Oil and Gas: UK Continental Shelf

Lord Henley Excerpts

Monday 18th June 2018 Lords Chamber

[Lord Bruce of Bennachie]

To ask Her Majesty’s Government what steps they will take to promote new exploration and enhanced recovery of oil and gas from the United Kingdom’s continental shelf.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, the Maximising Economic Recovery of UK Petroleum strategy sets out the steps that the industry and the Oil and Gas Authority must take to secure that the maximum value of economically recoverable oil and gas is recovered from the strata beneath UK waters. Most recently, the Government have provided £45 million for seismic surveys in underdeveloped areas, and data from those will support the forthcoming 31st offshore licensing round.

[Lord Bruce of Bennachie (LD)]

I thank the Minister for that reply. As noble Lords will be aware, the industry has had a pretty traumatic two or three years, but nevertheless it accounts for hundreds of thousands of jobs and billions of pounds of benefit to the balance of payments. However, not enough exploration, development and enhanced recovery investment is taking place. Will the Government ensure that there are sufficient incentives, not subsidies, to make this happen rather than just encourage it to do so? We should recognise that if we do not look, we do not find, and we cannot produce.

[Lord Henley]

I agree with the noble Lord that the industry has had a pretty traumatic time but I think things are picking up. As he said, this is very important for energy security, jobs, the economy and—dare I say it—the Exchequer. As I said in my original Answer, we are providing funds for seismic surveys to help in the next round. As the noble Lord will be aware, some 61 companies got licences in the previous round, with the potential to produce some 320 million barrels of oil equivalent. I hope something similar or better will come from the next round.

[Lord West of Spithead (Lab)]

My Lords, the Minister will be aware that oil and gas platforms on the continental shelf, undersea cables and fisheries are all part of what was once called the “offshore tapestry”, with a small fleet of ships to look after that tapestry. We no longer have that; post Brexit, there may be some issues. Does the Minister not believe that we should perhaps look at investing in more ships to look after that highly valuable offshore tapestry?

[Lord Henley]

The noble Lord makes a very important point, which I will certainly pass on to my colleagues in other departments.

[Lord Goddard of Stockport (LD)]

My Lords, I draw attention to my interests in the register; I am a vice-chairman of the All-Party Parliamentary Group on the British Offshore Oil and Gas Industry. Does the Minister agree that one way to enhance the recovery of oil and gas from the United Kingdom continental shelf, increase tax revenues and create valuable jobs in the industry—which has lost 150,000 jobs since 2014—would be to focus simply on extended production of late-life fields and promote early development of known proven resources?

[Lord Henley]

The noble Lord is correct: we should do that. As his noble friend said, we should also continue with explorations. There is much that we can do, that the Government are doing and that the industry is doing.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, is the Minister aware of the carbon bubble—the possibility that the bottom could fall out of the market in oil and gas and general fossil fuel investment? Will the Government therefore give some advice on these risks to anyone who would like to look further at oil and gas? I raised this with the Bank of England a few years ago and it has since said some quite enlightened things.

[Lord Henley]

The noble Baroness makes a point but it is important that we continue to look at all available resources. The noble Baroness knows we are moving towards a low-carbon economy but we also want a balanced energy mix. It is important that we make use in the medium—and possibly long—term of the fossil fuels that we have.

[Lord Berkeley (Lab)]

My Lords, who is responsible for removing the redundant platforms in the North Sea and elsewhere? I believe they are all privately owned. What happens if the company no longer exists? Who is responsible for putting the seabed and everything else back to what it was originally?

--- Later in debate ---

[Lord Henley]

As I understand it, although I will no doubt have to write in greater detail to the noble Lord, removing the platforms is a matter for those who put them in place. When we talk about jobs and available exploration jobs, it is worth pointing out that there will be jobs in decommissioning and removing those platforms in due course, which will make use of the expertise in north-eastern Scotland that put the platforms in and operated them.

[Lord Krebs (CB)]

My Lords, what is the Government’s estimate of the length of time for which we can continue to burn fossil fuels while meeting our legally binding carbon reduction commitments, as agreed up to the fifth carbon budget and beyond?

[Lord Henley]

I am not sure I can give the noble Lord those figures but I can assure him that there are opportunities to continue to meet our obligations in that respect, particularly by making use of shale gas exploration if we move onshore. We certainly reckon that current production represents some 65 % of UK oil demand and 50% of UK gas demand, but there is much more to be found.

[Baroness Deech (CB)]

My Lords, can the Minister explain what plans there might be to exploit the continental shelf around the Falkland Islands and whether there are any issues relating to the legal position of that shelf?

[Lord Henley]

The noble Baroness is moving on to a different continental shelf and rather a different question —one that I do not think I am qualified to answer at this stage. I will no doubt be prepared to write to the noble Baroness.