HL Deb 04 February 2003 vol 644 cc112-4

2.59 p.m.

Lord Hardy of Wath asked Her Majesty's Government:

Which of the main North Sea oilfields are now producing at well below their peak levels and what steps are being taken to enhance recovery by CO2 injection or by any other method.

Lord McIntosh of Haringey

My Lords, UK oil production peaked in 1999 and is beginning to decline. Most producing oilfields, including Forties and Brent, are below their peak levels. Government and the industry are actively engaged in maximising economic recovery of hydrocarbons, including by application of enhanced oil recovery techniques. Such techniques— for example gas injection and depressurisation—are being used in the Brent and Brae areas. CO2 injection, mentioned in the Question, is currently being studied.

Lord Hardy of Wath

My Lords, I thank my noble friend for his reply. Will the Government ensure that more public attention is given to the current work that he mentioned? Given the production peak offshore and the increasing dependency on overseas oil and gas supplies, will the Government support greater investment and endeavour in order that we maximise the United Kingdom energy yield?

Lord McIntosh of Haringey

My Lords, I agree with everything that the noble Lord said. There has been work on all the technologies for many years. The zero emissions technology group is working continually on environmental risks, economics, legal issues and international co-operation. For many years, because of lower energy prices, many attractive techniques have simply not been economical.

Lord Ezra

My Lords, is the noble Lord aware that the injection of CO2 into suitable depleted reservoirs of oil can enhance production by some 10 to 15 per cent. as has been demonstrated in the United States and Canada? Does he not agree, therefore, that that could be linked with the development of plants for clean coal technology improvement with CO2 extraction, thus contributing to the long-term benefits of the coal and oil industries?

Lord McIntosh of Haringey

My Lords, again, I agree with all of that. The Government are keen on CO2 injection. For that reason, we announced in the last Budget a 70 per cent tax relief on enhanced oil recovery using CO2 injection in petroleum revenue tax areas, and 40 per cent elsewhere. So, we are giving fiscal encouragement. As the noble Lord, Lord Ezra, will recognise, there are legal problems. There is the question whether the use of CO2 injection or CO2 sequestration techniques conflict with international conventions on dumping waste at sea.

Lord Campbell of Croy

My Lords, does the noble Lord agree that oilfields normally peak in their first three or four years, but then continue in production for at least 20 years? Are the Government making arrangements to ensure that as much oil as possible is saved?

Lord McIntosh of Haringey

My Lords, I have before me a table of all the oilfields and their production since 1975. I shall spare the House my reading them out. Although it is technically possible to continue to extract oil for many years after the peak, it is not necessarily economically worth while.

Baroness Miller of Hendon

My Lords, what assessment have the Government made of the impact of the 10 per cent supplementary charge, announced in the 2002 Budget, on the producers of oil and gas on the United Kingdom continental shelf? I wish to know, in particular, its impact on investment in exploration, development of the shelf and employment, particularly in Scotland.

Lord McIntosh of Haringey

My Lords, issues of past taxation policy are not relevant to the Question on enhanced oil recovery. The noble Baroness, Lady Miller, will be aware that we have been encouraging further exploration. For example, in the last Budget we increased first-year capital allowances from 25 per cent to 100 per cent. We have also abolished the royalty on the older fields.

The Lord Bishop of Hereford

My Lords, will the Minister enlarge on his reference to the sequestration of CO2? Is there not international agreement that sequestration of CO2 under sea is environmentally desirable and acceptable, far from being a dumping of toxic waste?

Lord McIntosh of Haringey

My Lords, I wish that that were the case. I agree that there are many advantages of sequestration, which the noble Lord, Lord Ezra, pointed out, both in where the CO2 comes from and where it goes to. Integrated gasification combined-cycle technology, which is the technique referred to, has considerable advantages. But, although it may not be a welcome fact, there are claims that, under the London Convention and the Ospar Convention, they constitute dumping waste at sea. Certain legal issues must be sorted out.

Lord Glenarthur

My Lords, have any abandoned fields been brought on-stream again as a result of enhanced recovery techniques?

Lord McIntosh of Haringey

My Lords, I am sorry, I do not know. I shall write to the noble Lord.