North Sea Gas Reserves (Hansard, 14 March 1984)

§ Lord Ezra
My Lords, I beg leave to ask the second Question standing in my name on the Order Paper.

§ The Earl of Avon
My Lords, the 1983 Brown Book estimates proven and probable recoverable reserves initially in place on the United Kingdom continental shelf to be some 1,374 billion cubic metres. Of these, about 470 billion cubic metres have been produced so far. The remaining reserves are equivalent to 20 years or so of gas consumption in Britain at 1983 levels. This period will be extended by the availability of gas imports. In the longer term, as traditional sources of gas supply become exhausted, there will be the options of importing liquefied natural gas and manufacturing substitute natural gas from coal.

§ Lord Ezra
My Lords, I thank the noble Earl for his reply. Would he not agree that this is a very important market? It is one which has been built up at great cost and with great success. It is therefore important that people should know where supplies will be coming from in due course. The noble Earl referred to imports. Will be kindly indicate to us what are the options so far as importing gas is concerned, and whether he will be contemplating a pipeline connection with the continent?

§ The Earl of Avon
My Lords, it may not be widely known, but at the moment we actually import 25 per cent. of our natural gas, anyway. Future sources are, I understand, in negotiation with the British Gas Corporation at the moment, and the options include both the Norwegian Sleipner Field and a Dutch field. Noble Lords may have seen a week ago BP's new exploratory plans. This question of gas supplies is an exciting world, and one that we are looking at, and I can assure the noble Lord that the gas corporation is well aware of the future prospects.

§ The Earl of Lauderdale
My Lords, can my noble friend say whether the Government are prepared to look kindly on any project for a cross-channel gas pipeline funded by private enterprise?

§ The Earl of Avon
Yes, my Lords.

§ Baroness Burton of Coventry
My Lords, coming nearer to home, may I ask the Minister whether the plentiful supplies which he has mentioned will have any effect on gas prices to consumers in the more immediate future? Is the noble Earl aware that I ask that question because in the gas industry there is considerable disquiet over the fear that the Government may without consultation impose on that industry a requirement to make additional payments to the Treasury, as it did with the electricity industry?
Finally, since I was unable to do so yesterday, may I now ask the noble Earl whether he will look at the reply that he then gave me in regard to paragraph 46 of the report of the Select Committee? The noble Earl said then that he could not give me an answer to a recommendation. Is the noble Earl aware that I was not asking him for a reply to a recommendation, but was making a statement of fact, which I thought it would be useful for him to read?

§ The Earl of Avon
My Lords, as usual I am grateful to the noble Baroness for her three supplementary questions. I shall indeed look at my reply of yesterday. 727 So far as gas prices are concerned, the noble Baroness will of course be aware that on this particular occasion the gas industry and the Government were in agreement on the size of the rise in prices recently announced. The announcement follows the increased cost of gas to the British Gas Corporation itself. With regard to her first supplementary question, gas prices in this country will now be influenced by international prices.

§ Baroness Macleod of Borve
My Lords, though the Question is specifically about the North Sea, can my noble friend the Minister say whether there are finds of gas in other seas around our islands?

§ The Earl of Avon
Yes, my Lords; there are some in the south basin of the North Sea. I am not sure exactly what area the noble Baroness has in mind when she refers to the North Sea.

§ The Earl of Lauderdale
My Lords, further to his answer about a cross-channel pipeline, can my noble friend say whether the Government are prepared to consider allowing the export of gas from this country, so that gas would be available at European prices, so providing a better incentive for exploration?

§ The Earl of Avon
My Lords, my noble friend raises an interesting point but I think that he is a little ahead of the times. At the moment we are still importing about 25 per cent. But we are not by any means closing the door to what my noble friend suggests.

§ Lord Stoddart of Swindon
My Lords, can the noble Earl give some indication of the extent of the increased prices that consumers will be facing over the next few years? I have heard estimates of an increase of up to 40 per cent. I believe that consumers would be interested to know what his estimate is. Can the Minister also say whether there are any plans for extensive coal gasification? Is he able to comment on the question raised in another place that there is a possible market for 90 million tonnes of coal for gasification in the future?

§ The Earl of Avon
My Lords, I shall take the last question first because that is always easiest. I reiterate what my honourable friend said in the other place. He does not know where that figure comes from, and it has absolutely no bearing on the situation at all. On coal gasification, we are making progress. The National Coal Board is doing so, as is the Gas Corporation in its gasification plans. These are going well. As for the price in the future, we can look back on the present rise of just over 4 per cent., which is under the rate of inflation, and also to a year's freeze before that. We can say to the gas consumer that we hope very much—I cannot go beyond that because it is on international world markets that gas is now traded—that there will not be the rises that we have seen in the past.

§ Lord Molloy
My Lords, can the Minister say that if, as the Gas Corporation indicates, the levy from North Sea gas amounts to around £500 million, this will be judíciously used or even stored ready for the day when we have to pay for gas from elsewhere?

§ The Earl of Avon
My Lords, the levy transferred the windfall gains on early North Sea gas, which is exempt from petroleum revenue tax, from BGC to the nation as a whole. So really, the nation is benefiting from this gas levy.

§ Lord Bowden
My Lords, can the Minister say whether it is true that nearly half the gas put into the mains escapes before it ever gets to the consumer? If so, can he say whether steps are being, or could be, taken to mend the pipeline?

§ The Earl of Avon
My Lords, there is indeed some leakage but nothing like the amount that the noble Lord suggests. Modernisation and new technology all the time lessen this fact.