§ 3.17 p.m.
§ The Earl of LAUDERDALEMy Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how many exploration rigs are now drilling wildcat wells on the United Kingdom Continental Shelf, and what were the corresponding figures for this time last year and in 1977, 1976 and 1975 respectively.
The Earl of GOWRIEMy Lords, at the end of May there were seven mobile rigs engaged in exploration drilling. The corresponding figures for May 1978, 1977, 1976 and 1975 are nine, 15, 14, and 20 respectively.
§ The Earl of LAUDERDALEMy Lords, I thank my noble friend for that reply, but is he aware that he has not answered the Question? Is he aware that the Question was about wildcat wells being drilled now; not about the number of exploration rigs? Can he address himself to the Question which I asked, which is how many wildcat wells are being drilled now?
The Earl of GOWRIEMy Lords, I apologise to my noble friend if I have given him an unsatisfactory Answer; but, in fact, strictly speaking, the wildcat well is an exploration well in a new area which has not previously been drilled. I thought that my noble friend was extending his interpretation of the word a little wildly to exploration wells generally.
§ The Earl of LAUDERDALEMy Lords, without wishing to torment my noble friend, who, after all, is not in the Department of Energy and has, therefore, to take his briefing at second hand, is he aware that at present four wildcat wells are being drilled? Further, is he aware that that compares with three already being drilled in the Dutch area, two in the Norwegian area and one in the Irish area? Is he aware that that is the lowest rate of activity for six years and that this is nothing to he happy or complacent about?
The Earl of GOWRIEMy Lords, I see no sign of complacency on this Bench about this situation. Pending the outcome of the ultimate review, this is exactly why we have already made substantial changes in policy, so that exploration may be increased.
§ Lord WYNNE-JONESMy Lords, is the noble Earl aware that, as I suggested to him yesterday, the number of discoveries per wildcat well actually drilled is decreasing? Is he aware that, in 1974, 3.5 wildcat wells per discovery were drilled; in 1977, 5.8 and, for the bigger wells of over 300 million barrels, there were 26 wildcat wells per discovery? Would he not agree that this indicates quite clearly that to extend the number of wildcat wells is not likely to produce a vastly increased number of discoveries?
The Earl of GOWRIEMy Lords, contest the last part of the question. It is true that the cherries lowest down on the bough, if I may put it that way, are the easiest ones to pick, and that the most obvious prospects in licensed territory are drilled first. The success ratios for the number of areas of the United Kingdom Continéntal Shelf are still very high, and overall success ratios remain above the worldwide average. That is exactly why we wish to encourage more activity of the kind suggested in the supplementary question asked by my noble friend.
§ Lord ORR-EWINGMy Lords, is my noble friend aware that the taxation policies in general, and the oil taxation policies in particular, of the last Government have led to this disastrous state of affairs where exploration rigs are now dispersed all over the world and are not concentrated in the North Sea where they are badly needed? What is this Government now going to do to set matters right and attract these exploration rigs back to the North Sea?
The Earl of GOWRIEMy Lords, it should be clear from my answers that we are not satisfied with the policy that we inherited, and that is why we are engaged in reviewing it.
§ The Earl of LAUDERDALEMy Lords, is the noble Earl aware of the scale of the effort that is needed? Is he aware that the Offshore Operators' Asso- 1611 ciation, extrapolating from experience all over the world, reckon that we need between 60 and 90 wildcat wells per year if we are to get enough oil in the 1990s? That means having about 20 exploration rigs at work instead of the seven that he mentioned.
The Earl of GOWRIEMy Lords, as I have already said, everything should be done to encourage increased exploration.
§ Lord KALDORMy Lords, is the noble Earl aware that, despite the fact that enormous profits are already being earned from the North Sea by private companies, this terrible, drastic taxation that the noble Lord referred to just now has so far yielded hardly any revenue?
The Earl of GOWRIEMy Lords, obviously the Government, any Government, have a great interest in the high yield of oil because that gives a high yield in taxation.
§ Lord MISHCONMy Lords, could possibly the concluding question on this matter be this to the Minister? Will the noble Earl follow the guidance of the noble Earl, Lord Lauderdale, in a general sense and see that the Government cease to take a preponderance of inexpert advice?
§ Lord BALERNOMy Lords, are the Government aware that there is a universal belief in the industry that BNOC had access to confidential information, both on finance and exploration, and that this has in some way been leaked to competitors of the oil companies operating?
The Earl of GOWRIEMy Lords, I am well aware that there have been criticisms of the role, and the often contradictory role, of BNOC as it was set up, but I am not aware that it has in any way abused that role.