HC Deb 10 March 1986 vol 93 cc649-50
3. Mr. Greg Knight

asked the Secretary of State for Energy if he will make a statement on the extent to which offshore oil recovery technology is being achieved in the United Kingdom as a result of the ninth offshore licensing round.

The Minister of State, Department of Energy (Mr. Alick Buchanan-Smith)

Following the ninth round of licensing, there has been a significant advance in the contribution of United Kingdom companies and institutions in areas of high technology offshore.

Mr. Knight

How much research and development is taking place in the offshore industry? Is that not very much on the increase, and is that not good news for Britain?

Mr. Buchanan-Smith

I am glad to say that the results of the initiative that we took in the ninth round on new technology identified £140 million of ongoing work on research and development in the offshore industry. Further inquiries since that time show that that figure could be as high as £170 million. I am delighted at the way in which the oil companies and the supply industry have responded to the initiative.

Mr. Kennedy

Since the ninth offshore licensing round, there has been a fall in oil prices. Can the Minister assess the impact of those falling prices on offshore technology and research and the big contracts that come with it? He will appreciate that that is a matter of considerable concern to the highlands and islands of Scotland.

Mr. Buchanan-Smith

There is every sign that work is continuing following the ninth round, and, as the hon. Gentleman knows, the main work is exploration. It is significant that in the first six weeks of this year more exploration wells were drilled offshore than in either of the two previous years, including 1984, which was a record year. The oil industry is maintaining its activity.

Mrs. McCurley

Will the new offshore licensing round improve the state of the order books for some of our construction companies involved in such work?

Mr. Buchanan-Smith

I am delighted to say that already this year I have approved five new gas and oil fields and two major developments, and there will be a considerable amount of work coming from both those development approvals. Who gets the work will depend on how competitive they are, their price, delivery and reliability; and our British yards have a good record.

Mr. Rogers

Apart from technological investment, will the Government invest in a gas-gathering scheme to prevent the enormous waste of scarce resources in the North sea? When will the Government put some money into this?

Mr. Buchanan-Smith

I hope that the hon. Gentleman recognises that the amount of gas flared offshore since 1979 has been reduced by half. At the same time, oil production has increased by 50 per cent. There has been a considerable improvement in that area. It is significant that many independent schemes have already been initiated by the oil industry, using the industry's own money.

Mr. Orme

The Minister has not answered the question asked by the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) about oil recovery technology and the fall in oil prices. What effect has that had to date on oil recovery technology?

Mr. Buchanan-Smith

There has been no effect at all. The longer-term effect is that more work will be encouraged in those areas. The more that can be done to lower costs and improve efficiency, the more will profitability increase in the face of a lower world oil price. I therefore believe that oil recovery technology will be encouraged.