Chamber
Meeting of the Parliament 17 November 2011
17 Nov 2011 · S4 · Meeting of the Parliament
Item of business
Oil and Gas Sector
In June, I had a members’ business debate on oil and gas taxation. It was a constructive debate, which was handled constructively by all parties across the chamber. It is good to see that I appear to have set the tone for oil and gas debates in the Parliament this session—long may that continue.
I agree with much that has been said by all members in today’s debate thus far. Lewis Macdonald rightly referred to some of the tragedies that have taken place in the North Sea. One of the fatalities in the recent Super Puma crash, Stuart Wood from Newmachar, was in the year below me at Dyce academy and played in the school football team with me, so the issue affects many people in my peer group, with whom I grew up. I note that the report on that crash is due out soon and I have no doubt that lessons will be learned in the industry.
I agree with the minister that it is important to focus on the positives and to look forward. The Scottish Government has been engaged constructively and, I hope, productively with the UK Government on the taxation regime in the North Sea. Although one would undoubtedly have hoped that the previous decision would have been taken following slightly more consultation with the industry, one hopes that, moving forward, there will be a period of consultation, which would help to alleviate concerns in the industry caused by some last-gasp decision making. I hope that the UK Government’s ears are open to that argument when the minister makes it to them.
I agree that there is a need to address skills gaps. In particular, Oil & Gas UK has highlighted to me that a gap exists in the middle between those who are graduate entrants or young entrants into the industry and those who are coming to the brink of retirement. One of the reasons why that gap exists is a subconscious mood out there that somehow the industry did not have a future. The short-termism that often defined the way in which the oil and gas industry was talked about led people to consider that it was perhaps not an attractive industry to move into. That has created something of a problem and a requirement for the gap to be filled.
The oil and gas industry advisory group has identified six priorities, one of which is skills. That is extremely important. I note that the PWC report refers to the work by, for example, Talisman and Wood Group in offering university scholarships. Indeed, the report encourages other companies in the sector to consider moving down a similar route.
Along with a number of other members, I attended the launch of Professor Alex Kemp’s worthy tome on the history of North Sea oil and gas. [Interruption.] Bless you, Ms Boyack. It was interesting to note, in the course of that evening, how many of the students on Professor Kemp’s course come from other areas of the world, where oil and gas sectors are seen as a long-term prospect, and how few people from the locale were on the course. We must do more to encourage people to believe that this is an industry that they can go into and that it will not decline within 10 to 25 years, as was so often the mantra.
I welcome the shift in focus that has taken place, which is constructive. Had some of our opponents’ political predecessors perhaps had the foresight to talk up the longevity of the industry to the same extent, some of the problems might not have arisen.
We had a discussion earlier today on female employment. OPITO produced a report that suggests that there has been an increase in the number of females being attracted to work in the oil and gas industry, which has often been viewed as very masculine and macho.
Work has been done, for example by Aberdeen College and the sector, to try to provide places for people from Kinloss and Lossiemouth, who are leaving the Ministry of Defence, on the drilling transformation training programme that is planned at Aberdeen College. The Prince’s Trust has also worked on developing a new basic entry programme for unemployed and disadvantaged workers. The industry has undertaken all that positive work, which we should welcome.
I am pleased that Mr Brown was able to clarify that the Tory amendment does not seek to disregard the PricewaterhouseCoopers report in its entirety, because there is much in that report that is worthy and to be commended. The report identifies that up to 24 billion barrels of oil could be extracted from the UK continental shelf. In fact, there is some discussion in the oil industry about whether that estimate could be increased depending on further investment and exploration. The west of Shetland fields, for example, could generate upwards of $600 billion in the next 40 years alone.
The report states that contrary to the view that North Sea production is in terminal decline, the outlook for the oil and gas industry in Aberdeen is positive. There is a wealth of exciting opportunities that will enable Aberdeen to continue prospering, through utilising new technology to extend the life of existing fields or through developing incremental reserves or greenfield sites. I am sure that my fellow members for the north-east and Aberdeen welcome, as I do, that analysis and the industry’s positive vision for the future of Aberdeen. I accept entirely the chancellor’s contention that investment is taking place. That is evident from BP, TAQA and Premier Oil, from the recent announcement from Talisman Energy and Wood Group and from the acquisition of ExxonMobil assets by Apache.
At the same time, though, there is a real need to focus in on the brownfield and marginal sites, which are the ones that are most affected by the tax changes. That is why I hope that the constructive discussions that are taking place will result in something a little better in the future.
A simple equation is that skills development depends on investment and investment depends on confidence. I am pleased that it appears that there will be no more short-termism and no more talking down the future prospects of the industry. Parliament should unite to say that oil and gas has a robust and optimistic future. The issue must be handled carefully. I know that the Scottish Government and the minister will be working to ensure that the next 40 to 50 years are handled better than the previous 40 years.
15:36
I agree with much that has been said by all members in today’s debate thus far. Lewis Macdonald rightly referred to some of the tragedies that have taken place in the North Sea. One of the fatalities in the recent Super Puma crash, Stuart Wood from Newmachar, was in the year below me at Dyce academy and played in the school football team with me, so the issue affects many people in my peer group, with whom I grew up. I note that the report on that crash is due out soon and I have no doubt that lessons will be learned in the industry.
I agree with the minister that it is important to focus on the positives and to look forward. The Scottish Government has been engaged constructively and, I hope, productively with the UK Government on the taxation regime in the North Sea. Although one would undoubtedly have hoped that the previous decision would have been taken following slightly more consultation with the industry, one hopes that, moving forward, there will be a period of consultation, which would help to alleviate concerns in the industry caused by some last-gasp decision making. I hope that the UK Government’s ears are open to that argument when the minister makes it to them.
I agree that there is a need to address skills gaps. In particular, Oil & Gas UK has highlighted to me that a gap exists in the middle between those who are graduate entrants or young entrants into the industry and those who are coming to the brink of retirement. One of the reasons why that gap exists is a subconscious mood out there that somehow the industry did not have a future. The short-termism that often defined the way in which the oil and gas industry was talked about led people to consider that it was perhaps not an attractive industry to move into. That has created something of a problem and a requirement for the gap to be filled.
The oil and gas industry advisory group has identified six priorities, one of which is skills. That is extremely important. I note that the PWC report refers to the work by, for example, Talisman and Wood Group in offering university scholarships. Indeed, the report encourages other companies in the sector to consider moving down a similar route.
Along with a number of other members, I attended the launch of Professor Alex Kemp’s worthy tome on the history of North Sea oil and gas. [Interruption.] Bless you, Ms Boyack. It was interesting to note, in the course of that evening, how many of the students on Professor Kemp’s course come from other areas of the world, where oil and gas sectors are seen as a long-term prospect, and how few people from the locale were on the course. We must do more to encourage people to believe that this is an industry that they can go into and that it will not decline within 10 to 25 years, as was so often the mantra.
I welcome the shift in focus that has taken place, which is constructive. Had some of our opponents’ political predecessors perhaps had the foresight to talk up the longevity of the industry to the same extent, some of the problems might not have arisen.
We had a discussion earlier today on female employment. OPITO produced a report that suggests that there has been an increase in the number of females being attracted to work in the oil and gas industry, which has often been viewed as very masculine and macho.
Work has been done, for example by Aberdeen College and the sector, to try to provide places for people from Kinloss and Lossiemouth, who are leaving the Ministry of Defence, on the drilling transformation training programme that is planned at Aberdeen College. The Prince’s Trust has also worked on developing a new basic entry programme for unemployed and disadvantaged workers. The industry has undertaken all that positive work, which we should welcome.
I am pleased that Mr Brown was able to clarify that the Tory amendment does not seek to disregard the PricewaterhouseCoopers report in its entirety, because there is much in that report that is worthy and to be commended. The report identifies that up to 24 billion barrels of oil could be extracted from the UK continental shelf. In fact, there is some discussion in the oil industry about whether that estimate could be increased depending on further investment and exploration. The west of Shetland fields, for example, could generate upwards of $600 billion in the next 40 years alone.
The report states that contrary to the view that North Sea production is in terminal decline, the outlook for the oil and gas industry in Aberdeen is positive. There is a wealth of exciting opportunities that will enable Aberdeen to continue prospering, through utilising new technology to extend the life of existing fields or through developing incremental reserves or greenfield sites. I am sure that my fellow members for the north-east and Aberdeen welcome, as I do, that analysis and the industry’s positive vision for the future of Aberdeen. I accept entirely the chancellor’s contention that investment is taking place. That is evident from BP, TAQA and Premier Oil, from the recent announcement from Talisman Energy and Wood Group and from the acquisition of ExxonMobil assets by Apache.
At the same time, though, there is a real need to focus in on the brownfield and marginal sites, which are the ones that are most affected by the tax changes. That is why I hope that the constructive discussions that are taking place will result in something a little better in the future.
A simple equation is that skills development depends on investment and investment depends on confidence. I am pleased that it appears that there will be no more short-termism and no more talking down the future prospects of the industry. Parliament should unite to say that oil and gas has a robust and optimistic future. The issue must be handled carefully. I know that the Scottish Government and the minister will be working to ensure that the next 40 to 50 years are handled better than the previous 40 years.
15:36
In the same item of business
The Deputy Presiding Officer (John Scott)
Con
The next item of business is a debate on motion S4M-01349, in the name of Fergus Ewing, on the oil and gas framework.14:58
The Minister for Energy, Enterprise and Tourism (Fergus Ewing)
SNP
Thank you for accommodating this important debate, Presiding Officer. I welcome the opportunity to acknowledge the success of Scotland’s oil and gas sector, ...
Tavish Scott (Shetland Islands) (LD)
LD
Will the minister give way?
Fergus Ewing
SNP
Certainly.
The Deputy Presiding Officer
Con
Liam—
Tavish Scott
LD
I am Tavish Scott, not Liam McArthur.Does the minister recognise that one of the major economic opportunities over the next 15 to 20 years will be in decommi...
Fergus Ewing
SNP
I welcome Tavish Scott’s point; he is absolutely right that decommissioning will present considerable opportunities for Scotland. Just yesterday we received ...
The Deputy Presiding Officer
Con
I am sure that we should be reassured, minister. Perhaps you would like to move on.
Fergus Ewing
SNP
Thank you, Presiding Officer.Access to finance is as much an issue in the oil and gas industry as it is in other industries, and oil companies are finding it...
David Stewart (Highlands and Islands) (Lab)
Lab
I am grateful to the minister for giving way because he is “that sort of minister”.My point is on fallow fields, which—as the minister will be aware—are fiel...
Fergus Ewing
SNP
That is one of a number of factors that concern all members across all parties. I cannot speak for Chris Huhne, but I think that the UK Government is apprise...
The Deputy Presiding Officer
Con
You can have a little more time, if you wish.
Fergus Ewing
SNP
That is very generous of you, Presiding Officer. You are that sort of Presiding Officer.
The Deputy Presiding Officer
Con
That depends on the day.
Fergus Ewing
SNP
Thank you, Presiding Officer. Technological excellence, robust supply chains, a skilled workforce and making best use of the existing onshore and offshore oi...
The Deputy Presiding Officer
Con
My pleasure. Could you please move the motion?
Fergus Ewing
SNP
I move,That the Parliament recognises the continued importance of Scotland’s oil and gas sector to the Scottish and UK economies, its support for 196,000 job...
The Deputy Presiding Officer
Con
Thank you. I call Lewis Macdonald, who has a generous nine minutes.15:12
Lewis Macdonald (North East Scotland) (Lab)
Lab
North Sea oil and gas have now been with us for a working lifetime. Other members, like me, will know people who have retired from the industry, having joine...
Maureen Watt (Aberdeen South and North Kincardine) (SNP)
SNP
I thank the member for recognising the future of the oil and gas industry. Is it not regrettable that in the second session of this Parliament his ministers—...
Lewis Macdonald
SNP
To be frank, what I regret is that after the minister’s constructive opening—and invitation for us to have a consensual and constructive debate—Maureen Watt ...
Gavin Brown (Lothian) (Con)
Con
We have had an excellent start to the debate. The minister’s speech was ministerial and helpful as opposed to partisan, and Lewis Macdonald’s speech was well...
Mark McDonald (North East Scotland) (SNP)
SNP
I note that the member’s amendment would delete all reference to the PWC report. What aspect of that report does he disagree with so fundamentally that he se...
Gavin Brown
Con
In the main, it is an excellent report, about 95 per cent of which I could probably sign up to immediately. There were a couple of issues to do with proposed...
The Deputy Presiding Officer (Elaine Smith)
Lab
We move to the open debate. I can allow speeches of up to seven minutes.15:29
Mark McDonald (North East Scotland) (SNP)
SNP
In June, I had a members’ business debate on oil and gas taxation. It was a constructive debate, which was handled constructively by all parties across the c...
Sarah Boyack (Lothian) (Lab)
Lab
I apologise that I will have to leave for a brief period for a prior commitment with a constituent, although I will be back for the closing speeches.I join c...
Maureen Watt (Aberdeen South and North Kincardine) (SNP)
SNP
I welcome this debate, because oil and gas is a subject that is very close to my heart; I worked in the industry and went offshore as part of my job for some...
Tavish Scott (Shetland Islands) (LD)
LD
A number of weeks ago, Oil & Gas UK and the French company Total organised a parliamentary visit to the Elgin-Franklin field, which is east of Aberdeen. In o...
Mark McDonald
SNP
Will the member take an intervention?