Oil Refineries

Part of Orders of the Day — Prescription and Limitation (Scotland) Bill – in the House of Commons at 12:00 am on 15th June 1973.

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Photo of Mr Dick Douglas Mr Dick Douglas , Clackmannan and East Stirlingshire 12:00 am, 15th June 1973

I appreciate the opportunity to raise the matter of the siting of oil refineries in the United Kingdom. I take the view that this is a vital matter to the economic growth of the United Kingdom and to the environmental prospects of areas in which oil refineries are situated or are likely to be situated.

This week we have had a number of excellent debates bearing on environmental and regional topics. We have just completed such a debate. All the considerations discussed on the Maplin Development Bill and in relation to the Channel Tunnel are related to the growth of traffic movements. I was rather struck by some of the statistics involved in the Channel Tunnel debate about movements of traffic. If we were to tackle the problem properly we might include some contingency plans for horse troughs every few hundred yards in case the energy crisis befalls us.

All the assumptions relating to Maplin and the Channel Tunnel involve directly the availability of fuel supplies. Energy policy is a much neglected topic in this House, although the House of Lords has recently discussed it. I hope that we shall have an opportunity of discussing the broad issues of it in the not too distant future.

I wish to deal with a relatively narrow aspect of energy policy under two main headings: first, the general economic and strategic considerations involved in the siting of the refineries; and, secondly, the planning considerations related to two refineries being mooted.

Since 1945 the general policy in the United Kingdom has been to endeavour broadly to keep refining capacity moving in harmony with United Kingdom demands for fuel and fuel products. Currently the United Kingdom capacity is, I am informed, about 120 million tons, which in terms of throughput gives a figure roughly in balance with demand. Projections of demand for fuel in the United Kingdom suggest that we shall require refining capacity of about 150 million tons by 1980. There might be some differences—perhaps 2 or 3 per cent. one way or the other—but broadly the figure of 150 million tons is reasonably accurate.

That would mean either new refineries being created or existing ones being expanded to give an additional output of 40 million to 50 million tons. As far as I can discover—and I should appreciate the Government's assessment of the position—about 40 million tons of oil can be refined in the regions which we might roughly say are in South and South-East England, with additional capacity planned for a further 14·6 million tons. Therefore, roughly half the United Kingdom needs can be supplied by refineries in these regions.

The argument often used for the location of refineries in particular areas is related to the proximity of the refineries to their markets and the claims made about the relative costs of transporting refined products against the cost of transporting the crude oil. But I emphasise that calculations about such costs are taken directly from the oil companies. Nowhere have I seen statistics about the transporting of crude oil and refined products which might involve social cost-benefit analyses.

I turn to the planning considerations. Late last year the Department of the Environment issued a paper on the selection of sites for oil refineries. I should like to comment on some of the views expressed in it. The document refers to the minimum capacity of a new refinery as being about 4·5 million tons per annum, requiring a site of at least 250 to 300 acres. My discussions with oil companies suggest that that type of refinery in modern terms is pretty small beer, and that modern refineries which are being projected, albeit some from the United Kingdom point of view export-oriented, might have a capacity of 24 million to 25 million tons per annum. Therefore, the area of 250 to 300 acres mentioned in the document is for a refinery of minimum capacity.

The document does not show that it is possible to increase the throughput of a refinery without necessarily encroaching on a proportionate quantity of land. It is possible to double the throughput without doubling the amount of land required. That is a deficiency in the document that the Department might wish to rectify. What is the Department's estimate of the land necessary for a 10 million or 20 million ton refinery? That should be spelt out to the local authorities.

A refinery is unable to prove a great generator in terms of employment. The Department takes the view that jobs might be provided for between 200 and 300 people and that the construction side might involve 3,000 people. Consideration of the location of a refinery should, therefore, include the impact of between 200 and 300 people being employed in controlling the enterprise and also an assessment of the impact of 3,000 construction workers in a particular area at a given time.

Another important consideration on the credit side for the location of a refinery in a particular area is the industrial rating charge on the refinery. Refineries can be a substantial generator of spin-off activity from the point of view of refining capacity and even petrochemicals. The rates they pay are a substantial contribution to the local authorities, and this should be mentioned in the Department's document.

On many occasions I have mentioned my interest in North Sea oil, and I make no apology for doing so. Arguments have been put forward about the rate of production from the present and future discoveries in what might loosely be called Scottish waters. The latest, more optimistic, Government view is that output from these waters might be in the region of 100 million tons by 1980. At present only about 9 million tons could be refined in Scotland at the BP refinery at Grangemouth. However, I know from my visits there with my hon. Friend the Member for Stirling and Falkirk Burghs (Mr. Ewing) that there could be an expansion of the Grangemouth refinery on its present site with no encroachment on land that is not zoned for industrial purposes. The refinery could be expanded to achieve an output of 20 million tons per annum without any great dislocation.

There are other projects before the Secretary of State for Scotland for refining capacity in the West of Scotland. The Department's paper states that major refineries will often be developments of such national or regional importance that planning applications will be called in for decision. That is an important consideration because many people might be dissuaded from seeking planning permission because of the cost involved in local inquiries. The paper says that, rather than have applications decided locally, the Secretary of State will send inspectors. On the advice of the inspectors and sometimes not, according to their advice, the decision to allow planning permission will be granted or refused.

Such inquiries are costly and time-consuming because of their restrictive nature. They cannot point to alternative sites for development purposes. Under the Planning Acts provision is made in Scotland and in England and Wales for a planning inquiry commission. Because of the importance of the expansion of refinery capacity, the Government should set up a planning inquiry commission for deciding sites for England and Wales and one for deciding such sites in Scotland. That is necessary because of the strategic importance of the sites and because the companies need to know on what sites they are likely to get planning approval.

I shall dwell for a little while on an inquiry which was completed last year. I know that the hon. Member for Essex, South-East (Sir Bernard Braine) is in the Chamber. I shall try to speed up matters, Mr. Deputy Speaker, so that he might catch your eye. The application which I shall discuss is that made by the United Refineries Limited to develop a site on Canvey Island. The inspector, commenting on the planning application, said: There is not enough suitable land left on Canvey Island for a second oil refinery. … Although the present application is a significant improvement on the 1971 proposal, the amenity objection is still great enough to outweigh the national economic interest and to justify its refusal. That is clear and cogent language.

During the Adjournment debate on 7th December 1972 the hon. Member for Essex, South-East sought assurances from his hon. Friend the Under-Secretary of State for the Environment about the Government's position on the application. The Under-Secretary of State said: I should like to give my hon. Friend at least the assurance that my right hon. Friend will take most fully into account the environmental factors and the views of the local people and of my hon. Friend before reaching any decision upon that application."—[OFFICIAL REPORT, 7th December 1972; Vol. 847, c. 1788.] In fact, the Secretary of State for the Environment overruled the inspector's view and granted planning permission. In a letter to the agents for the applicant, the view is expressed for the Secretary of State that He agrees with the inspector that it would be in the national economic interest for the proposed development to take place. But nowhere in the Secretary of State's analysis or that of the inspector do we get an assessment in any terms that might be loosely described as quantifiable of the national economic interest.

I have paid two visits to Canvey Island. I have met the constituents of the hon. Member for Essex, South-East. They are incensed about the decision. The hon. Gentleman is fully aware of that. It is important that, if a Government Department takes a decision against its own inspector and quotes the national economic interest, that interest should be quantified in some way. The Secretary of State should not take refuge in a vague definition of the national economic interest based on a 1971 application.

Events have moved forward considerably against the siting of refineries in the South-East since 1971. The major consideration, of course, is the discovery of North Sea oil. If we take the argument set out in the Government's White Paper, that the refinery should be located near the market, we come to the view that the United Refineries' application is export-oriented and that the market it is thinking about is not a market in the South-East of England but a market on the Continent or elsewhere.

How does one quantify the national economic interest of putting two refineries, whose total capacity will be only 10 million tons in national terms, in the South-East where it will have a considerable impact on the environment? We in Scotland could easily accommodate the 10 million tons in terms of refinery capacity without encroaching on land in Scotland. This is an unwarranted imposition by the Government in the terms of the Department's inspector and the people in the South-East. I suggest that even at this late stage the Government should get together with the companies and try to persuade them to operate together, with not two refineries but one. But, more important, the sooner the Government tackle the issue of the siting of the refineries and set up planning commissions, one for England and Wales and one for Scotland, the better.