UK Continental Shelf Exploration Wells (Hansard, 1 December 1981)

§ The Earl of Lauderdale
My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

§ Lord Skelmersdale
My Lords, 33 exploration wells have been drilled this year. In addition, seven exploration wells were being drilled as at 12th November 1981, the last date for which there are figures.

§ The Earl of Lauderdale
My Lords, I thank my noble friend for that information. Could he tell us how that figure, a total of 40, compares with the figures for the last several years?

§ Lord Skelmersdale
Yes, my Lords. As I said, 40 to-date this year; 32 in 1980; and 33 in 1979.

§ Lord Strabolgi
My Lords, despite that situation, are the Government aware that the present excessive tax régime is a positive disincentive to exploration in the North Sea?

§ Lord Skelmersdale
No, my Lords, I do not think that we are aware of that at all. The indications are that, far from slowing down the number of exploration wells being drilled, they are increasing, as I said in my original Answer to my noble friend. We therefore have no reason at all to believe that the introduction of any new fiscal arrangements is having any significant effect.

§ The Earl of Lauderdale
My Lords, is my noble friend aware, in the light of his answer to the noble Lord's supplementary question, that the oil industry has made a submission to the Government—a united submission—and has said: "For heaven's sake, do not do any new licensing until we have got through the budget and see what conditions are"? Is he not aware that a whole number of companies have delayed their proposed developments and, in certain cases, are threatening to abandon them altogether?

§ Lord Skelmersdale
My Lords, I am very much aware that there are two submissions from the oil companies currently being examined in Whitehall, both by my own department and by the Treasury. These are the UKOOA ones, which I think my noble friend has in mind in asking his supplementary question, and also the BRINDEX one. I rather think that this goes a little wide of the Question on the Order Paper which refers to exploration wells rather than production or any other form of well.

The Earl of Halsbury
My Lords, is the noble Lord able to give us a breakdown of the wells drilled for exploration as between oil and gas? How many were drilled in the expectation of oil and how many in the expectation of gas?

§ Lord Skelmersdale
My Lords, I am afraid that I cannot give that breakdown. But of course, as the House will know, one is never quite sure which one will find, or indeed whether one will find both together.

§ Lord Taylor of Gryfe
My Lords, will the noble Lord comment as to whether the proposals for the sell-off of BNOC assets in the North Sea is a disincentive to new developments and new investment in that area?

§ Lord Skelmersdale
My Lords, I do not think that the admission of private capital into BNOC makes any difference at all. Each petroleum production licence granted carries an agreed work programme stipulating the minimum number of wells to be drilled in the initial term of the licence. We believe that the removal of BNOC privileges has helped to stimulate drilling activity, which we expect to see further encouraged by privatisation.

§ The Earl of Lauderdale
My Lords, is my noble friend aware that in fact the chairman of BNOC has welcomed the proposal to introduce private capital 932 into that organisation and the corresponding relief from Treasury interference that will come? Can he also tell us this: Arising out of another exploration well drilled, is it the case—as has been widely rumoured—that the offshore supplies office has had very little opportunity this year to generate new North Sea jobs just because of the slowdown in drilling?

§ Lord Skelmersdale
Yes, my Lords, I am certainly aware of the views of the chairman of the BNOC in this connection. I must say I agree with him, and I would hope that other nationalised concerns saw the situation in the same light as he does. As far as employment prospects in offshore supplies are concerned, there are really two different points here which perhaps I ought to make. There is currently a shortage of rigs in the North Sea, meaning that foreign rigs may well come in. That might mean a decline in the United Kingdom's share of those rigs but not a decline in employment, since those people currently working will remain and, depending on the origin of foreign rigs, this could well mean an increase in employment of our own labour.

§ Lord Strabolgi
My Lords, when considering the representations made by the oil industry about the excessive tax régime, will the Government also bear in mind the question of the short-term fields?

§ Lord Skelmersdale
Yes, my Lords, I am sure that this will be considered.