HL Deb 21 February 1985 vol 460 cc671-3

3.8 p.m.

Lord Stoddart of Swindon

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

The Question was as follows:

To ask Her Majesty's Government whether they intend to introduce measures in 1985 to encourage enhanced oil production from existing North Sea oilfields.

The Minister of State, Scottish Office (Lord Gray of Contin)

My Lords, the Government have under review the possibilities for additional measures to encourage enhanced oil production from existing fields in accordance with their policy of achieving maximum economic recovery of petroleum from the United Kingdom Continental Shelf.

Lord Stoddart of Swindon

My Lords, may I thank the noble Lord for his helpful reply? Will he confirm that incremental oil from a large existing oilfield could very well be equal to the total capacity of a new marginal field? Can he assure me that the Government are keeping closely in touch with research and development into techniques to recover that substantial potential increment to our oil supplies and are addressing themselves to the problem of financial incentives to encourage the exploitation of incremental oil?

Lord Gray of Contin

Yes, my Lords, I can confirm to the noble Lord the points which he asked me about. My right honourable friend the Chancellor of the Exchequer announced during his 1984 Budget speech in another place that the Government would be reviewing the fiscal treatment of incremental investment in existing fields. It will of course be for the Chancellor to announce the outcome of the review in due course. The Government keep in touch with techniques for enhanced oil recovery used in other countries, though it must be noted that these techniques have so far been developed with the landward rather than the offshore production of oil in mind. So far as offshore oil is concerned, they are still in their early stages.

Lord Parry

My Lords, will the noble Minister have a mind to mention the Celtic Sea under the general heading of this question?

Lord Gray of Contin

My Lords, I am sure that my right honourable friend the Secretary of State for Energy will be delighted to think that there are many who still have confidence in the reserves or the potential reserves of the Celtic Sea.

The Earl of Lauderdale

My Lords, will my noble friend agree that the last very helpful fiscal incentives to the oil industry were provided in the Budget after some three years of pressure by the United Kingdom Offshore Operators Association, supported, indeed, by the department of which he was a distinguished Minister of State? Will he therefore press the Treasury to hurry up with this study and make sure that another three years do not have to pass before the excellent arguments of the oil industry are accepted and then boasted about afterwards by the Government?

Lord Gray of Contin

My Lords, I think that my noble friend was perhaps being a little unfair on the Government there. After all, the decisions which were taken in the Chancellor's Budget of 1983 have led to the enormous increase in exploration in the North Sea. The point which he makes, that further incentives should be given in some future Budget, will certainly be noted and I have no doubt that the Chancellor is considering all these matters in preparing his Budget. But of course I have no idea if this features among the priorities.

Lord Cledwyn of Penrhos

My Lords, given our dependence on North Sea oil revenue, can the noble Lord give us an up-to-date estimate of the effective and practical life of the North Sea oilfields?

Lord Gray of Contin

My Lords, I am sure your Lordships will appreciate that is an extremely difficult question. The Department of Energy at the present moment claim that we shall be self-sufficient in oil until the end of this decade, although there is little doubt that we shall be taking oil from the North Sea after the end of the century.