§ The Earl of LauderdaleMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government what incentives they mean to offer to encourage exploration of the sedimentary basins believed to exist below volcanic rock between Scotland, Orkney and the Shetlands on the one hand, and Rockall on the other.
The Minister of State, Department of Employment (The Earl of Gowrie)My Lords, the Government have at present no plans to offer particular incentives to encourage exploration for hydrocarbons in the areas to which my noble friend refers.
§ The Earl of LauderdaleMy Lords, in thanking my noble friend for that reply, may I ask him whether he is aware that, by the end of next year, some 15 out of the 16 producing oilfields on the British continental shelf will already have peaked or started their decline? Is it not therefore very important that plans should be set on foot and incentives offered so that the deeper waters to the north-west of Scotland are explored?
The Earl of GowrieMy Lords, while the lead and lag times are both long in the oil industry, as my noble friend is well aware, I certainly agree with him that these are finite resources and the resource considerations will probably make exploration in deeper waters viable. When that time comes, the Government will certainly be prepared to consider incentives additional to those already obtaining.
§ The Earl of LauderdaleMy Lords, would my noble friend agree that the taxability of the companies investing in the North Sea is also finite, and that the impact of current taxation tends to drive them away to look for cheaper opportunities in other parts of the world?
The Earl of GowrieMy Lords, as I believe I have said to my noble friend and to the House before, I think we all regret increases in taxation, whether in a corporate or a personal capacity; but as I said to my noble friend on another occasion, I do not think that taxation changes are yet having a significant effect on the general level of exploration in the continental shelf. If and when they do, the Government will act accordingly.
§ The Earl of LauderdaleMy Lords, would my noble friend take note that the average period of time now required to drill a well in the North Sea is 25 per cent. longer than it has been during the previous five years, and should not that be focussing their minds seriously?
The Earl of GowrieYes, my Lords, I think it should indeed; but I believe we shall see a very different position as the world comes out of recession and as there are more general incentives to produce hydrocarbons rather faster.