North Sea Oil

HC Deb 12 January 1976 vol 903 cc16-9

14. Mr. Tim Renton

asked the Secretary of State for Energy what progress is being made in developing the smaller North Sea oilfields.

Mr. John Smith

Development of all 13 of the commercial fields listed in Appendix 9 of the 1975 Brown Book is proceeding satisfactorily, and appraisal of many other discoveries, some of them small, is also being carried forward.

Mr. Renton

In the case of some of the smaller fields, is it not a fact that the combined effect of growth in costs and the size of the total Government "take" is so depressing that oil operators see no incentive in bringing the fields to production? Despite the early prevarications of the Secretary of State, will the Government explain the extent of the setback in production plans that has led to a downgrading of estimated 1985 oil production from 175 million to between 100 million and 150 million tons?

Mr. Smith

The Government have not made any downgrading in oil predictions for 1985. Furthermore, we believe that our taxation proposals take fully into account the needs of the small and marginal fields. My right hon. Friend the Secretary of State has power to remit royalties in appropriate cases. We are concerned that the marginal fields should be developed so that we utilise the whole of the potential of our existing oil resources. There is no evidence to indicate that the taxation structure will inhibit such an aim. If the hon. Gentleman wishes us to reduce the rate of taxation more generally, he should say so.

Mr. Hardy

Is it not the case that the United Kingdom currently enjoys a much greater share of industrial activity generated by our offshore oil exploration than was the case two years ago?

Mr. Smith

I am grateful to my hon. Friend for drawing that to our attention. It is far too often assumed that the British industry supplies only a small proportion of the amount of equipment for offshore oilfields. I remind the House that out of 19 platforms so far ordered, 13 have been, or are being, built in this country.

Mr. Gordon Wilson

In view of the potential of the small oilfields, which no one denies, will the Minister say what steps are being taken within his Department or the Offshore Supplies Office to monitor developments in technology which have been taking place affecting the exploitation of those smaller fields currently being developed? Is he satisfied that he is receiving sufficient information about the problems and the techniques from the oil companies concerned?

Mr. Smith

We have found oil companies to be co-operative on these matters. I am not aware of any feeling in the Department of Energy that the companies are not being forthcoming on this matter. On the wider question of technological development, the hon. Member will be aware that an Offshore Energy Technology Board has been set up under the chairmanship of the Chief Scientist of the Department of Energy. The Board is already doing useful work, not only in examining better techniques for exploiting small and large fields but in looking to the next generation of oil equipment, so that this country may be in the lead in providing that equipment not only for our own fields but around the world.

Mr. Patrick Jenkin

Since the remission of royalties was announced by the Government as an important feature to encourage the development of smaller fields, may I ask whether the hon. Gentleman does not think that it is about time that the Government published a White Paper dealing with the principles on which they would be prepared to remit royalties?

Mr. Smith

I shall consider that suggestion. Perhaps it is significant that at the moment there is no application before the Department for the remission of royalties.

22. Mr. Gordon Wilson

asked the Secretary of State for Energy what representations he has received regarding operations of North Sea oil supply boats.

Mr. John Smith

None, Sir. The hon. Member may have in mind his recent letter, which was concerned with a crane barge and to which he will receive a reply.

Mr. Wilson

Will the hon. Gentleman give an assurance that he is not satisfied with the situation in which oil rigs operating in the North Sea are not under the full control of authorities in this country? Will be consider the position in the United States, where there is flag preference in relation to offshore oil developments and to the supply boats, with a requirement that the crews should be of American origin?

Mr. Smith

The hon. Gentleman is in correspondence with my right hon. Friend the Secretary of State for Employment about the crane barge situation and responsibility for offshore matters, and I do not wish to intrude on that correspondence. On the more general question, the hon. Gentleman will be aware of the steps that the Government have taken to ensure a full and fair opportunity for British equipment, including British ships, in the servicing of North Sea rigs. The recent memorandum of understanding and code of practice reached between the Government and the companies—I understand that 40 of the 42 member companies of the United Kingdom Offshore Operators' Association have already signed it—is a very important step towards maximising the contribution of British industry.