Peter Aldous calls for speedy action to support oil and gas investment and exploration

18th January 2016

Peter Aldous calls on the Government to act quickly to support the oil and gas industry and implement measures to encourage investment and exploration.

Peter Aldous (Waveney) (Con): I should point out at the outset that I am the chairman of the all-party group on offshore oil and gas, and that the industry is a significant employer in my Waveney constituency, with Lowestoft and its port being an important service centre. I am also a partner in a family farm that has a solar farm, but I will not comment specifically on such technology this evening.

Most of the Bill focuses on the Oil and Gas Authority, so I will concentrate my comments on the offshore oil and gas industry on the UK continental shelf. The Bill also contains provisions on onshore wind farms, about which I will say a few words. It is right that all such planning applications should be determined locally, regardless of their size. Local communities and local planning authorities know their areas best, and planning decisions should rest with them.

The Government should remove support for onshore wind and, indeed, other renewable technologies openly and transparently. Investors need to see a clear and smooth pathway to a point in time when there will be no subsidy. That best attracts investment, creates secure long-term jobs and reduces costs to the consumer in the long term.

The oil and gas industry on the UKCS faces very serious challenges. It is fighting for its very existence. The livelihoods of tens of thousands of people are on the line. Some 75,000 jobs have gone in the past 15 months. That is primarily due to the dramatic collapse in oil prices. An example of the problems facing the industry is that, at the beginning of the year, the combined market value of 112 publicly traded oil companies—the entirety of Britain’s listed oil and gas industry, excluding Shell, BP and BG—was, at £7 billion, the same as that of Marks & Spencer. Two years ago, one of those companies, Tullow Oil, was worth more than M&S on its own.

The UK offshore oil and gas industry still has a vital role to play over the next 30 years. First, as the Secretary of State has stated, energy security is the No. 1 priority. Maximising the production of oil and gas at home will reduce our dependence on imports. Secondly, while 42 billion barrels of oil equivalent have been produced from the UKCS, there are known reserves of 20 billion barrels of oil and gas to be recovered from our offshore waters. As she set out in her resetting speech, gas has a key role to play in powering our future economy.

Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): I wanted to be here earlier for this very good debate, but unfortunately my travel arrangements got in the way. The hon. Gentleman mentioned oil reserves. Does he lament the loss of carbon capture and storage for the enhanced recovery of oil reserves, as the maximisation of that would have added further to our energy security?

Peter Aldous: The Bill, in its original form, was right to concentrate exclusively on maximising the economic recovery of oil and gas in the North sea. I regard carbon capture and storage as an important technology that has a future in the UK energy mix, but it is not yet mature. We need to home in on the challenges facing the oil and gas industry.

The Secretary of State’s resetting speech set out a potentially exciting future for offshore wind. This industry has the potential to bring exciting opportunities to my area. The offshore oil and gas industry has an important role to play in the transition to a low-carbon economy. Its supply chain is broadly the same as that of the offshore wind industry.

We have heard about the importance of setting up the Oil and Gas Authority and endorsing the Wood proposals so that we can move forward. I will not go over that, but in the time remaining to me I will comment on what else the Government need to do within the framework laid down by Sir Ian to help and support the industry at this crucial time.

In the March Budget last year, the Government brought forward a package of fiscal measures to support the industry and encourage investment and exploration. As the hon. Member for Aberdeen South (Callum McCaig) has mooted, we need to look closely at those measures again. We should look to reduce the supplementary charge and the petroleum revenue tax still further or, I suggest, get rid of them altogether. We should also consider providing more funding for seismic surveys, which will be the very lifeblood of the industry going forward.

Secondly, in line with Sir Ian’s recommendations, there is an urgent need to commence work on regional plans. I want a regional plan to be started as soon as possible for the southern North sea, where there are still significant gas reserves.

Thirdly, although the North sea is a mature basin in many respects, we are embarking on a final chapter of oil and gas recovery there, which is, in many ways, a new venture, built on a cornerstone of co-operation, collaboration and consolidation. In the past, innovating, investing in technology and reducing costs have been done by the big oil companies. I suggest that we look at what has happened with the catapult industry of offshore wind, in which the Government have led the way.

In conclusion, we need to get on with it. Time is of the essence. The approach that Sir Ian has advocated is in the best interests of energy security. It will give the jobs on which the industry depends the best chance of a secure future in what are very uncertain times. Moreover, it will give the UK offshore oil and gas industry the real prospect of an Indian summer.

9.24 pm

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Peter holds regular surgeries at various locations in the constituency. Please call 01502 586568 to make an appointment.

 

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