Oil and Gas Industry

Bill Grant Excerpts

Tuesday 9th October 2018 Westminster Hall

[Bill Grant (Ayr, Carrick and Cumnock) (Con)]

It is a pleasure to serve under your chairmanship, Mr Hollobone, and I thank the hon. Member for Falkirk (John Mc Nally) for securing this important debate.

I welcome the stated aim of the Oil & Gas UK trade association, which is

“to strengthen the long-term health of the offshore oil and gas industry in the United Kingdom by working closely with companies across the sector, governments and all other stakeholders”.

In late 2014, Her Majesty’s Treasury developed a plan to reform the oil and gas fiscal regime. Over the last 50 years the oil and gas industry has contributed more than £350 billion to the UK Exchequer in production tax revenue alone—not an insignificant sum.

In 2017 the UK Government’s industrial strategy stated:

“We can also reduce costs for the UK as a whole by making intelligent use of our oil and gas assets and expertise. While the move towards clean growth is clear, oil and gas remains one of the most productive sectors of the UK economy, supporting 200,000 jobs directly and in the supply chain, and generating £24 billion in annual exports. The emerging shale gas industry offers the prospect of creating jobs, enhancing the competitiveness of downstream sectors and building up supply chains.”

It seems likely that shale gas will be extracted only south of the border, as the Scottish Government appear—I emphasise the word “appear”—to have placed a moratorium on that source of energy. I understand, however, that imported shale gas from the US is helpful when securing the future of the important Grangemouth plant.

I read with interest a recent post note in the journal of the all-party group for energy studies, which considered decarbonising or reducing the carbon content of UK gas supplies as an option for reducing emissions from heating, potentially substituting natural gas with hydrogen or biomethane. I am pleased that such welcome research is continuing in that field. Indeed, some businesses in my constituency are already utilising biomethane, although not necessarily to the exclusion of natural gas.

The opening in February 2017 of Aberdeen’s Oil & Gas Technology Centre clearly illustrates both the UK and Scottish Governments’ commitment to the future of the oil and gas sector. The £180 million investment aims to unlock the full potential of the UK North sea for future generations, which is vital given that future energy demand, not just in the UK but globally, is predicted to increase as global living standards and population levels rise.

Another important aspect for the future is securing for the UK work associated with the decommissioning of platforms and subsea facilities where a cost-benefit analysis proves that to be prudent. The Oil & Gas Authority has stated that such work may create a globally competitive market for the UK. The aim of the Department for Business, Energy and Industrial Strategy is to maximise the economic recovery in relation to the UK’s continental shelf, and it endeavours to secure maximum value for economically recoverable hydrocarbons.

Although the oil market is volatile—post 2014 the price of a barrel of Brent crude plummeted—it is clear that oil and gas have a positive future. That future may not be a mirror image of the past, but rather a new vision, as scientific research and innovation define and constantly refine it for our children and grandchildren. Oil and gas may not have the same exclusivity they once experienced, but in my view they will remain part of an inclusive package of energy options for some time to come.

Let me turn to a fuel from the past—coal. These days, open-cast or imported coal is used mostly as an integral part of the UK manufacturing sector, especially in the chemical process to make steel and cement. Many Members present, however, will recall when coal was king. Collieries in Ayr, Carrick and Cumnock, such as Littlemill, Killoch, Barony, Knockshinnoch and Beoch, to name but a few, fuelled the industrial revolution and kept the home fires burning. Sadly, there are no longer any deep mines in the United Kingdom, and coal is outlawed as a polluting fuel. With the recent alarming UN report on global warming, we must be aware that the same fate may befall oil and gas in the rush to embrace clean renewables and to prevent a catastrophic rise in global temperatures. In closing, therefore, I ask the Minister to comment briefly on that recent UN report on rising global temperatures.