§ Motion made, and Question proposed,That this House do now adjourn. [Mr. Wakeham.]
§ 11.59 p.m.
§ Mr. Robert Maclennan (Caithness and Sutherland)
I am grateful for this timely opportunity to raise the proposed arrangements for servicing the Beatrice oilfield. The group of companies developing the Beatrice field, which lies in block 11/30 in the Moray Firth about 12 miles from the coast of my constituency, has been a most unsettled partnership, and since the beginning of the year there has been a considerable transfer of licence interests. I understand, however, that BNOC is on the point of formally acquiring the major shareholding in the consortium, that of MESA Petroleum, which will give it a stake of 28 per cent., and that it will be the managing operator of the field
Apparently there is also an imminent prospect that P. & O. will sell its 15 per cent. stake to BP, the remaining stakeholders being Kerr McGee with 25 per cent., Deminex with 22 per cent., and Hunt Oil with 10 per cent.
Since the Beatrice field was first discovered there has been a lively and legiti 1284 mate interest in my constituency in the arrangements for its exploitation. Lying so close to the shores of Caithness and Sutherland that the exploration rigs have been plainly visible to the naked eye from Helmsdale to north of Clyth Ness, the field has aroused both fears and hopes. Its proximity to valuable inshore fishing grounds worked by boats from Wick, Lybster and Helmsdale, and its closeness to beaches attractive to summer visitors, have given rise to concern that operations to exploit the field would carry unusual and unacceptable risks of damage to gear and of pollution.
The field lies far closer to the coastline than any other so far discovered in the North Sea. The Highland regional council was voicing the concerns of the local population when it took exception to the proposals of MESA Petroleum to offload and tranship the oil offshore. The previous Government considered that these local fears were justified and required the oil to be brought ashore by a pipeline to a point within Cromarty Firth.
Although some of my constituents would have preferred to see the landfall of the pipeline further north, at, for example, Kilmote near Loth, it was generally recognised that there was little advantage to local employment to be derived from a pipeline landfall. This welcome decision to pipe the oil ashore has not and could not remove all risk of damage and detriment to my constituents' interests flowing from the operation of an oilfield so proximate to the land. In the event of accidental leakage or spillage at the rig there can be little prospect of protecting the local coastline. This risk and that of damage to gear from the detritus of the operations is real and present.
I turn from the fears about Beatrice to the hopes associated with it. Caithness and Sutherland is an area of high unemployment. At the Thurso and Wick employment exchanges the registered unemployed stand at 1,430. The reasonable wish of my constituents is that if they are to suffer the disadvantages from the proximity of the Beatrice field they should also enjoy some of the employment opportunities associated with its exploitation.
With that in mind I approached Mr. Peter Clarke, the managing director of MESA Petroleum, in the summer of 1977 1285 to ask him to undertake to do two things. First, I asked him seriously to examine the possibility of establishing the operating service base for the field at the port of Wick in Caithness. Secondly, I asked him to recruit his main work force from the areas proximate to the Beatrice field. Both these requests he undertook to meet. Regrettably, during the period of management by MESA Petroleum my constituents have derived no discernible employment benefit from the Beatrice field. I admit that when the undertakings were given the company was still unsure about whether it would obtain the approval of the Department of Energy for the extraction of oil so close to the shore by a method which the company considered to be acceptable. The company was then no doubt anxious to obtain local support—including mine—for its proposals.
Since Mr. Clarke's promise to consider Wick seriously as an operating base, its attractiveness for the purpose has been enormously enhanced by the arrival of an established entrepreneur in Wick, Kestrel Marine Ltd., a successful subsidiary of the Lyle shipping group, based in Dundee. There is a substantial investment in the improvement of the Wick port of the order of £1 million, of which £300,000 was advanced by the Highlands and Islands Development Board, to deepen the basin, provide more extensive hard-standing, cranes and all-year-round facilities. Now there is a base to service the Beatrice field, which lies close to it. Wick stands ready to do such work in other North Sea locations.
It was therefore with some astonishment that my constituents learnt, following an announcement on Friday 18 May by Captain Black, the port manager of the Cromarty Firth port authority, that MESA Petroleum had entered into an agreement with that authority to service the Beatrice field out of the Cromarty Firth basin, apparently as part of a "package deal" in which the servicing arrangement was linked to the authority's agreement to accept the pipeline landfall in Easter Ross.
There is, of course, no necessary operational connection between the two activities—the landing of the oil by pipeline and the servicing and supply of the oil rig. On the face of it, it would appear that the Cromarty Firth port authority has required the operator to accept a pretty 1286 poor deal—the use of an as yet nonexistent servicing port at a cost of between £2 million and £3 million at West Invergordon in return for the authority's agreement to receive the pipeline landfall.
I have little interest in how this agreement came to be made, though I note the oddity of MESA's entering into such an agreement just as it was about to sell its shares and surrender the management of the operation to BNOC. The terms of this agreement have not been made public. To that extent, what I have said is supposition. In my view it is in the public interest that the facts should be made clear. Nor has it been made clear whether BNOC or the other stakeholders in Beatrice were consulted, nor whether they are bound by this agreement. Perhaps the Minister can explain the position as he understands it.
It does fall to the Government, however, to decide whether the proposed service base at West Invergordon will be built. Under section 9 of the Harbours Act 1964 the Minister of Transport would be required to approve the proposal to build the new harbour, since the sum involved in its construction is above the limit of £1 million permitted for unauthorised harbour expenditure.
I do not know—perhaps the Minister can inform me—whether the operators of this base would be entitled to aid under the Industry Act to establish their operation. Nor is it clear whether other public expenditure would be involved in this proposed development. But I put it to the Minister that when the Minister of Transport comes to consider the application to build this new base he should reject it. It would be a deplorable misuse of resources to build up this wholly unnecessary facility to duplicate existing facilities at the port of Wick which have been put there as a result of public and private investment.
Incidentally, if the £2 million to £3 million which is apparently the cost of the proposed development at Invergordon is available for investment in port development in the area it would seem more sensible to direct it towards the further improvement of the existing facilities of the port of Wick. Furthermore, if the project at West Invergordon goes ahead it will provide little immediate employment in Easter Ross. It would probably 1287 be not less than 18 months before the facility would be available to service the Beatrice field. The sole result of such work will be the continuation of the servicing which is going on now out of the overcrowded port of Peterhead until that new base at West Invergordon is constructed.
The Cromarty Firth port authority aspires to attract oil-related industry to Easter Ross. This it is entitled to do. I have made clear that there is no doubt about that under the authorising Act which established it. But it should concentrate its efforts on the downstream activities which have interested a number of its members for many years. I think that it is now agreed that Scotland has seen too many sites established for the construction side of the oil industry. I am sure that this Government, in particular, will be determined to avoid the waste of resources on unnecessary duplication on the servicing side of the industry and will not wish to see a public authority such as the Cromarty First port authority promoting such unnecessary expenditure as is involved in its proposed arrangements for the Beatrice field operation.
§ 12.8 a.m
§ The Parliamentary Secretary to the Ministry of Transport (Mr. Kenneth Clarke)
I am grateful to the hon. Member for Caithness and Sutherland (Mr. Maclennan) for raising this subject. I appreciate his concern for the development of the harbour facilities at Wick and the interests of his constituents in Caithness which depended upon that. Clearly, Wick and the harbour trustees there hope to derive some benefit from the development of the Beatrice oil field, which at the point with which we are concerned is exceptionally close to the coastline-indeed, visible to many of the people concerned.
It was an encouraging development at Wick when Kestrel Marine Ltd., in early 1977, appeared on the scene with a scheme for the development of that port, and, with the assistance of public funds, undertook various developments there in the hope of attracting some of the business related to servicing the oil industry in the North Sea.
1288 In this matter the hon. Gentleman's constituents and the port of Wick are to some extent in competition with those a little further to the south at Invergordon, in Easter Ross, where the Cromarty Firth port authority also hopes to attract some of the benefits of the North Sea oil industry. There, the interests of the constituents of my hon. Friend the Minister of State, Department of Energy, the hon. Member for Ross and Cromarty (Mr. Gray), who is present, are vitally concerned. There is a genuine interest in Easter Ross in acquiring such employment as is available from the development of the North Sea oilfield.
The choice of location of the necessary facilities for servicing the Beatrice oilfield lies with the Beatrice field consortium, in which the dominant partner is the MESA oil company. It is the choice that it has made that the hon. Gentleman is criticising and seeking to question.
MESA first had to consider a landfall for its oil pipeline as a means of getting oil ashore. I am advised that the hon. Gentleman is correct in saying that there was considerable concern about any other method of getting the oil ashore. It was necessary that it should be piped. It is accepted by everyone involved that Cromarty Firth is the most suitable place for the oil landfall. There is no other suitable site on the coast.
The decision has been announced and proposals to have been made to the Cromarty Firth port authority, together with the landfall for the oil pipeline, for tanker terminals and service facilities to be provided at Invergordon. A package of proposals was submitted by MESA earlier this year to the Cromarty Firth port authority for tanker terminals and a servicing base, which the hon. Gentleman suggests could better be sited at Wick.
There is a commercial decision to be taken by the Beatrice oilfield consortium. From all that I have been able to discover, it reached its independent conclusion after having analysed the various options open to it. It was at the initiative of the consortium and MESA that the decision was taken that the landfall for the oil pipeline, the tanker terminals and the service base should all be sited at Invergordon. There is no question that the Cromarty Firth port authority applied any improper influence in seeking the location of the facilities at its site. There 1289 is no question of Kestrel and the Wick harbour trustees being unfairly excluded. It was a commercial decision, made for reasons best known to MESA.
The hon. Gentleman asked about the basis of the MESA approach. Heads of agreement have been drawn up, and in addition to MESA the BNOC was involved. The agreement that is being contemplated will be binding upon all the members of the Beatrice field consortium and its successors. There is no question of the oil company excluding the BNOC from the decision or anticipating any change in the shareholding in the Beatrice oilfield consortium.
§ Mr. Maclennan
The hon. Gentleman's reference to improper pressure by the Cromarty Firth port authority allows me the opportunity publicly to say that the statement issued, with my name attached, by a local councillor, Councillor Mowat, in the Highland region was issued without my authority. It was couched in terms which I should not have approved had I seen the statement. I make no allegation of impropriety on the part of the authority.
§ Mr. Clarke
I am grateful to the hon. Gentleman. I understood that he was not consulted about the terms of the statement.
As I have said, a commercial decision was made by the consortium between the two competing sites. The Ministry of Transport believes that ports of the type involved in this instance should compete with one another commercially for facilities of this sort. There is no question of the Department being partial between competing locations. That would be improper if the consortium decided that one location was more suitable. Therefore, it is somewhat irrelevant from the Government's point of view to determine why the decision was taken.
However, my advice is that it is probable that the consortium was influenced, first, becauses it had to have its pipeline landfall at Invergordon, and therefore there was some convenience in having the service facilities at the same site, and, secondly, because weather conditions sometimes adversely affect Wick, Invergordon can be more attractive. I am told that Wick is vulnerable in certain weather, especially in winter, when it can 1290 be closed, perhaps for several days, by easterly or south-easterly gales.
That was recognised by Kestrel when it decided to set up there, and it accepted that there would be times when it could not get ships in and out of port. This is less of a limitation for Kestrel's engineering work than for other operations, but on some occasions emergency access might be required to the supply base, it is likely that that was a significant feature in influencing MESA to go further south to Invergordon.
§ Mr. Maclennan
I realise that this is not a matter of Government responsibility and that the Minister is passing on views that he has gleaned from commercial sources. However, practically every port in Britain is closed from time to time by weather—including Peterhead, which is the present main base for operations in the North Sea.
§ Mr. Clarke
I certainly claim no personal expertise in the navigational problems of getting ships in and out of ports, especially in the far North-East of Scotland, but I am advised that Cromarty Firth is more sheltered than Wick for such operations, and such considerations were probably taken into account. As the hon. Gentleman acknowledged, the Government cannot intervene in such matters, so long as the decision was made on commercial grounds, using the best and honest judgment of the consortium. There seems to be no evidence of unfair competition.
I can understand the disappointment of the hon. Gentleman and his constituents that the decision appears to have been made by the consortium in favour of Invergordon. Nevertheless, the Department will be involved, because the proposed service base at Invergordon will cost £2 million or £3 million and therefore, together with the tanker terminal at the same site, will require ministerial approval under section 9 of the Harbours Act. It is the intention of the parties that, like the tanker terminal, the service base will eventually be built by MESA under licence from the port authority.
At the moment no application under that Act has been made in connection with the service base. If and when one is made it will be considered in the usual way, which includes necessary—indeed obligatory—consultation with the 1291 National Ports Council, which will advise on the viability and advisability of the project. My right hon. Friend and I will bear in mind the hon. Gentleman's representations if that application is made.
The view of the Council will be influential, and the commercial judgment of the consortium is not something that the Government can properly question when deciding whether the necessary approval should be given for the investment at the site preferred by the consortium. That is the position of my Department. We are waiting to see whether an application is made. It is clear that such an application is contemplated by the consortium and the ports authority.
§ Mr. Maclennan
When the matter comes before the Minister for consideration and decision, will he bear in mind the possible disadvantage to the port of Wick from the establishment of a new port geographically proximate to it? Is it a proper consideration for the Minister to have in mind commercial damage to those affected by competing claims of this kind?
§ Mr. Clarke
It will be necessary to take advice on that before the decision is taken. My immediate reaction is that there are no constraints on the considerations which the Minister may take into account when deciding whether to give approval under the Act.
The decision to give support to the port of Wick has already been taken. Support was given to Kestrel in developing its facilities at Wick. That does not necessarily carry any obligation thereafter to give it any unfair commercial advantage vis-à-vis its natural competitor at Invergordon. The Department must remain detached in these matters and take an objective view. Decisions of advantage to the hon. Gentleman's constituents may be of disadvantage to those of my hon. Friend. Impartiality must be maintained.
I wanted to underline the point, which the hon. Gentleman conceded, about the position of the Cromarty Firth port 1292 authority. That is not a Government-owned or nationalised body. As with most of these harbour authorities, it is an independent public trust set up under the Cromarty Firth Port Authority Order 1973. It has a number of statutory duties and powers laid upon it. Its duties include the improvement and promotion of development in the port and its vicinity.
The position of the Cromarty Firth port authority—the competitor of Wick harbour trust and Kestrel—which is of such interest to the hon. Gentleman, is that it has the right and duty to promote development in its area. It acted in this case to promote development. It is perfectly entitled to do so. There is a positive obligation upon the authority to try to attract business and new employment opportunities to Invergordon. I am assured, however, that the initiative came not from that body, but from MESA and the oil consortium in the first place.
There is no question of the Government stepping in to frustrate the Cromarty Firth port authority in its legitimate objectives. The Government have no desire to frustrate the proper development of Wick. The involvement of Kestrel was a desirable development. The previous Government assisted that development. This Government hope that the developments at Wick will prosper. They will do nothing that will stand in the way of development at Wick or interfere with the legitimate aspirations of the hon. Gentleman's constituents.
I hope that I have explained our impartial position in this dispute. I noted what the hon. Gentleman said about his concern. A decision must wait until an application is made. That will be considered in the usual way, in consultation with the National Ports Council. I assure the hon. Gentleman that I have taken careful note of his views. They will be given full weight when the decision is finally taken.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-four minutes past Twelve o'clock.