Offshore Oil (Hansard, 10 November 1975)

§ 11. Mr. Gray
asked the Secretary of State for Energy what is his assessment of the potential yield of oil finds in the West Shetland, Celtic Sea and Channel areas, respectively.

§ Mr. John Smith
Oil has not yet been discovered in any of these areas. Seismic survey work suggests that they are promising, but further drilling will be needed before we can make a worthwhile assessment of potential reserves, area by area.

§ Mr. Gray
Does the Minister accept that these are extremely high-risk areas and are hardly suitable for an inexperienced company, such as the British National Oil Corporation? Will he ensure that in such circumstances public funds are not put at unnecessary risk when private finance is available?

§ Mr. Smith
If the hon. Gentleman is suggesting that we should abandon our participation proposals, I confirm that we shall do no such thing. It is an essential 908 part of the Government's policy that in the next round of licensing we shall have majority State participation. The great pity is that this was not done in 1971 by the Conservative Government. It is impossible to write down these areas as the hon. Gentleman is trying to do in advance. He should bear in mind that in 1969 a leading oil company said that there was no oil in the northern North Sea.

§ Mr. Robert Hughes
Will my hon. Friend say what exploration drilling has so far taken place in the Celtic Sea? If I am right in thinking that none has taken place, what action will be taken if the companies do not carry out their responsibilities to explore the blocks for which they have licences?

§ Mr. Smith
During the past year no drilling has taken place in the Celtic Sea, one reason being the high rate of success east of the Shetlands, where companies achieved a success ratio of one in two. Companies are under specific licence obligations to complete a drilling schedule or surrender their licence. Both the Government and the companies will be anxious to see that those obligations are fulfilled, and over the next year I expect to see activity in these areas.

§ 14. Mr. Alexander Fletcher
asked the Secretary of State for Energy how many oil rigs are currently engaged in the exploration of United Kingdom oilfields: how many were so engaged at the end of October 1974; and how many he expects to be engaged at the end of October 1975

§ Mr. John Smith
Twenty-six mobile drilling rigs were operating on the United Kingdom Continental Shelf at the end of October 1975. This compares with 25 at the end of October 1974.

§ Mr. Fletcher
Does the Minister consider that that is progress? Does he not feel that the need to explore for oil in the North Sea requires a great deal of urgency and incentive from the Government, rather than the arm-twisting over what is referred to as "voluntary" participation, which is contrary to public interest and is in danger of driving further exploration rigs away from this area?

§ Mr. Smith
That hardly squares with the fact that the present level of drilling activity is the highest there has ever been 909 in the North Sea. Indeed, our prediction for this year was 30, and the average is likely to be 28, so it was a reasonably accurate prediction. I take this opportunity of challenging the right hon. Member for Wanstead and Woodford (Mr. Jenkin), who, in recent articles, has suggested that the Government predicted an average rig year's activity of 40 for this year. That is quite untrue, and is a misinterpretation of the statistics.

§ Mr. James Lamond
Will my hon. Friend remember that no matter how many oil drilling rigs there are in the North Sea, there is a limit to the amount of oil there? Therefore, will he sound a warning to the Scots who are pinning all their faith on the policy of the Scottish National Party, which suggests that Scottish oil, as it calls it, will solve all Scotland's problems? In fact, the limit of this oil will be reached in, possibly, 30 years from now.

§ Mr. Smith
I think it is impossible to come to precise conclusions about the amount of oil there is, or how long it will last. I certainly agree with my hon Friend that it would be the height of folly to try to float off some sort of independent State upon a commodity which is finite and very much subject to price changes.