§ Mr. Hardy
I beg to move amendment No. 1, in page 2, line 18, at end insert—`(1A) In managing on behalf of the Crown pipelines and storage installations the Agency shall prepare a plan to design and construct an onshore crude oil pipeline system to complement the existing system and shall enter into agreements on behalf of the Crown to make the system available to licensees with production from onshore fields on a common carrier basis at a commercial tariff and the system shall include better rail sidings, tank farms and necessary links with offshore producing facilities.'.This amendment provides for the design and construction of onshore crude pipeline systems, which will complement existing systems and allow the making of agreements with licensees to use the pipelines as common carriers. As the amendment recognises, this would involve rail sidings, tank farms and links with offshore production facilities. It is a sensible amendment; the Minister will recall that it is similar to one that we debated in Committee, although it is not identical. It has more merit than the amendment that we debated in Committee, and the Minister will have had a little more time to consider the wisdom of our proposals.
The amendment is sensible, because it would make a helpful contribution to the nation's transport facilities. The Minister said in Committee that, the building of a pipeline can cause some difficulty, and that the several pipelines that had been built in his constituency had caused him concern as a representative of the local people. However, if he has reflected on the matter since Committee, he will have discovered that, after it has been completed, a pipeline causes much less concern than would many vehicles pounding along the roads in his constituency, to the distress of those who might momentarily have had only a little anxiety about the construction of a pipeline.
If the Minister seeks to maintain the Government's policy of extracting oil as fast as, possible from onshore as 95 well as offshore fields, he will present serious problems to those who live in the areas affected. On balance, the vast majority of residents in areas where onshore oil has been discovered would wish to swap the prospect of vehicles pounding along their roads for the sensible and peaceful operation of a new pipeline.
I am sorry that the Government have not been more sensitive about such matters. The Minister was hasty in his rejection of our amendment in Committee, and I wish to put this point to him. My constituency is in an area where onshore exploration is proceeding. The Minister will share my view that onshore exploration in such areas is likely to be fruitful. As a Member for one of the large parts of England where oil is likely to be discovered, I would prefer it to be moved by pipeline than on our inadequate roads.
A short time ago, I told another Minister in the Department that I would strongly object to any opencast development in my area, and that I would object even more strongly to attempts to move on the roads in my constituency the material displaced or the coal extracted. Greedy eyes are already considering one site where the roads simply could not tolerate the additional traffic that would be required. If there is opencast development, the material should be moved by rail or by canal, not by road. The same argument applies in the case of the amendment. There is no reason why the roads should be clogged by vehicles moving material extracted from offshore oilfields when we have readily available the silent, efficient and effective pipeline system.
If the Government advise the Oil and Pipelines Agency that it should go ahead with extensions to the pipeline system, this could lead to substantial industrial orders and to many jobs. I hope that that point has not escaped the Minister's attention. The amendment does not state, although perhaps it should have done, that the jobs created would be largely within British industry. We recognise that, at last, the Government have begun to realise the enormity of the unemployment problem in many industrial areas, and such orders would be welcome and timely. There would be substantial benefits in the transportation of the product and, in the long run, for the environment, and the provision of jobs through orders to the steel and engineering industries, at a time when such jobs are needed desperately.
Since, this year, the Government will receive £12,000 million in direct revenues from our oil activities, the Opposition believe that some of that money could be invested in Britain. We would commend such valuable investment. The Government tend to boast that the oil revenues have allowed us to buy substantial assets abroad. Earlier this year, after calculating that we had received £50,000 million in direct revenues from offshore oil, I asked the Prime Minister during Question Time what benefit we had obtained from it. The Prime Minister's response was that we had enormously increased our overseas portfolio. When she was asked a similar question the other day, her answer had shifted a little. It should shift much more, and one way to shift it would be to devote some of the revenues to establishing a pipelines system that could benefit Britain for a long time.
In Committee, the Minister boasted of how much money had been invested in our existing pipelines. Although it is not as colossal a figure as the investment in 96 some of the projects which the House debates from time to time, the sums involved are substantial. In 1980–81, we invested £2.47 million; in 1981–82, it was £1.87 million; in 1982–83, it was £2.6 million; in 1983–84, it was £3.65 million; and in the last full financial year, the figure was £4.32 million. Those substantial sums would provide more benefit if our existing pipelines were complemented by links to the onshore fields. We do not rule out additional links, which are entirely justified, to ensure that the onshore and offshore fields are complementary.
The Minister must recognise the merit of our proposal. It would provide jobs and a cleaner and healthier environment, and it would please the Select Committee. If the Minister recognises the merit of the consideration of the Select Committee, he will realise that the Select Committee appears to be recommending that there should be improved storage facility and investment, and the amendment would certainly fit well with the Select Committee's relatively recent recommendation.
I hope that the Minister will not dismiss as unimportant our concern about unemployment, the environment and transport. He may feel assured that the Government's docile and substantial majority in Parliament will allow him to continue to reject our logical and intelligent pleas with impunity, but I rather think that in another place there will be concern for the environment and employment which adds grace to that establishment, but which, if ignored in this House, is particularly regrettable since we are supposed to be the democratically sensitive establishment. We are perhaps relieved of the problem and responsibility of taking the longer and more relaxed view, which is often the characteristic of their Lordships. Here we are entitled to discuss realities. The reality of the situation is that the sheer common sense of the amendment deserves consideration.
It may be that the Government Whips have persuaded their hon. Friends to stay away in order that they shall not be exposed to the sanity of our suggestion. The Minister smiles enigmatically, as is his wont, but I should not be surprised if that were the case. I trust that the shock which we had in Committee when the Minister rejected our argument will not be repeated tonight. The Minister is aware that the private sector recognises merit in the pipeline system and in its extension.
He recognised in Committee, and I hope that he will again tonight, the wisdom of the extension of the link which Mobil is now establishing to the terminal at Wymondham in Norfolk. Mobil was serving Mobil's interests, but in fact it was serving British interests as well because it is much more sensible to invest in this way to make the movement of oil efficient without causing social and economic disadvantage. Now that the Minister has had a few weeks for reflection, I hope that he will realise that the Wymondham development by Mobil is one which should be extensively repeated. We would certainly wish this to be so. In that regard, I remind the Minister that we put this proposal forward as a demonstration not only of our belief in sane arrangements in transport and industry but because we believe that there is a substantial place for co-operation in the economy between the public and private sectors. The example of the Mobil development in Norfolk should be repeated. I think that we can justly 97 claim that our approach is entirely undogmatic and that, if there is dogma in these matters, it rests firmly wholly on the Government's shoulders.
On this occasion I hope that the Minister, perhaps in preparation for consideration of the Bill in their Lordships' House, will recognise the powerful arguments in support of our amendments and, for a change, will consider accepting them.
§ Mr. Bruce
I am not sure what the Minister is going to make of this proposal. I yield to nobody in my willingness to resist the Government's economic policy and to criticise many aspects of their oil and gas development policy. I started out on my political career by standing against the Minister, and I like to think that I have done a little better since then.
I do not think that, in the course of trying to be constructively critical of the Government's performance, I can be expected to support what seems to me a barmy idea. I wonder what kind of impetus is coming from within the oil and gas industry to give rise to this kind of proposal. I certainly agree that we want to look for co-ordination of development, and I would welcome proposals to extend that. However, I am puzzled as to how one can integrate the onshore industry with the offshore industry, which is completely different in geography, scale and location; and where the pipeline is going to or from is a mystery to me.
§ Mr. Hardy
I recognise the hon. Gentleman's difficulties. He is standing in for his hon. Friend the Member for Orkney and Shetland (Mr. Wallace) at short notice. If he had prepared for the debate, he would have been able to obtain from his hon. Friend the map of the pipeline system. On it, as on the various public documents available, he would have seen where the offshore fields are or are likely to be. He would have noticed that the location of the offshore fields in the area of Wessex is not very far from existing pipelines—perhaps those which have facilities at Hamble. Is the hon. Gentleman aware that, in Committee, his hon. Friend voted alternately with us and with the Government? My impression is that, having supported the Government on new clause 1, he will support us on amendment No. 1.
§ Mr. Bruce
I am grateful to the hon. Gentleman, but I am capable of making up my own mind about the merits of the amendment. I gave way in the hope that he might answer my question. Where is the driving force in the industry about the benefit that it would get from the integrated development that the amendment appears to propose? I still wonder whether it is being suggested that we should pipe oil from Wytch farm to Hound point or even to Sullom Voe.
§ Mr. Bruce
The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) is pushing his luck suggesting that an hon. Member from the Aberdeen area who has been connected with the oil industry does not know where the pipelines are. I am well aware of where the onshore pipelines are. It is sensible to co-ordinate development of new pipelines and to take account of our new requirements when giving annex B approval. However, it is extravagant to suggest that the agency must prepare a plan to design and construct an onshore crude oil pipeline system.
British Gas and BP were interested in an integrated gas gathering system. Those of us who supported the system 98 were encouraged because plenty of people who knew a great deal about oil and gas development felt that the project was worth while. Movement came from within the industry rather than at the whim of a political party. The project did not go ahead, but it was always a sensible idea. The Government would not have considered it so closely if they had not recognised its considerable merits. However, I am not aware of any serious suggestion in the industry for an approach such as this.
The Labour party must show that it is not determined to regulate the industry for purely bureaucratic reasons. It must also show that it recognises that people in gas and oil production are professionals with considerable experience and with whom they should work in partnership. I understand that, in spite of the bold words of the hon. Member for Wentworth (Mr. Hardy), the amendment will not be pursued to a Division. The Labour party would be wise not to press it.
§ Mr. Buchanan-Smith
I am not aware of any pressure in the industry for this type of pipeline. When considering annex B development plans, I consider the pipeline implications and the terminal implications. Proposals and decisions are commercial, but the structure must be thought out sensibly.
The hon. Member for Wentworth (Mr. Hardy) has previously, and generously, acknowledged that I am deeply concerned about the employment potential of our oil industry. He has credited what I have tried to do since coming to this office to ensure that benefits are ploughed back in employment opportunities in the United Kingdom.
Equally, I hope that the hon. Gentleman will accept that offshore fields, to which the amendment refers—I must emphasise that—involve environmental factors. That was one of the major reasons for introducing a new licensing procedure for onshore development and exploration in the past 12 months. No scheme will please everybody, but the new scheme has been generally welcomed by both oil and environmental interests seeking a better balance between the two. I am sensitive to those points.
The amendment concerns crude oil from onshore fields, which, as the hon. Member for Wentworth said, can be transported in a number of ways, one of which is by pipeline. I hate to have to disappoint the hon. Gentleman again, but I question the relevance of the amendment to the Bill. We must remember that the Government's pipeline system was originally constructed to supply military airfields owned by the Government with the materials essential for wartime use. Therefore, the Government did not have then, nor do they now, any strategic interest in crude oil pipelines. I could not see such a pipeline servicing Government-owned establishments, as I am not aware of any that are using crude oil.
Therefore, decisions on how oil is disposed of, or transported from, a particular onshore development are the responsibility, with proper respect for planning and environmental considerations, of those who are concerned with the commercial development of the particular oil accumulation. If the licensees decide that the pipeline is appropriate, it would be for them to construct and operate it. I do not see any justification for involving the public sector, and in particular the Oil and Pipelines Agency, in owning or financing such pipelines.
Those are fundamental objections, but there are some practical ones as well. I endeavour to be practical in 99 dealing with amendments, as I was in Committee. Amendment No. 1 refers to an onshore crude oil pipeline that is complementary to the existing Government pipelines and storage systems. However, as the existing system transports products and the one envisaged by the amendment would convey crude, it is difficult to see how the two could be regarded as complementary. However, if any part of the Government pipeline became redundant and if it appeared that it could be used by the licensee of an onshore oil production field and was appropriate for crude oil, I would expect the agency, as the managing agent of the existing system, to do what it could to facilitate such a change of use.
Despite the speech of the hon. Member for Gordon (Mr. Bruce), the amendment is not clear about where the pipelines should go once they have left the onshore fields. I imagine that the licensees would want to connect them to existing pipelines, to refineries or to port loading facilities. The amendment suggests that the pipelines should be linked with offshore producing fields. However, as the major onshore fields such as Wytch Farm and Humbly Grove, two of the bigger ones, are in the south of England and the major offshore fields are in the north of Scotland, it is difficult to see what purpose would be served by constructing such an extremely long pipeline.
§ Mr. Hardy
The Minister of State's Department has produced an attractive document about British onshore reserves. It shows that the prospects for oil extraction in Britain cover not merely the Wessex area but a large part of the area on the western side of the Bristol channel. It is a pity that illustrations cannot be used in the Official Report, but this illustration shows that the prospects stretch right up into Lancashire on the western side of the Pennines and include a large part of Lincolnshire stretching right across to Northamptonshire and a considerable part of Yorkshire, stretching to Teeside. This means that the Teeside facilities for the oil industry could link in very well with the extraction of oil from the Yorkshire and Humberside region. We are taking a longer view of oil extraction than the hon. Member for Gordon.
§ Mr. Buchanan-Smith
I am glad that the hon. Gentleman takes such a long-term view, but I hope that he realises that the map he is holding represents what we know on the basis of geological knowledge, not what we know on the basis of drilling. I am referring to the areas where we are producing onshore oil. Many people would like oil to be produced in commercial quantities in some of these other areas too, but where work has taken place the results have not been quite so optimistic as the hon. Gentleman is and as I should like to be. I have to be realistic and to look at these matters in a practical manner.
For these reasons, I am anxious that the Government's pipelines system should be used as sensibly as possible. Again I pay tribute to the British National Oil Corporation for the way it managed the system. In recent years it has increased the commercial use of the pipelines system, but it has always borne in mind the fact that it has a fundamentally strategic use and that its full capacity has not been needed. The agency will, I am sure, encourage the use of the pipelines system for commercial purposes. To try to stretch a crude oil pipeline as opposed to a 100 product pipeline to one that services crude oil from onshore fields is not, attractive though in some respects is the hon. Gentleman's proposition, one that lies properly with the functions of the Government's pipelines system either as it has been in the past, as it was recently under BNOC or as it will be in the future under the agency. For those reasons, I ask the House to reject the amendment.
§ Mr. Dalyell
I want again to ask for the leave of the House to put a question. I should like to hear what the Minister of State has to say in reply to it. I have to declare a strong constituency interest in the matter, not only because of the experience of Hound point, which was offshore, but because the whole pipe-laying exercise was so traumatic for some of my constituents and caused problems in particular for smallholders. As a Scottish Member of Parliament, the Minister knows about these problems. Furthermore, there are possibly oil deposits in the Bathgate area of Livingston.
In a previous incarnation the Minister had experience of the Scottish Office. To what extent will these be strategic planning matters for Government Departments to what extent will they be left to commercial interests? This is a very important issue. I listened carefully to the Minister and if I have misunderstood him, I apologise. My impression is that these decisions will be made by commercial interests, and hang the rest of us. I hope that that is not true.
§ Mr. Buchanan-Smith
By leave of the House, Mr. Deputy Speaker, I will answer the points raised by the hon. Member for Linlithgow (Mr. Dalyell). I can assure him that nobody is more sensitive than I about the laying of pipelines. The hon. Member for Gordon (Mr. Bruce) will bear me out when I say that within its small physical confines my constituency probably contains more pipelines than the constituency of any other hon. Member of Parliament. If, for the sixth time, certain landowners have a pipeline running through their land it can be a very traumatic experience. Both my Department and local authority departments are sensitive about this matter, and I take to heart the hon. Gentleman's point.
All onshore oil exploration and production is subject to the licensing procedure of my Department. As I said earlier, those procedures have recently been totally reviewed and a new system introduced to provide better safeguards. That will be welcomed as an improvement on the situation which existed before. Looking at it from the industrial and economic point of view, ultimate control rests with my right hon. Friend the Secretary of State, who grants the licences. The exercise of the licensing policy is discussed with my right hon. Friends in other interested Departments and we take a strategic view in relation to it. It is not just a narrow commercial view. The proposals and applications come from commercial interests, but the system is subject to licensing and licensing control, and the performance of the licences is monitored.
§ Mr. Dalyell
The Minister will forgive me for being parochial, but for the Livingston-Bathgate situation may we have an undertaking that at an early stage the two hon. Members concerned—my hon. Friend the Member for Livingston (Mr. Cook) and I, and indeed the regional council and the district council—will be taken into the confidence of those doing the strategic planning, because 101 last time round a great deal of hassle would have been saved if we had been consulted at an early stage, especially in relation to the compensation of some constituents?
§ Mr. Buchanan-Smith
As I said to other hon. Members who have an interest in exploration or production licences in their constituencies, I am very happy for them to come and discuss these matters. If the hon. Gentleman wishes to follow that up he may do so, should the appropriate stage arise. As the hon. Gentleman may know, just a few weeks ago I announced under the new procedures the first onshore licensing round. Applications have been invited and that round will close towards the end of September. From then on we shall he examining the applications, and thereafter we shall be making an announcement about the awards. If, when the awards are announced, the hon. Gentleman finds that his constituency or that of his hon. Friend is affected, I shall be happy to meet and discuss with him any aspect he wishes to discuss.
§ Mr. Hardy
We shall not press this matter to the vote. Before the withdrawal of the amendment, could I say to the Minister that, as a result of his constituency experience, there may well be a stronger case for integration in the development of pipelines than seems to have been the case in his own area? I recently saw a pipeline, not for oil, built through my constituency and it was obvious that we manage things very much better in north Yorkshire than they are managed in the right hon. Gentleman's constituency in Scotland.
One of our major concerns was the position of the smaller companies in the round of licensing to which the Minister has referred. Over the months, if it becomes obvious that, in the national interest or in the interest of the small independents, pipeline facilities should be provided, I hope that the Minister will not, out of a sense of dogma, prevent the Oil and Pipelines Agency from applying its ability and experience in the national interest. I hope that he will recognise that its experience is substantial and should be made available and not denied simply because the Minister has remarkably little faith, even in his own Department's publications, but a great deal of dogma.
I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.