Offshore Oil and Gas Industry

Hannah Bardell Excerpts

Thursday 3rd March 2016 Westminster Hall

[Hannah Bardell (Livingston) (SNP)]

It is a pleasure to serve under your chairmanship and to speak in this debate, Mr Walker. I am the Scottish National party Member for Livingston, which does not have an obvious connection with the oil and gas sector, although we have some businesses down the supply chain, and many of my constituents work in the oil and gas sector, as do people across the country.

I spent the last three years of my career before coming to this place working in the oil and gas industry in Aberdeen. I spent seven years of my working career in Aberdeen and the north-east of Scotland, so it is an area and an industry that is close to my heart. I will take a little walk down memory lane, as it is appropriate to the topic. I spent the last three years of my career in the service sector. I worked for a year in a subsea company and then for an asset integrity and construction company. The last company I worked for was the biggest supplier of people power and scaffolding offshore. From speaking to many of my friends and former colleagues, many of whom have lost their jobs, I know the impact of job losses on family life and on communities, which is substantial. We have heard extensive information about the industry today, but it is always important to remember that there are lives behind every job loss and every company shutdown, but there is also hope, because there are so many people in this industry.

We talk about the UK’s exports and how we are not doing as well as we could, but we do not just export products and innovations; we export people. I have travelled to a number of countries and cities across the world, and in every oil and gas city, whether it is Houston, Abu Dhabi, Dubai or Perth, I hear an Aberdonian accent, which is a fact. Aberdonians have worked for generations in the oil and gas industry, and they have been exported all over the world. Scotland has a long tradition of innovation. I think it was Arthur Miller, the American writer, who said that Scotland invented the modern world. Well, it is true that Aberdeen and the people of the north-east of Scotland pretty much invented the oil and gas sector and many of its technologies and innovations.

I worked with one guy in my last company called Jim Chalmers, who worked on the hook-up of the Brent Delta, which was the platform for which Brent crude was named. Before I left, we were working on the decommissioning of that platform. He has literally spent his entire career in the sector and in the industry, and he has some frankly incredible stories to tell. He also lost many friends in the Piper Alpha disaster, which I will mention later.

On global markets and pressures, we have seen market oversupply and a trading war between shale oil and the middle east. That has put pressure on oil, causing it to drop to a 12-year low, although it is bouncing back somewhat. Lower and lower for longer and longer, as my hon. Friend the Member for Aberdeen North (Kirsty Blackman) said, will be the norm. I have been to many Oil & Gas UK events over the years, and the business breakfast I went to last week was one of the most entertaining and informative. An independent analyst, Beth Mitchell, talked about some very dry and technical information with significant wit and flair, so I pay tribute to Oil & Gas UK not just for the way it presented its activity survey but for the way that Beth presented the information. One thing the activity report drew on was the challenges and pressures put on the shale industry and how the industry has responded in the US. The industry has developed new innovative technologies. It has gone back and re-fracked wells and has been able to operate at a much lower price than anybody had expected, which has been causing additional pressure. She highlighted how the oil and gas industry could learn from that.

As we approach the Budget, I follow everyone in saying how important it is that the Government listen. One key thing that happened in a recent Budget announcement was the cancellation of the carbon capture project, which was a huge blow for us in Scotland and the north-east. I understand that the Government have their books to balance, but we are looking to maximise recovery and to do all we can for this sector, for the energy industry and for innovation and new technologies. It was a hammer blow to the north-east of Scotland and to Scotland’s industry, and we urge the Government to reconsider this technology and the removal of the investment.

I have spoken briefly about innovation. I will touch on a couple of innovations with which I was directly and personally involved. One of them, at the subsea company I worked for, was called the autonomous inspection vehicle. For those who know what an ROV is—a remotely operated vehicle—an AIV is tethered to a boat, and it goes around inspecting in areas too dangerous for divers. The company where I worked developed one that was tetherless. It was basically a remote-controlled car under the sea, which was incredible technology. The company put in a lot of investment, and the company with which it had partnered, SeeByte, developed the technology. SeeByte was a spin-off from Heriot-Watt University.

Interestingly, just before I left, I got news that SeeByte, which had been a Scottish firm, would be sold to an American firm. That was particularly disappointing, because we see it over and again: companies in Scotland and the UK get to a certain level, and there is just not enough angel or equity investment to get them over the line to the next step, so they go to, or are bought by, American firms. It was disappointing to see that happen. I know that there have been changes to innovation grants. We have gone from grants to loans, and we are now hearing companies talking about moving abroad. That is disappointing, and I urge the Government to rethink.

The other technology was called ERBAS, or extended reach breathing apparatus system. A couple of guys in a workshop came up with a piece of technology to help the guys—they are largely men—who go down the leg of a platform. For those of us who cannot imagine it, I have a friend whose father was one of the last coal miners in Scotland, and then went on to work in the oil industry at Sullom Voe in Shetland. He said that although he had been in a roof fall in an underground coal mine, he had never been as scared as he was going down the leg of a platform. The technology that the company developed was to stop those guys having to carry their air. Instead, they could make a free descent, plugging in as they went, so they could breathe going down and coming back up. The company was investing in the technology and trying to get it to take off, but was unable to get external investment.

Those are just a couple of examples, but they are significant. Companies across the oil and gas sector are developing similar technologies every single day, and we need to do as much as we can to support them and their opportunities.

[Callum McCaig (Aberdeen South) (SNP)]

The hon. Member for Waveney (Peter Aldous) and my hon. Friend the Member for Aberdeen North (Kirsty Blackman) have discussed access to finance. My hon. Friend is making a powerful point about how innovation requires financing. Does she agree—I am sure she does—that access to finance is critical to maintaining that drive for innovation?

[Hannah Bardell]

I absolutely agree. It is critical that we send the right message not just to the industry but to the markets that we are there for them and will invest in the technology. Again, as our exports drop, we must consider how we can do better. This is an area where we are leading the world, and we must invest.

Another innovation developed was the rebreather. As I am sure many Members remember, there was a series of helicopter accidents in the North sea, and in August 2013, a helicopter went down off the coast of Shetland. I was part of the emergency response team for my company at the time; sadly, we lost someone in that accident. That experience changed me and everybody else involved, and I will certainly never forget it, but the industry’s response—we had the support of Oil & Gas UK, the police and all the various bodies—was incredible. It showed the industry’s robustness and ability to respond. Ultimately, getting in a helicopter is pretty much the only method of transport for people who work offshore. The industry’s response—developing a new breathing system and new ways to get people offshore—was important, because the accidents put significant pressure on production and on the ability to get people out and back safely.

I will touch briefly on the apprenticeship levy, which was introduced by the UK Government to deliver 3 million more apprenticeships. We welcome anything that can deliver more apprentices. However, there is a lack of clarity on the issue and a concern in the industry, which I have raised and will meet the Minister about shortly, regarding double charging. Some parts of the industry are already paying a levy to the Engineering Construction Industry Training Board for apprentices.

I urge the Government to do all they can to ensure that the levy is clear, concise and simplified, and that it delivers what it promises. Scottish Ministers have had concerns about the lack of consultation, and they are still not clear how the new body being created will work. It is important that people do not end up being put into apprenticeships that are not real apprenticeships but low-paid jobs. We must do our best to get young people into this important sector and many others. I welcome the Minister’s willingness to meet me, and I thank the Aberdeen and Grampian chamber of commerce, which has done a lot of work to bring together people in the oil and gas sector on that issue.

Oil & Gas UK’s operating expenditure report for 2017, the activity survey, says that the industry has made substantial progress. We must commend it on reducing operating costs, with total operating expenditure falling by around 15% to £8.2 billion. The industry has the wit and will to do so. Clearly, innovation comes not only in technological form but in terms of expenditure. Under massive pressure, the industry has led the world in innovation. We must do all that we can, in terms of the tax regime and the field allowances that Oil & Gas UK has called for, to reform the special taxes paid by the industry, to promote investment and maximise capacity during the downturn.

Other hon. Members and I recently met the Underwater Centre in Fort William, which trains divers across the globe, particularly in the UK and Scotland. We must remember that diving is one of the most dangerous jobs that anybody can do. The Underwater Centre told us that the average age of a diver is now more than 50. What is happening is that although people are still coming through for training from Scotland and the UK—less so globally—the centre is seriously concerned that when the upturn comes, not enough people will have been invested in and not enough divers will have been trained, and we will get back into the same cycle that we have seen before, in which only certain people have certain skills, and companies must pay a fortune for them. I saw it happen in the industry when I was there: people were paid phenomenal salaries for specialist skills, because we had not had the foresight to invest in training.

I come to the work that the Scottish Government have done with Scottish Enterprise and Scottish Development International. I know from having tried to open an arm of a business in Norway—and succeeded—how important Scottish Enterprise and SDI were. They gave us support and financing to attend, for example, the Offshore Northern Seas conference in Norway and get business, and helped us understand how to operate in a different country. The Scottish Government have been doing everything that they can to support the industry in its time of need. First Minister Nicola Sturgeon set up a jobs taskforce in January 2015 in collaboration with Scottish Enterprise, chaired by its CEO Lena Wilson. It is only fair to pay tribute to Lena Wilson, who has done a huge amount of work on the issue. She has worked tirelessly with the Oil and Gas Authority, Oil & Gas UK and many others.

The Scottish Government are also running an “adopt an apprentice” scheme through Skills Development Scotland to re-employ any modern apprentices in the industry who have lost their jobs or apprenticeships. On 1 February 2016, the Scottish Government announced £12.5 million for oil and gas innovation and further business support, including £10 million in Scottish Enterprise funding to help reduce the risks associated with carrying out research and development and enable access to specialist exports to help kick-start innovation projects in Scotland.

Finally, I would like to make a point about health and safety or, as it is often called in the oil and gas sector, HSSE or HSSEQ—health, safety, security, environment and quality. The right hon. Member for Tynemouth (Mr Campbell) also mentioned it. At a time when costs are under such huge pressure, it is important that health and safety are not compromised. I have seen the results personally, and had to deal with incidents. The industry has come a long way since Piper Alpha. It is hugely innovative and it continues to invest, but it is important that we send the message that health and safety must not be compromised in these difficult times.

In conclusion, there is a huge amount being done by Government, by industry bodies and all across the sector, including by companies and individuals, but we have to send the strongest message possible that this industry has a prosperous future and that we need to do all we can to support it. The oil and gas industry matters and the message that we have to send to our banks and to investors is that it is open for business and is here to stay.