Clause 80 - Acquisition of rights to use upstream petroleum infrastructure

Part of Energy Bill [Lords] – in a Public Bill Committee at 5:00 pm on 16th June 2011.

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Photo of Caroline Lucas Caroline Lucas Leader of the Green Party 5:00 pm, 16th June 2011

I want to say a few words about the clause and the other clauses in the rest of the chapter. I am concerned that what they are driving at is a facilitation of the exploitation of the last hardest-to-reach oilfields in UK waters and of those with smaller, more marginal, reserves, neither of which are likely to be profitable without assistance. That assistance is found in the provisions that make it easier for third parties to access upstream oil and gas infrastructure such as pipelines to shore.

Further, exploitation of UK oil will obviously delay the point at which we can wean ourselves off unsustainable fuel. That in turn will reduce the pressure to maximise the potential of the energy efficiency and renewable energy industries, which, as we have been hearing throughout the Committee sittings, represent significant economic, environmental and social opportunities for the UK. Furthermore, hard-to-reach oilfields are by definition riskier propositions. If they required only straightforward operations, the areas that the clauses seek to open up would already have been exploited.

The exploitation of such areas is seen as a niche market. As such, the harder-to-reach fields are often exploited by niche operators. I believe there is a significant risk attached to making it easier for new, typically smaller companies to enter that particular market. I am also concerned about the setting up of legally insulated small subsidiaries of larger oil companies operating in this area. I understand that, despite operating in riskier circumstances, niche or subsidiary oil and gas companies often do not have the same level of liability cover as larger operators.

As the Deepwater Horizon and Macondo well disaster showed, when a mistake is made in such a hostile environment, it can be catastrophic and extremely difficult to correct. Some 200 million barrels of oil poured into the Gulf of Mexico. Billions of pounds have already been paid out in compensation and clean-up costs, and that is to say nothing of the impact on BP’s share price. It is unlikely that a smaller company or a legally insulated subsidiary of a larger company will be able to survive such a financial battering and it will simply fold, even with the Government and the taxpayer as insurers of last resort to foot the bill.

In addition to having fewer financial resources to respond to disaster, smaller companies may also lack the practical resources to react with the necessary speed. I oppose the clause because I want to see less oil drilling, not more, and because I want to ensure that the oil rig is extracted as safely as possible. The clause and the whole chapter generally move us in the wrong direction on both points.