§ Mr. John H. Osbornasked the Secretary of State for Energy what action he has taken in response to the organising group's recommendations concerning the disposal of the natural gas liquids from the proposed new offshore gas-gathering pipeline system.
§ Mr. GrayValuable natural gas liquids will be brought ashore by the new gas-gathering pipeline. The ethane, in176W particular, will be an important new feedstock for petrochemical plants in the United Kingdom. Timely completion of the facilities for handling these natural gas liquids is essential to the gas-gathering system as a whole.
The organising group I set up in June has just made recommendations to me on the handling of these hydrocarbons. Its advice is that the ethane should be extracted at St. Fergus and piped separately to users, with the processing of the remaining stream carried out at Nigg Bay. It recommends that preparatory work should be carried out on an ethane line from St. Fergus to Moss Morran and Grangemouth, with an extension to Teesside, and that an ethane line from St. Fergus to Nigg Bay should also be considered. The organising group has stressed the urgent need for decisions on the routing of the NGLs. It has invited me to decide how they should be aggregated into quantities sufficient for bulk contracts to be entered into for petrochemical use.
I have invited the organising group to develop its planning on the lines recommended.
It is, however, my view that the actual pattern of disposal of the NGLs should be determined by commercial negotiations. At least seven companies have expressed an interest in purchasing the ethane as feedstock for petrochemical manufacture and several licensees have expressed a need for reassurance that they will be able to regain access to natural gas liquids after onshore fractionation into component products. It is important that commercial negotiations for the sale and processing of NGLs should proceed quickly to a point which enables the pattern of onshore disposal to be settled. To facilitate this, clarity is needed on the rights and roles of the various parties with an interest in the system. I have therefore today confirmed to the British National Oil Corporation that I shall not stand in the way of the exercise by the corporation of the rights to natural gas liquids which it enjoys under participation agreements. The British National Oil Corporation and the British Gas Corporation have informed me that they will co-operate in the disposal arrangements, as appropriate. These developments identify to prospective purchasers a substantial seller able to enter promptly into disposal negotiations. Taken together with the organising group's work on the processing arrangements, this should enable the pattern of the onshore facilities to be determined. There will be no obligation on licensees to sell the remainder of their natural gas liquids through an intermediate agency.
I have invited the corporations and the organising group to seek to maximise the national economic benefit and as part of this to recognise the importance of petrochemical activity in the United Kingdom based on natural gas liquids. I have asked them to ensure, so far as possible, that facilities to process the NGLs, including any extracted from Norwegian gas if it becomes available, will be provided in accordance with the timetable envisaged for the gas-gathering pipeline as a whole. They are to ensure that, subject to participation, licensees can recover their own material after fractionation and that later licensees and customers have access to the system on reasonable terms. I have made it clear that BNOC should not commit itself to investment in petrochemical plant.
I expect all parties to the commercial negotiations to conduct them constructively and speedily. It would not be acceptable for any of the parties to block agreement on reasonable terms if this threatened to impede timely completion of the gas-gathering system.