Oil and Gas Exploration (Hansard, 29 October 1979)

§ 10. Mr. Viggers
asked the Secretary of State for Energy if he is satisfied with the current level of oil and gas exploration activity in United Kingdom waters.

§ Mr. Gray
The Government were not satisfied with the position they inherited and have begun the task of recreating the conditions which will encourage drilling. They have removed certain arrangements introduced by the previous Administration which discouraged exploration. We are confident that the industry will respond to those initiatives. Indeed, there have been encouraging signs in recent months of growing interest in drilling activity.

§ Mr. Viggers
I congratulate the Government on the success of their policies in encouraging exploration, which I believe is about 65 per cent. up this year on 1978. Does my hon. Friend recognise that this accelerates a much bigger problem—that of facing up to the measuring out of precious oil and gas resources? At the present rate, when will oil and gas production start to decline? Are the Government satisfied with that? If not, what will they do about it?

§ Mr. Gray
On present estimates, we should be self-sufficient and, indeed, a net exporter, throughout the 1980s. The Government are continuing to monitor the situation. The question of depletion is very much in the mind of the Government. We are examining the question. Indeed, the answer that I gave to the hon. Member for Dundee, East (Mr. Wilson) at the beginning of Question Time today was significant on the question of the serious attitude that we take on the subject.

§ Mr. Douglas
Is the Minister giving the House an assurance that we shall continue to produce oil throughout the 1980s at a rate in excess of 2 million barrels a day? Is he aware that if we accelerate the exploration rate there will be a serious deficiency in Britain's oil drilling capacity? That will produce a situation in which we shall be paying American companies across the exchanges. When will the Government ensure that there is a British drilling company with muscle in operation in the North Sea?

§ Mr. Gray
I am glad that the hon. Gentleman recognises that there has been a decided upturn of interest in drilling. Exploration wells drilled over the past four months numbered 13, compared with only seven in the corresponding period last year. The Government are aware of the present situation and are having talks from time to time with those who might be interested. However, these are matters for commercial judgment in which the Government do not wish to interfere.

§ Mr. Skeet
Is my hon. Friend aware that the Wood Mackenzie report supports his analysis, and that due to the higher price of oil and the more favourable terms for licences more work is likely to be done in the North Sea?

§ Mr. Gray
I accept what my hon. Friend says. The Government have set up a committee to examine the question of the marginal fields. That could be beneficial in the long term.

§ Mr. Robert Sheldon
Is the Minister aware that an oil depletion policy is becoming increasingly important? The problem is that it is becoming more realistic to keep part of that oil under the North Sea than to allow it to boost our foreign exchange earnings and create the disadvantage of our becoming a petro-currency, to the disadvantage of British industry and the exports that we expect from it?

§ Mr. Gray
The Government are fully aware of that situation and are taking steps to overcome the problem. It is amazing to hear from a Treasury Minister in the previous Government that they took such a long time to realise that.