The UK’s latest energy minister, the 12th under Labour since 1997, yesterday pledged not to allow the North Sea oil and gas industry to become a Cinderella in the push for renewable energy and a low-carbon economy.
Lord Hunt of King’s Heath, fresh from a visit to Total’s Elgin/Franklin gas/gas condensate field some 160 miles east of Aberdeen, told the Press and Journal he understood the huge strategic value of the offshore sector nationally and internationally.
Describing his offshore trip as an “extraordinary” visit, he said there was no danger of the industry being overlooked because the government had long recognised the importance of North Sea oil and gas.
“I think what’s so exciting is that, although 39billion barrels have already been extracted, there is a lot more to produce in the future,” he said.
“What this visit has brought home to me more than anything is the future potential – 20-25billion barrels is a huge amount.”
He dismissed suggestions the Brown government did not value one of the few successful industries left in the UK, saying it was needed for security of supply if for no other reason, and that the new Department of Energy and Climate Change (DECC) would keep this thought uppermost.
“Clearly, with oil and gas, we have to do everything we can to make and exploit what we’ve got,” said Lord Hunt.
“Climate change for me is a critical issue and renewable energy is one of the ways that will lead us towards a low-carbon economy, but alongside that we have to ensure security of supply and so I don’t believe there’s a tension between those twin goals in the department.”
He said the DECC had been building on the work done by its predecessors over the last year or so to ensure it had the correct strategies for ensuring the right energy mix.
On renewables, he admitted there was “a long way to go”, from the 1.8% of power now to the 15% required by 2020.
“It’s a massive challenge,” he acknowledged.
“But we are producing the renewable energy strategy by the parliamentary recess this summer, which will set out scenarios about how we are going to get there.”
The minister accepted a successful North Sea industry needed sufficiently high-calibre people in place at the department, both in Aberdeen and London, and said he was confident the officials dealing with oil and gas came with a very high reputation.
On the latest UK Budget, where only limited concessions were made by Chancellor Alistair Darling, Lord Hunt said he would refrain from commenting on tax matters.
He also ducked a call from BP at yesterday’s Oil and Gas UK business breakfast that Mr Darling should review the level of selective corporation tax imposed on the North Sea, but said the department would continue to talk to industry about these issues.
“There were some Budget concessions made,” he said. “People may not think it’s enough and they may want other things, but I hope at least it was a signal that government has been listening and wishes to give some encouragement and incentive to the industry.”
Lord Hunt insisted both the DECC and the Treasury had been responsive to the needs of small exploration and production companies brought to the brink of ruin by the financial meltdown.
“We know companies have come under great pressure because of the credit crunch,” he said. “I understand that.
“In terms of the offshore licence regime, the DECC has been flexible with some of its decisions to try to ease the situation for such companies.
“Equally, the Treasury has set up some schemes in terms of making credit available to small companies. We are very alive to the situation.”
Lord Hunt also pledged he would be back in Aberdeen to attend Offshore Europe, which some of his predecessors have failed to do.
“I have been before when I was health-and-safety minister,” he said. “I have already told people I want to come, so I’m coming.”
