The Government’s Energy Bill passed its second reading in the Commons yesterday with the express support for large sections of it from the opposition Labour energy spokesman Lisa Nandy, MP.
She agreed with her opposite number, British Energy Minister Amber Rudd that it is vitally important for the UK economy – and the hundreds of thousands of jobs it supports – that the North Sea oil and gas industry maximises economic recovery of the remaining 20-billion barrel of oil left in the basin.
The Wigan MP said; “The price of a barrel of Brent crude oil ($28-barrel) underlines the need for parties in this house of work together. There is cross-party consensus to support (these) jobs by maximising economic recovery in the North Sea.
Both Rudd and Nandy agreed that de-carbonising the energy industry in line with Paris climate-change commitments is important in long run but accepted the need to maintain security energy supplies by relying on oil and gas in the shorter term.
NOW BOOKING: The 2016 UK Oil and Gas Collaboration Conference: 14 April, Aberdeen
Nandy added: “We agree it is in the national interest to support the Energy Bill and to implement the recommendations in the Wood Review.
“There are substantial oil and gas reserves still in the North Sea, with around 300 fields currently in production.
“Although there is about 20-billion barrels of oil – gas still to be recovered, the problem is that most of these reserves are in smaller and more (economically) marginal fields. So the OGA (the industry regulator) needs powers to ensure collaboration across the industry.”
Worries about Iran’s return to an already oversupplied oil market drove down Brent crude down to $27.67 a barrel early on Monday, its lowest since 2003. The price crept back above the $28-barrel marker later in the day.
Callum McCaig, MP for Aberdeen South and the SNP’s Energy spokesman in the House of Commons ask Rudd if she agreed that ‘the <oil and gas> industry requires substantial support from the Government by means of fiscal measures (aka tax-incentives>’.
The Minister declined to comment on ‘Treasury matters’ but added: “If the UK does not maximise economic recovery of our own oil and gas, it will result in more imports into the UK, which will be bad the for economy and the balance of payments.
“Maximising Economic Recovery must be part of a balanced plan for lowering the energy supply low-carbon mix.”
John Redwood, a former Conservative Minister, pointed out that “at $28-barrel, there would be practically no new investment in the North Sea”.
Moving the motion to approve the Bill, Rudd said its two main aims were to formally establish the Aberdeen-based Oil and Gas Authority (OGA) – and thereby increasing N. Sea oil and gas production by up to four billion barrels over the next 20 years – and to end new subsidies for onshore wind energy.
She said that renewable energy susbidies should ‘not be part of any permanent business model’ and warned that these could otherwise result in an over-supply of onshore wind farms by 2020.
The minister told MPs that ending the onshore renewable energy subsidy could save taxpayers up to £200 million.
However, Labour criticised the UK Government’s U-turn over carbon capture and storage (CCS). Nandy said Chancellor Osborne’s decision to cancel the £1 billion North Sea carbon capture project proposed for Peterhead power station by Shell and SSE as ‘reckless’.
She has asked the National Audit Office to investigate this ‘mishandling of the CCS project’ as the companies seek to recover development costs.