Oil and Gas Sector

Part of the debate – in the Scottish Parliament at on 9 January 2013.

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Photo of Lewis Macdonald Lewis Macdonald Labour

It is right to celebrate successes and opportunities in oil and gas, but it is important also to remember that those successes and opportunities have come at a cost. When we last debated oil and gas, in November 2011, I spoke of the impact of the Piper Alpha disaster 25 years ago, which Rhoda Grant and others have mentioned. Offshore workers have died in the intervening period; indeed, a support vessel crewman died at sea only a few weeks ago. However, there has been a step change in safety since 1988 and the gains that have been made in that time must not be taken for granted.

Before Christmas, the Scottish Parliament cross-party group on oil and gas heard from Terry O’Halloran, who is a safety representative of the offshore workforce that is taking part in the investigation into the causes of the two helicopter ditchings in the North Sea in 2012. He and his colleagues told us about the work that is under way, and they confirmed that the manufacturers and operators have agreed that the helicopters in question should be grounded for as long as it takes for the causes to be found. That is what it means to put safety first; not warm words, but firm actions, even if they come at a cost to business profits and Government revenues, because those financial costs matter less than the human costs of getting it wrong.

I welcome the further development of a Scottish oil and gas strategy. When Parliament first debated oil and gas, in Aberdeen in May 2002, I said that we were only halfway through the life of the industry and that we had a shared priority

“to secure the benefits for enterprise and employment in Scotland of extracting the remaining resources”—[Official Report, 29 May 2002; c 9274.]

from the North Sea. That is still true today.

Aberdeen and Grampian Chamber of Commerce published in November its latest oil and gas survey of its 400 member companies in the sector. Skills gaps and difficulties in recruitment came up time and again. The chamber of commerce highlighted the need for progress with the energy skills academy, with

“appropriate resources from both the private and public sectors.”

That must mean investment by the Scottish Government and the Scottish Higher and Further Education Funding Council in the oil and gas academy of Scotland, which is a new initiative that is being developed by the universities and colleges in and around Aberdeen. Investment in OGAS at this critical time can help to secure the position of Aberdeen city and shire as the leading centre of excellence in oil and gas outwith North America, second only to Houston on the world stage. It would help oil and gas today, and would also help to build a strong platform for development of offshore renewable energy skills and capability in the future.

I welcome Fergus Ewing’s renewed commitment today to working in partnership with the UK Government and industry through PILOT. That is essential to tackling the barriers to maximising production and to maintaining the highest safety and environmental standards.

Last month, Professor Alex Kemp at the University of Aberdeen produced his latest report on potential production of oil and gas. In his view, to extract even half the remaining potential reserves in the UK continental shelf would require a continuing high oil price and increased levels of exploration, enhanced production from existing fields, fewer shutdowns, improved access for new operators to other companies’ pipelines, and investment to extend the life of existing infrastructure.

Those are not simply technical problems for economists and engineers to resolve; they go to the heart of the issues of safe working offshore and potential future production. We can achieve nothing in relation to either if issues including ageing infrastructure are not addressed in good time—as the minister acknowledged and as Tavish Scott emphasised. Although new technology such as horizontal drilling will enable harder-to-reach oil and gas reserves to get to market, much of it will still find its way onshore via production platforms and pipelines that are now 40 years old. Maintaining that infrastructure and affording the new technology depend on the price of oil and uncertainty about future costs and returns.

With oil at $111 a barrel, Aberdeen will continue to lead the world in developing new technologies to extract oil and gas in a most hostile environment. However, that innovation is dependent on price and is focused on production. It is vital that safety is not compromised in the extension of the working lives of production platforms and pipelines, which is why the step change in safety must be protected and why the industry’s growing willingness to be open and transparent is so important.

I commend Eurocopter and the helicopter safety steering group on their willingness to put safety first when it comes to journeys to and from workplaces offshore. It is just as important that accidental releases of hydrocarbons are now routinely publicised on Oil & Gas UK’s website and that the industry body’s step change in safety has led it to include elected safety representatives from the offshore workforce. Those changes suggest that the industry recognises what its future priorities have to be and that a safe and sound working environment is the key to greater production, revenue and profits. It knows that untapped reserves will stay beneath the sea bed unless they can be extracted safely, efficiently and in an environmentally responsible way. None of that can be taken for granted.

If people are asked to go to work in such a hostile and hazardous environment—Tavish Scott rightly highlighted the particular challenges that will be associated with the developments west of Shetland—those people should be confident that they have the support of Parliament and all of us in putting their safety first.