North Sea Oil and Gas: Capital Investment (Hansard, 24 April 1990)

§ Viscount Ullswater
My Lords, the amounts of money invested in the North Sea this year will be decided by the companies involved. The indications are that exploration and appraisal activity could reach an all time record, and capital investment, which grew at over 20 per cent. to reach £2-6 billion in 1989, is expected to maintain this rapid growth in 1990.

§ Lord Gridley
My Lords, does my noble friend the Minister agree that the National Economic Development Office forecast that an investment of £350 million will be made this year, or an increase of over 50 per cent. on the 1989 figure? Does he agree that that is a wonderful testament to the way that the Government operate their regulations in the industry?

§ Viscount Ullswater
My Lords, I fear that my noble friend may have his figures a little awry. According to my information, a figure of £3-7 billion of investment is reported by the National Economic Development Office in 1990. Nearly £5 billion of investment in new North Sea projects has been approved by the Department of Energy over the past two years, and the lion's share of that investment is supplied by UK industry, adding to employment particularly in Scotland, the North East of England and the London area.

§ Lord Williams of Elvel
My Lords, will the noble Viscount tell the House how much of that investment goes into health and safety? Is he aware in that context that trade unions have identified 40 serious accidents in the North Sea since the Piper Alpha disaster and that the health and safety regulations do not yet apply offshore? How much money and how much government lead is required to ensure the safety of workers in the North Sea?

§ Viscount Ullswater
My Lords, offshore safety is one of the considerations which the Government have consistently stressed. It is of paramount importance and the Government attach a high priority to the safety of offshore workers. Safety standards will not be compromised for any reason. We constantly seek ways to improve the safety of all offshore workers. The Government cannot be responsible for the amounts of money about which the noble Lord asked me. It is for the companies themselves to invest that money, but they are encouraged at all turns by the Government to do so.

§ Lord Williams of Elvel
My Lords, perhaps I may ask the noble Viscount when the Government will extend offshore the health and safety legislation which is in practice onshore, such as the Electricity at Work Regulations, the Pressure Systems and 428 Transportable Gas Containers Regulations, the Noise at Work Regulations and the Control of Major Industrial Accident Hazard Regulations.

§ Viscount Ullswater
My Lords, I believe that those matters are the subject of another Question, but many of the points raised by the noble Lord will be taken into account by the report of the noble Lord, Lord Cullen. That report, which deals with a great number of safety matters, will be available later in the year.

§ The Earl of Lauderdale
My Lords, will my noble friend go a little further and distinguish between investment for production of oil and investment for production of gas, inasmuch as the last Brown Book figures showed a decline in oil investment of 10 to 15 per cent., but a rise in gas investment of about 30 per cent.?

§ Viscount Ullswater
My Lords, I do not have the figures which my noble friend seeks. It is a question of the part of the North Sea in which the investment is made, but I understand that the gas-oil split is about 30 per cent. to 70 per cent.

§ Lord Taylor of Gryfe
My Lords, I am sure that the House will be encouraged by the figures which have been given this afternoon. Will the Minister tell us what are the anticipated revenues to the state from that massive investment and whether those revenues will be used to encourage manufacturing industry or infrastructure development instead of being dissipated?

§ Viscount Ullswater
My Lords, the UK's visible trade surplus in oil was £1-5 billion in 1989 and the oil trade surplus is forecast to rise to £2 billion in 1990. It is the responsibility of my right honourable friend the Chancellor of the Exchequer as to how that money is spent. I do not think that I could agree with the noble Lord's comment about it being dissipated.

§ Lord Cledwyn of Penrhos
My Lords, my question moves marginally away from the Question on the Order Paper. However, can the noble Viscount tell us from his brief what is the investment in the industry in the Celtic Sea, or whether the Government are pursuing a policy of depletion there?

§ Viscount Ullswater
My Lords, on this occasion the noble Lord's question is outside the scope of the Question which deals with the North Sea.

§ Lord Tordoff
My Lords, will the noble Viscount clarify a point which arose from the question of the noble Earl, Lord Lauderdale, regarding the split between oil and gas? As I understand the situation, most of the gas comes from the southern North Sea. If the majority of investment goes there, how can there be a massive increase of jobs in Scotland?

§ Viscount Ullswater
My Lords, I believe that onshore investment is mostly in Scotland. Offshore, employment remains at the very high level of over 429 30,000 jobs. The noble Lord is correct in saying that most of the gas comes from the southern basin.

§ Lord Campbell of Alloway
My Lords, in the context of the question put to him a little time ago, does my noble friend agree that one cannot just apply a whole series of onshore safety regulations to the offshore situation without substantial amendment?

§ Viscount Ullswater
My Lords, I probably have to defer to my noble friend's superior knowledge about that matter. However, I know that the Cullen Inquiry was set up after the Piper Alpha disaster to look very carefully at all the safety standards which should be applied offshore.