-operate; it may be unusual among sectors, but commercially it is very co-operative. It is also progressive and driven by technology—one might say that it is the space industry of the United Kingdom economy. It has made enormous leaps.

Obviously there are commercial pressures, because the price of oil and gas goes up and down, but the main thing I get from people I visit in the industry is that nobody is complacent about safety. No one can visit the headquarters of an oil and gas company without being forced to hang on to a railing. [Interruption.] The hon. Member for Aberdeen North and my hon. Friend the Member for Banff and Buchan, my colleagues from the north-east, are both nodding at that. We would quite literally have a stop order served on us if we went into the headquarters of BP or Shell and did not use the railing. I do not know what anyone there would make of health and safety in the Houses of Parliament—I imagine that they would have cleared us all out a long time ago.

As I said, oil and gas is a progressive industry. Some may suggest that the slump in oil prices has led to safety being downplayed, but that is simply not borne out by the evidence from everyone I have spoken to in the industry, in Step Change in Safety and in Oil & Gas UK. None of them has suggested to me that there has been a deterioration in health and safety.

The Sikorsky S-92 is now the main heavy lift helicopter; 20 Leonardo AW139s also operate in the North sea, and the Airbus H175 is the new medium lift. The number of people who fly in helicopters is reducing, because there are more trips but with fewer crew on board. The Super Puma 225 no longer moves offshore workers in the North sea—it is to the industry’s credit that it has recognised the unwillingness to use that helicopter.

[Alex Cunningham]

As I understand it, the Super Pumas are no longer in use because the CAA has put such stringent conditions on them that they are not commercially viable to run. Does the hon. Gentleman agree that although the industry as a whole may continue to consult, the consultation activity directly related to helicopter safety has reduced? Airbus did not bother holding the town hall meetings that it promised, while meetings of the OHSLG have been few and far between.

[Colin Clark]

I recognise what the hon. Gentleman says, but I think Airbus did not hold the town hall meetings because it realised that that approach was not constructive. The workforce have told the commercial part of the organisation that they no longer want to board the Super Puma. The industry has well and truly recognised that, and has not tried to force the Super Pumas back in.

Let me move on to resilience. There are three main airframes that operate in the North sea. The other day I had a meeting with Oil & Gas UK, which is doing a review of resilience. There is no pressure to bring the 225 back in, because if there is a fault and one of the three helicopters ends up grounded for a week or two, there will still be absolute resilience in the system—obviously at any one time there are crews on the rigs, but they can be operated with fewer crew. I understand that if one of the main helicopters has to be grounded, the Super Puma 225 will not have to be brought in, because it will be easier to bring in helicopters from elsewhere.

I am trying not to discuss Brexit at every opportunity, but the plan is for us to have associate membership of EASA, and the CAA has a contingency arrangement of recognising EASA licences. People I have met in the helicopter companies are reasonably comfortable that there are contingency arrangements that will not jeopardise resilience with respect to the crew or helicopters that are operating, or other helicopters being brought in.

As the hon. Gentleman says, aviation in the oil and gas industry is regulated independently of other organisations. Following research projects and learning from tragedies, the Civil Aviation Authority has drawn up a list of improvements, including prohibiting flights in severe weather in case of ditching, ensuring that there are emergency breathing systems, and managing the largest passengers in case of escape—it is a fact of modern society that passengers are getting bigger, so escape hatches have had to be made bigger.

The air accidents investigation branch is well respected. The Transport Committee’s 2014 report, which the hon. Gentleman mentioned, included a request that the AAIB stay in far closer contact with victims’ families. We recognise that those families’ experiences are enormously traumatic, so it is important that the AAIB stay much more closely in touch with them while it goes through its process. The Committee’s thorough findings highlighted several issues that have been acted on—it is all in the public domain. What I am trying to say is that oil and gas is not an industry that is in hiding; it is a very public industry with several very effective regulators. It is being open and is working closely with its workforce—not just the 10% in the trade unions, but the rest of the offshore workforce. As I said, there is also a clear plan for when we leave the EU.

In summary, oil and gas is an industry with a safety-driven culture. It would be fair to say that no industry in the United Kingdom is quite as safety-driven as oil and gas, apart from perhaps the nuclear industry. We all recognise that an accident in oil and gas can be cataclysmic, and the industry does everything it can to control that. It is a very open industry. It is open to regulators and to public scrutiny. It is not trying to hide anything, and is questioned and held to account by legislators and regulators. Despite all that, there is no complacency. The industry is driven by the recognition that it has to be constantly on its guard, because that is so important, not just for the helicopters, but for the whole offshore and onshore industry.

Suggestions of a public inquiry are not necessarily constructive at this point, because of the work and the workforce engagement that has gone on. I absolutely agree with the hon. Member for Livingston (Hannah Bardell), who said that we all expect to go to work in a safe environment, although she might reflect on the fact that we work in a building that is probably not safe, and we should perhaps be having a word with the authorities of this building.

There is one anomaly in the 2014 report that I am not comfortable with. We still have not seen a fatal accident inquiry on the 2013 Shetland accident, which would be heard by a sheriff court in Scotland. That inquiry may have a view on a public inquiry, and I would respect that, when the fatal accident inquiry eventually happens, which I hope it does.

The hon. Member for Stockton North mentioned Step Change in Safety, which is running awareness courses on helicopters. That is very positive. This is a safety-culture industry, which is working with the trade unions and the rest of the workforce. No one is complacent about safety in the oil and gas industry.

I have written to the Department and discussed an independent review that would bring together stakeholders and engage all parties in looking at resilience on the commercial and the contractual side, and would be an open forum. It would be industry and workforce engagement, rather than a room full of lawyers, discussing evidence that we believe is already 100% out there. A public inquiry could undermine a lot of the hard work that has been done to date.

The public bodies and industry groups are all still working in the same direction. This is not an industry that is delivering its swan song, or that is going backwards. It is an industry driven by safety and, equally, by the commercial realities of modern business. It is a reflection on the engagement with the workforce that the 225 is not in operation and that there is no contingency plan to bring it back into operation on the UK continental shelf or in Norway, even though it operates elsewhere in the world and with our own military.

All loss of life is an absolute tragedy and is devastating for families. I think particularly of those in the north-east of Scotland. My good colleague, my hon. Friend the Member for Banff and Buchan, worked in the industry and lives with the history and the memory of the tragedies that have happened in the North sea. I finish where I started. The safety of our workforce comes first. If there are safety concerns, helicopters do not fly.

UK Oil and Gas Industry

Debate between Alex Cunningham and Colin Clark

Thursday 19th April 2018 Westminster Hall

[Alex Cunningham (Stockton North) (Lab)]

I congratulate the hon. Gentleman on securing this debate on an important issue. I am sorry that there are not more people here to discuss it, and that I have to leave before the end. He did not mention Teesside, which is of course the real centre of the oil industry. We have enjoyed a great partnership with colleagues in Aberdeen. Some £5 million of capital investment in new fields in the continental shelf is expected this year. Is he aware that companies that employ contractors are having extreme difficulties in recruiting people with the necessary skills for the new jobs now being created? Does he agree that the Government need to do more to improve the skills base to ensure that British workers can work on these British fields?

[Colin Clark]

The hon. Gentleman makes a very constructive intervention. There were 460,000 people working in the oil and gas industry; there are now nearer 300,000. With the amount of redundancies and people laid off in the industry, we might have expected that unemployment in the north-east of Scotland and on the rest of the east coast would have gone up sharply, but these are highly skilled people with highly transferable skills, and many companies that I visit in my constituency are already reporting a skills shortage, which is a concern that I am sure the Minister will mention.

It is very important that our universities and colleges engage with what the industry wants. One of the criticisms I heard recently was that there is not enough training in digitalisation for engineers. One company, Aker Solutions, a Norwegian company with a large base in Aberdeen, is recruiting from Mumbai because those engineers are trained in digitalisation. It is a serious worry for me that training and recruitment are not matching up.

Returning to my point about Mozambique, DIT had companies from Aberdeen and the north-east looking at the opportunities out there. There was also the Israeli ambassador’s lunch the other day—there are now huge finds of gas in the Mediterranean. Skills in the United Kingdom, particularly in the north-east, for example in directional drilling, will play a very big part in that.

I want to focus on the importance of the industry—its longevity, future and strategic importance—as well as Government involvement and the moral questions that surround the sector. The industry has come through some very tough years. As I said, employment in the sector has dropped from 460,000 to 300,000, but most of those people have been employed elsewhere. Employment has held up well, as people have also been employed overseas. Although there has been a downturn in the oil price, the amount of oil being produced pretty well holds up, so the number of people involved may simply move to another part of the world.

By early 2016 the price had declined by 75% in 18 months, so the industry withstood an enormous price shock, as opposed to a demand shock. Other basins stepped up production to maintain market share, most notably the middle east and OPEC. There have since been OPEC cuts and caps, which are helping to provide some sort of cost stability. We are seeing the price move nearer to $70, which starts to make the UK continental shelf much more profitable, or at least more able to cover its costs.

The main point to make today is that this is not a dying industry. Production will decline from the peak of 4.5 million barrels in 1999-2000—it is now down to about 1.5 million barrels—but it is still an incredibly important industry for this country.

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[Colin Clark]

I thank the Minister for that intervention. It is very important that we are careful that this industry is not demonised and is not seen as something of the past. It is a constructive industry and it is important that we do not suggest it is a stopgap until we move on to something else. We have to recognise its importance. How we use hydrocarbons responsibly is something we have to get right for generations to come, while reflecting on how we have got it wrong in the past.

[Alex Cunningham]

There is also the legacy industry from the parts of the industry that have changed. A huge decommissioning industry is growing up. Does the hon. Gentleman agree that contracts around decommissioning should be subject to even greater regulation in order to protect not just the environment but the interests of British workers who need to train to carry out this decommissioning work, which could create thousands of jobs for Teesside?

[Colin Clark]

The hon. Gentleman must have read my mind, because I am coming on to decommissioning. It is interesting that Hartlepool has already set itself up to take the topsides of rigs. That is pretty remarkable, because I remember that when I was standing for another election back in 2015 I was told that large vessels come and take the topside off, and then take it away to Turkey or the middle east to be broken up. I was told that, apart from a bit sub-sea, decommissioning was not going to be done in the UK. I am delighted that we are going to carry out decommissioning. This is about how ambitious we are to be involved in it. There are huge opportunities.

[Alex Cunningham]

There is the opportunity not just to decommission the rigs, but to bring them in, reconfigure them and put them back out on to the Dogger Bank to provide platforms for the people servicing the offshore wind industry. Would the hon. Gentleman support that?

[Colin Clark]

That is a very valuable point, and I know that the Oil and Gas Technology Centre in Aberdeen is looking at that. The initial idea was that everything would have to be taken down to the seabed, including the concrete installations on the bottom of the seabed. The industry is starting to look at the opportunities. The Oil and Gas Technology Centre is particularly active in thinking about what we can use again and what has significant value. There is a real opportunity with renewables, whether solar or turbines.

The current estimates put the total decommissioning spend at about £60 billion, but the Oil and Gas Authority is targeting a 35% reduction in that cost. Decommissioning has a big effect on the Exchequer, so it is important that we come up with an efficient way of doing it. Companies such as Well-Safe Solutions, based in West Aberdeenshire and Kincardine, are coming up with industry excellence to ensure that we do not learn a new lesson every single time we do this. We want much of the decommissioning industry to be in the United Kingdom. Apart from anything else, morally we should do as much decommissioning in this country as we can safely and in a way that fulfils what we want to do. We should not simply offshore our responsibility to developing countries.

Although there are opportunities for the UK supply chain, it is important to know how much of the cake we will get and what our ambition is. The biggest part of the decommissioning spend is the technical side—the technology and the design. We are already well positioned to do that in the north-east and the rest of the country.

The ambition of the industry, and the vision of people such as Sir Ian Wood, is to extend the North sea’s life with small-pool and late-life development. The industry can report growth; it is showing resilience. Oil and Gas UK’s “Business Outlook” report, released on 20 March, said that more new investment is expected in 2018 than in the past three years, so things are starting to tick up. Production in 2018 is set to increase by 5%, making it 20% higher than it was five years ago. That is resilience; the industry is not going backwards. Unit operating costs, which were a huge problem in the North sea and got completely out of hand, are now down to about $14 or $15 per barrel, compared with a barrel price of $70. That is not the total cost, but it means that we are now internationally competitive, which is very important.

The supply chain is still under enormous pressure, but revenues will stabilise in 2018. Cash flow and, most importantly, profitability remain a challenge. The service sector is telling companies in the oil and gas sector that they are being squeezed far too much. The problem is that if the tier 1s and tier 2s put them out of business, they will not be there for tomorrow, and that will be an economic disadvantage to the country.

More exploration is needed to realise the basin’s full potential. Transferable tax history, delivered by the Chancellor last year, is expected to remove barriers to late-life investment. The problem was that the tax advantages that a tier 1 company built up may have prevented other investors from getting involved in the oil industry, because they are unable to use the decommissioning tax breaks. That is very important, and it demonstrates the UK Exchequer’s broad shoulders.

Maximising the potential of existing fields is key to sustaining production at current levels to 2050. Oil and Gas UK estimates that

“between 12 and 16 oil and gas developments could get the go-ahead this year”—

as the hon. Member for Stockton North (Alex Cunningham) said—

“unlocking investment of around £5 billion.”

It goes on to say:

“That’s more than the new oil and gas field approvals sanctioned over the last three years combined and promises a much-needed business boost for the supply chain”.

It is important that the supply chain starts to negotiate contracts that will sustain it into the future. There is excess capacity, and if the oil producers squeeze too hard we could see a depletion in the number of people involved, and in the long term that will be very bad news.

Norway is always cited as an example. Exploration is tax-deductible in the Norwegian sector, and there are vast reserves. However, when companies find oil, they pay up to 78% tax, compared with the UK sector, for which it can be 20%. The industry reports that the greenfield and major brownfield developments set to be approved this year could yield more than 450 million barrels of oil and gas over time, although that still falls short of the level required to sustain long-term production at current levels.

We cannot underestimate this; the industry is not out of the woods. Oil and Gas UK said:

“The project landscape for 2018 is the healthiest the industry has seen…greater exploration success and maximising the potential within existing assets are essential for the future”.

Oil and Gas UK is not pulling its punches. It is saying that we see green shoots in the industry, but if this does not happen they could dampen back down. Oil and gas companies make decisions about investing money, and they are very tough about where they do that. They will invest in the UK continental shelf if it is the right place, but if there is somewhere better to invest, they will do that. It is important that the UK continental shelf remains fiscally one of the best places to produce oil. We must applaud the sector, because it has learned to be leaner. The UK continental shelf is more efficient, and optimism is returning to the sector.

To blow the trumpet of the north-east for a minute—there are several north-east MPs here—

[Alex Cunningham]

The hon. Gentleman means north-east Scotland. We use “the north-east” to refer to north-east England.

[Colin Clark]

Quite right. I mean the generic north-east.

The north-east of Scotland has 7% of the population, but 15% of the Scottish economy. I am sure that the hon. Member for Aberdeen North (Kirsty Blackman) will agree that it is the engine room of the Scottish economy. The policies of Her Majesty’s Government and the Scottish Government must encourage companies to thrive, and not be damaging. The cost of living in the north-east of Scotland is higher—house prices were driven up by the boom years, so we have the highest council tax bills—and employers feel penalised by what they see to be very high business rates. The empty business property rates have unfortunately backfired and are encouraging landlords to take buildings down. It is important that we invest in the north-east of Scotland—this is a plea to this place as much as it is to Holyrood—and that the money we raise there is spent there.

Over the lifetime of this Parliament, as much as £500 million of extra rates will be raised in the north-east of Scotland. My plea is that we spend that money in the north-east of Scotland, whether on roads, schools, hospitals or other facilities. It is important that we make the north-east of Scotland not only the right place to invest, but the right place to live. If somebody flies in from Houston or comes up from London or Europe, they have to come to somewhere they really want to live, so it is important that we invest in the area.

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[Colin Clark]

I thank Members for that plethora of interventions—it is good that everyone is so interested on such a hot day.

As I was saying, this is an enormously important industry, which has been the bedrock of the manufacturing industry of the United Kingdom. That is why Her Majesty’s Government have invested in it and made this country one of the best places fiscally to produce oil and gas. With the transferable tax history, the UK Government have delivered a massive incentive to invest—other Members campaigned for that for some time. However, it is important that the companies now investing in the industry understand their future responsibilities and that the companies that invested in the past, which have already had the tax benefit, realise that they still have a responsibility.

Fiscal policy makes the UK continental shelf one of the best places to produce oil and gas, and the low corporation tax of the United Kingdom means that the bigger part of the industry, the service sector, is well compensated when operating in the UK. To produce more revenue and grow the whole economy is what we are trying to do. For “business sector” read “jobs”, because employment in the oil and gas industry is picking up, and there is a huge spin-off from the industry. It has been reported that more than half of the companies surveyed expect employee numbers to rise this year. That is a big change.

The north-east of Scotland and the rest of the country involved in oil and gas have seen numbers heavily depleted. As we discussed in a Westminster Hall debate on social mobility a few weeks ago, some businesses are reporting difficulties in recruiting people with certain skills and competencies. That is a worry; perhaps our technical colleges and universities are not producing enough. I had not realised that that could be the case—I expected that Robert Gordon University in Aberdeen or Aberdeen University would be completely focused on the oil and gas industry, but there is already concern about skills shortages.

The oil and gas industry reminds me of the space programme in the US in the 1960s: when oil was $120 a barrel, the industry could not spend money fast enough—probably throughout the entire world, but particularly in the UK continental shelf. Since the oil price has dipped, the industry has obviously pulled back from training, which is probably the reason for our skills shortage. We saw a massive dip in training, although it is beginning to pick up again. Government should do everything possible to encourage training and investment in training, because the industry will continue to be important.

In the north-east we have the highest concentration of technicians and engineers in the United Kingdom—in both north-easts—and all sides can recognise that that is hugely valuable all over the UK. It is also important at the Oil and Gas Technology Centre that STEM—science, technology, engineering and maths—learning is an important part of what the oil industry offers.

Recently, the Aberdeen and Grampian chamber of commerce carried out an industry survey including employment and attitudes. I shall give a few of the numbers because it is important for us to understand where the industry is. The picture is a mixed one, but 80% of firms believe the industry has hit the bottom of the cycle and is now starting to go back up. That means we will start to see investment again—and we are. Fifty-four per cent. of the companies expected to be growing, which is very important, because we are clearly coming out of what was a major recession.

Companies also predicted that they will grow new opportunities, as came up in an earlier intervention by the hon. Member for Stockton North. I visited Sparrows, which builds complex cranes. It had a £10 million order for cranes to put on turbine platforms, to lift parts on and off: 105 of those automated cranes at between £50,000 and £100,000 each. That is a huge investment, and there is the industry diversifying out. More than 80% of companies expected to be involved in decommissioning, where the spend will probably be about £40 billion—that is not to be sniffed at and will sustain an engineering industry for a long time. Many sectors in the United Kingdom would like a £40 billion investment.

On Brexit specifically, the survey covered the issue of recruiting talent in future. The figures are worth mentioning: 47% of the companies surveyed believe that there will be no effect; and 33% were worried. I accept absolutely that we have to get immigration right because this industry employs such highly skilled people.

The Oil and Gas Technology Centre, funded by the city region deal to the tune of £180 million, combines academic research, including that of Aberdeen and Robert Gordon Universities, and industry to create value: to unlock the potential of the UK continental shelf, to anchor the supply chain in the north-east—predominantly the north-east of Scotland, in this case—and to create a culture of innovation that attracts industry and academia. The centre is trying to bring all that together.

For a long time, the oil and gas industry operated in silos, with independent commercial organisations. Sir Ian Wood, with one organisation, has been brilliant at encouraging companies to come together. I have to say—I am sure that all Members involved would agree—that the basing of the Oil and Gas Authority in Aberdeen has been an enormous success. I would be delighted were other Ministries to consider basing anything related to oil and gas in Aberdeen as well.

[Alex Cunningham]

I thank the hon. Gentleman for giving way again and for indulging me so thoroughly, because I have to leave the debate early. He has made a comprehensive case for investment in skills, innovation and development, but there is also the matter of the workforce. For example, workforce confidence in helicopter transport has diminished considerably in recent times. Since 2009 there have been 65 rescues and 33 deaths involving the Super Puma model. Does he agree that confidence in offshore transport needs to be rebuilt? The Government ought to consider and implement a public inquiry to help build that confidence again—that it is still safe to get in a helicopter to fly offshore.

[Colin Clark]

That was a valuable intervention. Recently, the British offshore oil and gas industry all-party parliamentary group met Airbus and the unions involved. There is obviously significant concern about the Airbus 225, also known as the Super Puma. At the moment, the Sikorsky S-92 is the main workhorse in the North sea. The problem is that if the 92 were grounded for any technical reason, or if there was any other reason to keep that helicopter on the ground for a week or two to check something, the industry would close down. Commercially, Airbus obviously wants to see the 225 come back in, and that is very much an issue for the Department for Transport. It is important for us to have confidence, because there is no other way to supply oil rigs.

When we had a visit from the Secretary of State for Transport, one or two of his advisers said, “This is brilliant, flying out in a helicopter.” I said, “How do you think they get back and forward?” The journey cannot be done by boat; it can take two and a half hours to fly offshore on a helicopter. Helicopters are important to the future of the oil and gas industry, so I accept the hon. Gentleman’s suggestion that we must restore the confidence of people who work offshore.

[Alex Cunningham]

Does the hon. Gentleman agree that part of that could be an open and transparent public inquiry? Everyone would be able to see, which would instil the level of confidence that workers are demanding.

[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.