Shale Gas and Oil (EAC Report)

Lord Tugendhat Excerpts

Tuesday 4th November 2014 Lords Chamber

[Lord Tugendhat (Con)]

My Lords, I, too, begin by congratulating the committee on this excellent report. As has already been pointed out, it is the last in a long line of distinguished reports produced under the chairmanship of my noble friend Lord MacGregor. I am honoured to have been a member of the committee for part of the time that he was chairman, so I can, with great sincerity, pay my tribute to the skills that he deployed in that role, to which others have referred.

My noble friend Lord Lawson referred to his background in the energy industry. I have a background which goes back further even than his, although it is of a less distinguished nature. Back in the 1960s, I was energy editor of the Financial Times. In that capacity, I covered the discovery and development of North Sea oil—and how very exciting that was for a young journalist. It was exciting for me but it was also very exciting for the country. I remember clearly how something which at first seemed like a dream came true, and how what seemed as though it might be a peripheral contribution to the national economy turned into a major contribution. I remember how first the Wilson Government and then the Heath Government did everything possible to encourage the development of this great new resource. When I was energy editor of the FT, which was before my noble friend was Secretary of State, world oil reserves were reckoned to last for 20 years, not even 30 years. That gives some idea of the importance that the North Sea assumed in the national imagination.

As has been pointed out, we do not know whether shale gas or even shale oil reserves will have anything like the impact on the British and wider European economy that the North Sea has had. The one point that I really want to make in this short speech is that it is of major importance that we determine whether we have a real bonanza lying under our island or something less important. If it is something very important we cannot let the opportunity slip: it would not only be of great significance to the British and the wider European economy but would also contribute, as the discoveries in the United States have done, to depressing the oil price and reducing the dependence of this country and the economies in the rest of the EU—which play such an important role in our prosperity or otherwise—on those suppliers. To the extent that it would help other countries it would help us. To the extent that developments in this country could encourage developments in other countries, the benefit of shale gas would be increased.

As my noble friend Lord Shipley and others have pointed out, the environment must be effectively safeguarded and a stringent safety regime put in place. That applied in the North Sea. There were many people then who argued that it would be impossible. The predecessors of some of the organisations that gave evidence of a rather doleful and pessimistic nature to the Select Committee were saying exactly the same things back in the 1960s, but an effective safety regime was put in place. The North Sea environment has also been sufficiently safeguarded.

Due account must also be taken of the economic interests and the quality of life of those who live in the areas where production takes place. It has, however, been pointed out several times that we are not talking about the sort of massive disruption that coal mines constituted in the 19th century or the early 20th century; we are talking about inconvenience of a much more modest nature.

[Lord Lawson of Blaby]

My noble friend referred to the effects on the areas where this is taking place. I am sure that he will agree that in the United States some of the most impoverished parts there have, as a result of the development of shale gas, been enormously enriched. In the case of England it is fortunate that the big deposits of gas are in the north, and everyone agrees that it would be great if we could strengthen the economy there. There is a huge plus for areas where this takes place, which is very important.

[Lord Tugendhat]

I certainly agree with my noble friend. I was going to touch on a related point, which I will now make. One of the most disagreeable things about many of the protests against the development of shale gas is that they come from prosperous people in prosperous areas, and these people may very well prejudice the development of a resource that would help less prosperous people in less prosperous areas. I agree that the regime must safeguard as far as possible the quality of life of the people in the areas concerned, but it would be quite intolerable if a small minority of people in the most well-to-do parts of the country was allowed to prevent the development of a resource which could have such a very great and beneficial impact on the country as a whole—and, as my noble friend said, in particular on that part of the country which has benefited least from the great development of the British economy over the last 20 to 30 years.

If we do not get ahead with exploiting this possibility we will be doing a great disservice to the nation. Nobody can foresee the future but we know that the electricity margin of safety is now so tight that supplies might well be interrupted during the winter. We are investing huge sums in renewables and in nuclear power, but when will they make a decisive contribution? As the noble Lord, Lord Hollick, pointed out, the cost in the case of nuclear power will be very considerable indeed.

Can we be sure that we and our European Union partners will never again be blackmailed by Russian or Middle Eastern suppliers, or that we will never suffer interruptions as a result of war or civil disorder? One only has to consider these possibilities to realise the importance not just in terms of our prosperity but in terms of our security of developing a new natural resource. If things go wrong and we are not safeguarding our future, the people who will suffer will be the least prosperous people because it will be impossible to keep our manufacturing industry going at the rate at which it could have been kept going if power supplies act as a brake instead of an accelerator on national economic development.

Looking back to the 1960s when development of the North Sea began we have a great deal to learn from the foresight, enthusiasm and political courage of those who made sure that we had a regulatory regime that enabled companies to go forward and develop those resources. All of us have benefited from that and I hope that in 50 years’ time, those who are sitting here will be able to say the same for the present.