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Energy Depletion Policy

Volume 24: debated on Monday 17 May 1982

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asked the Secretary of State for Energy if he will make a statement on the energy depletion policy of Her Majesty's Government.

My aim is to help create conditions that will ensure the efficient exploitation of our national energy resources. That way maximum encouragement will be given to prolonged, high levels of economic production.

Surely my hon. Friend must realise that the Department has had eight years in which to think about depletion policy. Bearing in mind the very high rates of taxation, falling oil prices, and the likelihood that by 1984–85 we shall pass the peak of production, will my hon. Friend assure the House that no further provision will be made for depletion policy, as it is not required? The public are entitled to know the Government's policy.

The depletion policy for oil is that which was given in the House by my right hon. Friend the Member for Guildford (Mr. Howell) when he was Secretary of State for Energy.

The Government are constantly aware of the need to consider future depletion policy, but we have no immediate plans to make an announcement.

Is there not a growing jobs crisis in the offshore supply industry, and a crisis in confidence, leading from the Government's incoherent attitude towards depletion and development? Will the Minister assure the House that we shall have a substantive statement on energy depletion policy, as compared with the nonsense that he has just spoken about depletion, so that industry can plan for the future?

It is very easy to make that sort of pronouncement from the Opposition Benches, but the Government have to bear their responsibilities in mind. The Government cannot authorise annex B's for proposed developments if the oil companies do not submit them. The North Sea is an extremely difficult place in which to work, and technical problems constantly arise. We are having discussions with several companies. I have no doubt that in due course annex B's will come forward and that the offshore supply industry will receive its share of orders.

I readily accept that the Labour Government had no depletion policy either, ever since they entered into the Varley assurances, but will the Minister agree that if the purpose of the Government is to use market conditions to create ideal circumstances for the exploitation of oil, we have the worst of all worlds, with the collapse of oil prices, partly due to over-production, and the very likely starvation of the oil platform yards? Is not the whole matter completely and utterly out of balance?

The hon. Gentleman has got it wrong. With the best will in the world, it is impossible to develop our North Sea resources in a way that will ensure a continuous flow of orders. The Select Committee on Energy will shortly be making known its deliberations on depletion, and it will be interesting to read its comments.

To what extent will my hon. Friend balance a depletion policy against the pressures of normal market forces? Whereas it makes sense to sell oil to our EEC partners and to others, will he consider a cross-channel gas pipeline and link, so that it is possible to buy as well as sell gas, particularly if the EEC countries can obtain cheaper supplies of gas from third countries?

My hon. Friend will be aware that, for example, we buy a substantial quantity of gas from Norway.

My hon. Friend will realise that the demand for gas in Britain at present is not fulfilled. Therefore, it is unlikely that we would consider exporting gas in the meantime. If, however, as a result of our policy—which is to encourage the private sector to explore further for gas—a great deal of gas becomes available, exports will be considered again at that time.

Has the Minister noted that the question refers to energy depletion and not just to oil depletion? Would it not be sensible for the Government to concentrate a little more effort on resources such as sun, wind and wave, which are non-depletable? Will he comment on the absurd recommendations made recently by ACORD, which are contrary to everything that our partners in Western Europe are doing?

It was significant that the hon. Gentleman should have omitted what is probably the most important factor of all, namely, nuclear power, in regard to which we are proceeding with our programme with all haste.

A substantial amount of money is being made available each year for research and development in regard to the other sources of energy that the hon. Gentleman mentioned, but he will appreciate that several of them are not yet at the stage at which they could absorb a massive injection of development funds.