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Oil and Gas

The hon. Gentleman should spit it out: the Government's action was a success, and if we tell the Treasury, officials there might be all the more willing to talk positively in the way that he indicates. That is a good point for us all to make. I have just recalled that the answer to the question about the number of exploration wells in the third quarter of the year was seven, as against nine in the whole of the first half, which fits with the picture of things picking up. I want to deal with the matter of the environment. A comprehensive framework of environmental protection measures has been developed to minimise the impact of oil and gas activities. That is embodied in bespoke oil and gas legislation, consistent with and in large part derived from the legislative framework of the European Community. All activities that could have an impact on the environment are subject to rigorous assessment, and significant activities are controlled through the issue of permits, consents or approvals. There is also an inspection and enforcement regime in place to confirm compliance with the conditions included in the environmental approvals. That robust regime is reflected by the industry's performance and the UK has a good environmental record. I noted, in reading the Committee's report, that although suggestions had been put to it about non-compliance with conditions on environmental matters, the Committee found the industry to have a good record. I am grateful that it came to that conclusion. The Chairman also raised the issue of carbon capture and storage, which is something in which I, too, am interested. Looking further ahead, we believe that carbon capture and storage will be one of the key technologies that will help the UK to meet its carbon reduction targets. The North sea has the potential to store more than 100 years' worth of UK power station CO2 emissions. Many in the oil and gas industry will have the knowledge and expertise to help us to realise that potential. However, the industry is keen, among other things, to get a clear regulatory regime for CCS. Last month my Department issued a formal consultation on how we propose to license the storage of CO2. We are keen to have comments from industry and stakeholders by the end of the year, so that we can move forward with the formulation of the regulations. The significance of a competitive and competent supply chain to the success of an oil basin is often underestimated. Indeed by far the greater part of the 450,000 jobs supported by the UK oil and gas industry is provided by the contracting community, and it is vital that the Government should maintain a close relationship across that sector. DECC, as the Department responsible for delivering energy policies, has a key role to play in promoting a successful upstream oil and gas supply industry. The fact that many areas of specialist support are provided by other Departments and agencies can create complexity, so it is important that DECC should maintain close links with industry to provide additional guidance when required. That is achieved either directly with companies, or via regional or sector trade associations, many of which it was instrumental in establishing. A good example is Subsea UK, which was set up five years ago with initial core funding from DECC when, along with industry representatives, it recognised the enormous growth potential in the subsea sector, both in the continental shelf and the broader international market. Subsea UK is now well established and is helping to grow opportunities for its 200-plus member companies and to secure a good share of the rapidly expanding global market, which is set to expand by a further 50 per cent. in the next five years. The current sectoral focus for DECC is now on offshore decommissioning, where funding is being provided to help to create a new trade body to foster UK capability and to assist indigenous companies to win a share of that work, which will be worth billions of pounds over the next few decades. The UK oil and gas supply sector has been a great success story, from the early days of the industry when American companies and personnel dominated and carried out much of the work to the present day when UK expertise is recognised and sought after in almost every oil-producing province in the world. The challenge will be to anchor that expertise in the UK and to ensure that we still have a significant oil industry well beyond the life of the UKCS. Currently the overseas oil and gas supply market is worth around £5 billion a year, with the potential to grow fourfold in the next 25 years. DECC and its partner UKTI will continue to work closely with the sector to help it to achieve that ambition. I alluded earlier to my being a fairly new Minister in the post. I am about to arrange my first ministerial visit to Aberdeen to see for myself the work that is now going on. The debate comes at an important point in the development of our offshore oil and gas resources. The industry faces a key challenge to achieve full economic recovery in a phase of inevitable decline in production levels and in the size of the remaining prospects. The financial crisis and the volatility of oil prices have magnified that challenge. The Committee's inquiry into this vital industry has therefore been timely, and we welcome its constructive recommendations. I assure hon. Members that the Government are fully committed to playing their part, through continued close working with the industry, to ensure that offshore oil and gas continue to contribute as much as possible to energy security, investment and employment in the UK, and, not least, to the vital transition to a low-carbon future, which matters so much to us and the whole world.