Oil and Gas Sector
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
Thank you for accommodating this important debate, Presiding Officer. I welcome the opportunity to acknowledge the success of Scotland’s oil and gas sector, which is a cornerstone of Scotland’s economy. The North Sea oil and gas industry makes a significant contribution to the economies of Scotland and the United Kingdom and acts as a major source of employment by supporting 440,000 jobs across the UK, including more than 196,000 in Scotland alone.
The industry is also a major source of investment: BP’s recent announcement of a programme of investment of almost £10 billion in North Sea oil and gas in the next five years is terrific news for Scotland. The industry is also a major source of tax revenue and has provided more than £300 billion in tax revenues to the UK Government over the years. The industry also supplies the majority of the UK’s oil and gas needs.
Since large-scale oil and gas production commenced in the North Sea in the 1970s, more than 39 billion barrels of oil equivalent have been extracted from the UK continental shelf. Although production levels might have peaked in 1999, the story does not end there—far from it. Indeed, 40 years after oil and gas pioneers in the North Sea first started to pump Scotland’s oil, the North Sea continues to produce 900 million barrels every year, and the story continues, with significant unharvested reserves remaining in the North Sea.
Forecasts from Professor Alex Kemp at the University of Aberdeen and others suggest that oil and gas production will continue at least until the 2040s. Oil & Gas UK—the trade representative body for the sector—estimates that between 15 billion and 24 billion barrels have yet to be recovered. That suggests that between 30 and 40 per cent of total oil and gas reserves by volume have still to be extracted. At current prices, those reserves could have a wholesale value of in excess of £1 trillion—which is a denomination that is not normally used in debates in the Parliament. Given that extraordinary potential, it is imperative that recovery of those reserves be maximised. I have enjoyed cordial relations with members of all parties in the Parliament on the shared pursuit of that objective.
In February this year, Oil & Gas UK published the results of its 2011 activity survey. The report makes good reading. The potential for new fields development is promising, with 67 possible new field developments reported. Confidence in the sector is fairly high, and levels of capital investment in the UK continental shelf are strong. There has been a series of recent commitments to the North Sea from leading oil and gas companies. There is more: looking to the longer term, the investment horizon in the UK continental shelf over the next decade and beyond is reported to have the potential to reach £70 billion.
Of course, much of the skill and the supply chain expertise in Scotland is now exported overseas. Of the nearly £16 billion-worth of oil and gas supply chain sales in 2009, 45 per cent—just under half—or £7.2 billion, was internationally based. That is a real tribute to the people who have worked in the industry over decades.
Over the years, Aberdeen has established itself as one of the world’s largest energy hubs. It has an enviable reputation around the world for engineering, innovation and excellence, especially in the subsea sector. Much of that skill and expertise has the potential to help to develop our emerging offshore wind sector as well, especially in design, installation and marine operations. I was pleased to note that that is recorded in the briefings that members have received for the debate from Oil & Gas UK and other bodies.
We have industrial and supply chain ability, research and development capacity and a highly skilled sector workforce that is second to none. It is clear that considerable opportunities remain in the North Sea and that the industry will remain an important part of the Scottish and UK economies for many decades to come. However, Government must play its part in supporting the opportunity by creating stable and effective support and incentive structures to help to make that happen.
I turn to some of the challenges. The Scottish Government recognises that we cannot take it for granted that development in the North Sea will happen without appropriate political and policy support. Strategic forums—such as the Scottish energy advisory board, which the First Minister co-chairs, the oil and gas industry advisory group, which I co-chair with Melfort Campbell and which was established by the Scottish Government, and the PILOT group, which it is chaired by Chris Huhne and which I attend on behalf of the Scottish Government—bring together the UK Government, the Scottish Government and the wider oil and gas industry to work together.
Will the minister give way?
Certainly.
Liam—
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 decommissioning? In particular, Shell is now actively considering the decommissioning options for the Brent field. What assurances can the minister give me that his Government will consider carefully the potential to ensure that the massive installations come ashore at the deep-water facilities in Shetland, which are closest to the Brent field?
I welcome Tavish Scott’s point; he is absolutely right that decommissioning will present considerable opportunities for Scotland. Just yesterday we received information that Bremerhaven, which is doing work of that nature, is nearly full.
I understand that that matter is much discussed in the industry, and I have taken part in some of those discussions. I would welcome discussions with Tavish Scott on what must be done in Shetland to ensure that his constituency can avail itself of the opportunities in the years ahead, provided that the various other difficulties relating to decommissioning—particularly the removal of the reliefs that were previously enjoyed—are tackled.
The forums that I attend are an example of Government working closely with key industry players to formulate clear visions in order to maximise recovery rates, sustain jobs and develop a Scottish oil and gas supply chain that is strong, healthy and resilient enough to take full advantage of the opportunities that are still to come in that vibrant sector in the several decades ahead.
Of course, Scottish Enterprise, Highlands and Islands Enterprise and Scottish Development International continue to support and assist many companies in the sector to grow and develop. The challenges that face the industry have their foundations principally in the supply chain, in skills shortages, in lack of sufficient finance from banks, in investment in the existing infrastructure, in lack of new exploration and appraisal, and in the adoption of innovative new technologies.
The joint forums help Government to understand industry needs and they help industry to understand Government expectations. As with most good partnerships, the collective effort becomes more effective than the individual one. The oil and gas sector in Scotland is supported by world-class supply chains, but we must do all that we can to support the growth and development of the Scottish supply chain, domestically and abroad, and ensure that opportunities are captured.
The sector has a strong and skilled workforce, but its skills needs are evolving and changing. We must work with all relevant players in the industry to ensure that the right skills are available in the right amount, in the right place and at the right time. The long-term aim must be to ensure that the oil and gas sector is viewed as a long-term attractive sector for young people to join and for diverse and exciting career opportunities. I believe that the industry is completely united on that. Skills is therefore a key issue for the industry advisory group.
I must say that I share the sentiments that are expressed in Labour’s amendment—at least in the first part, which relates to the topic at hand, rather than in the very last part. I endorse Labour’s explicit recognition of the importance of skills development and workforce representatives’ participation in all those matters, I entirely accept those points, and I thought that I should depart from the text that is before me just to say so. I am that sort of minister. [Laughter.]
I am sure that we should be reassured, minister. Perhaps you would like to move on.
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 increasingly difficult to access capital to explore, appraise and develop hydrocarbons in the UK—
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 fields for which companies have licences to develop but have not done so. When Labour was in power we introduced the licence information for trading—LIFT—policy, which allowed companies to swap licences. Is the minister concerned about that situation? There is potential in the North Sea that is not being developed because some companies are sitting on fields and not developing them.
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 apprised of that issue, and the need to tackle those problems is acknowledged in all quarters. The debate and the challenge really lie in how that will be done. The simple fact is that without capital to fund exploration, discoveries will not be made and reserves will not be realised. The PILOT group is consulting the banking industry and others to try to tackle that matter.
I am just looking at the large number of remaining pages in my text, which I do not have time to cover.
You can have a little more time, if you wish.
That is very generous of you, Presiding Officer. You are that sort of Presiding Officer.
That depends on the day.
Thank you, Presiding Officer.
Technological excellence, robust supply chains, a skilled workforce and making best use of the existing onshore and offshore oil and gas infrastructure are key in enabling recovery of the remaining reserves, which is a priority for us all. However, we have to ensure that success in the future is not dependent on the infrastructure of the past. We have to be realistic and to recognise that the majority of the pipelines and terminals were constructed decades ago and so identification of long-term and short-term critical infrastructure needs to be pursued. The energy advisory groups are working closely with industry to make progress on those issues.
Aberdeen has a strong world-wide reputation for technological innovation in the North Sea and is leading the way in many techniques. Aberdeen’s strengths were recognised in the PricewaterhouseCoopers report “Northern Lights—A strategic vision of Aberdeen as a world-class energy capital”, which was published earlier this month.
I have confidence that, with the right support, Scotland’s skills set and experience in the oil and gas industries will step up to the plate, but there are still challenges ahead. The recent and unexpected hike in tax was unhelpful and it is regrettable that there was no consultation of the industry. However, looking backwards will not help; we must look forward. I have sought—and will continue to seek—to work constructively with UK Government counterparts on that.
We also recognise the massive potential that the oil and gas industry has to develop the low-carbon agenda and economy. Pursuit of clean energy technologies such as carbon capture and storage have the potential to allow us here in Scotland to make great leaps forward in our ambitions for a low-carbon society. Those ambitions co-exist with, run alongside and do not conflict with the imperative of continued excellence and success in the oil and gas industry.
I shall shorten the remainder of my remarks, Presiding Officer. I look forward to a constructive debate this afternoon and I thank you for your indulgence.
My pleasure. Could you please move the motion?
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 jobs across Scotland and its contribution of £300 billion to the UK Exchequer over the past 30 years in real terms; recognises the long-term future of the industry, with up to 40% of the remaining total UK Continental Shelf oil and gas reserves worth £1 trillion; welcomes the strong confidence shown by recent industry investment plans announcing four new oil and gas projects valued at £10 billion over the next five years; supports the Scottish Government and its agencies in working to maintain and develop the long-term future of the oil and gas sector by improving the position of Aberdeen as a global supply chain hub, developing energy skills in the workforce and supporting collaboration between the oil and gas and low-carbon energy sectors; calls for a progressive approach to oil and gas taxation to encourage further deployment and extraction, and supports the findings of the PricewaterhouseCoopers report published on 3 November 2011 arguing that fiscal certainty and targeted incentives in the North Sea are required from the UK Government.
Thank you. I call Lewis Macdonald, who has a generous nine minutes.
15:12
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 joined it straight from school or college—a whole working lifetime ago—as well as others who have reached retirement age but chosen not to stop.
The industry will potentially be with us for another working lifetime to come. Young people who are completing their formal education today can join the industry and expect the UK continental shelf still to be an active oil province when they are approaching the end of their career. The new Clair Ridge field west of Shetland might not be due for decommissioning until as late as 2055.
The industry defines working lifetimes for generations of working people; indeed, it has defined the political and economic context in the UK and in Scotland for probably the whole working lifetime of all members currently in this Parliament.
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—and Liberal Democrat ministers—talked down the industry and said that it was “finished”, as a result of which many people have not seen the industry as a career choice?
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 has dug up what I can only assume to be a very obscure reference somewhere in an Official Report from the second session of Parliament. I recommend that she refer back to the first session of Parliament, when the Scottish Parliament met in Aberdeen and debated oil and gas. We had a debate similar to the one that I hope we will have this afternoon, with parties around the chamber recognising our common interest in getting the maximum economic and employment benefit from that vital industry.
Sometimes, the oil industry is debated in the wrong way, as though it were a cash cow and the oil produced itself, meaning that all we have to worry about is which Government gets the money, how much it is worth and what will happen when it is gone. The reality is that the energy and the revenues will be maximised only if the policy framework is right, and I welcome much of what the minister has said about that this afternoon.
The industry is also about the people who work in it. We must keep them safe at work and give them the skills that they need. The defining moment in the history of North Sea oil came on 6 July 1988—the day on which the Piper Alpha platform went on fire 120 miles off the Aberdeenshire coast. The disaster cost 167 lives. My friend, Bob Ballantyne, who was an electrician working on the platform on that day, escaped from the inferno by lying on his back in the burning sea, hoping that the current would carry him in the right direction. Some people who survived never really recovered from the trauma; others, like Bob Ballantyne, dedicated themselves to campaigning for a change in the culture of the oil and gas industry—a change that would put safety first. Critical to that, in their view, was that workers should have their own safety representatives offshore and access to trade union representation. In that campaign, the labour and trade union movement worked alongside the Piper Alpha families and survivors and made a difference.
Thanks also to the recommendations of Lord Cullen following his Piper Alpha inquiry, offshore safety for the past 20 years has been the responsibility of the Health and Safety Executive rather than the Government department that is responsible for maximising production. Offshore workers now elect safety representatives to speak up on safety issues on their installation, with the backing of their unions.
The industry itself supports Step Change in Safety, a pan-industry body that seeks to address health and safety issues as they arise and to put safety at the centre of the agenda offshore. Indeed, only last week, more than 70 safety representatives came together from companies across the UK continental shelf under the auspices of Step Change in Safety to address current issues in the industry.
Oil & Gas UK, the employers association, will affirm that the workforce are the people who are best placed to drive down the number of accidents and improve safety, and the majority of offshore workers are now covered by trade union agreements for contractors and construction, catering, drilling and other sectors.
So, the industry today is a far cry from the industry in the days before the Piper Alpha disaster, when there often seemed to be a wild-west mentality about the North Sea frontier, and a cavalier disregard for the first principles of safe working. In those days, trade union activists were liable to be told that they were not required again. We are living in a different world and should thank those who made the effort to make that happen.
Nevertheless, that change does not mean that there is room for complacency about health and safety or about environmental integrity in the offshore workforce. Offshore oil and gas production remains a major hazard industry that is subject to strict regulation on and off the platform. The unions remain concerned to ensure that nobody cuts corners on safety because of commercial pressures on contractors, and that workers do not find themselves unfairly penalised when lost-time incidents affect production offshore.
In recent years, even the journey to and from work has proved to be particularly hazardous. For example, 16 lives were lost when a Super Puma helicopter crashed a few miles from the beach in 2009. Following that catastrophe, urgent work was undertaken on helicopter safety, which has produced important changes in that area, too. Although the hazards still exist, the culture of the industry is very different from how it was in the early days, and that is why I believe the industry can have a productive future.
Such incidents should remind us of the human cost of North Sea oil. The sector is not simply a source of ready money for shareholders or, indeed, for Governments. We should not forget that offshore in northern waters is one of the world’s most hazardous workplaces and that the men and women who work there regularly brave conditions that most of us will rarely, if ever, experience.
It is equally important that we are not complacent about skills for the offshore industries, in relation to which our amendment highlights two areas: the oil and gas industry skills development body, OPITO, and the Scottish further education college sector.
OPITO is at the centre of identifying the skills needs of the oil and gas sector, offshore and onshore. It estimates that about 15,000 new people will be required over the next five years in the oil and gas sector alone, even without taking into account the growing demand for skilled labour for offshore renewable energy. To find those people, the sector looks to the Scottish Government and its agencies, among others, to ensure that they are delivering the skills mix that employers want. That means engagement with the post-16 education reform agenda. It means working to ensure that curriculum for excellence has enough oil and gas content to provide meaningful support for pupils who could go on to work in the sector.
That also means ensuring that training in relevant skills in further education colleges does not fall victim to what are clearly going to be significant cuts in the funding of further education as a whole. We know from the spending review that there is to be a 13 per cent cut in cash terms in funding of further education. If we add to that the impact of inflation, there is no doubt that there will be real impacts on either the quantity or the quality of further education provision, or on both.
The Scottish Further and Higher Education Funding Council is currently examining the way in which it supports units of learning in further education. Broadly speaking, students of engineering, such as those who are training as oil industry technicians, attract twice as much support as social science students in further education. That is for the very good reason that engineering students are expensive to teach, requiring smaller numbers per teacher and more equipment per class. This year, Aberdeen College, if I may use it as an example, is training a total of 89 full-time students, either on OPITO schemes or on Engineering Construction Industry Training Board schemes, and it is vital that the Scottish funding council do nothing to undermine that approach. Colleges must continue to be funded by the Government so that they can deliver the quality of training and the number of students that the industry needs. In turn, the industry must ensure that it is supporting skills providers by paying enough to meet training and employment costs.
There are important areas where the Scottish Government as well as the UK Government can act to enable the oil and gas industry to continue to produce energy, create skilled jobs and grow the economy.
As I mentioned in response to an earlier intervention, Labour led an oil and gas debate in the first session of Parliament, when we were in government. I spoke from the front bench in that debate. I was vice-chair of the oil and gas industry body PILOT for a number of years and worked to ensure that Scotland's devolved Government was engaged and made a difference in respect of the issues that affect the industry and the people in it. We acknowledge the work of the present Scottish Government in continuing to build on that work and to stay engaged. We welcome the fact that oil industry trade unions and employers are involved in the Scottish Government’s advisory group on oil and gas, as well as—at UK level—in PILOT.
There are, of course, other issues in the debate about the future of the sector on which we have views that differ sharply from those of the SNP. However, where we agree on the economic and policy priorities that are necessary in order for the industry to flourish, we will be able to work together; I hope that we will see that spirit prevail in the chamber this afternoon.
I move amendment S4M-1349.3, to insert at end:
“; recognises that health, safety and environmental standards must continue to have the highest priority in the next phase of North Sea exploration and production and in the development of a wider energy mix, including carbon capture and storage and offshore renewables; believes that trades unions as well as employers and regulators have key roles to play in maintaining these standards; acknowledges that the demand for skilled labour from both the oil and gas sector and offshore renewables will increase as the technical challenges become greater; believes that the Scottish Government should support the efforts of the offshore energy industries and of the oil and gas skills academy, OPITO, to recruit, train and retain skilled workers, and, in particular, calls for further education funding to be maintained in order to allow Scottish colleges to meet future demand for skilled labour both onshore and offshore.”
15:23
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 argued—the part about health and safety was captivating at points, and very well put.
The minister put it correctly when he said that we have to look forwards and that looking backwards is not going to help.
There is a lot to agree with in the motion and in the speeches that we have heard so far. The minister talked about exporting the excellent skills in the sector in the North Sea and made particular mention of the subsea sector. He was quite right to do that.
I note that the minister is a member of the PILOT group and has been attending its meetings. I was particularly interested to hear about the consultation of the banking industry that is going on. I wonder whether there are ways in which the minister can keep members abreast of how that consultation proceeds, because it is critical to the future of the industry.
I am grateful for the publication of the minutes of the oil and gas advisory group, which I know Fergus Ewing co-chairs. I was extremely interested in the range of issues that the group—the cast list of which reads like a “Who’s Who” of the industry—covered. It is taking forward a variety of issues, including the global context, skills, innovation, technology and future strategy.
As far as the motion is concerned, all members will agree that the oil and gas industry makes an enormous contribution to the economy. The minister mentioned the number of jobs that it supports, directly or indirectly, but it is worth restating that, in Scotland, the figure that we are talking about is in the realm of 200,000.
The motion rightly mentions the contribution that the sector has made to the Exchequer in the past, since the early 70s, and the contribution that it is likely to make over the next 30 or—if Lewis Macdonald is correct—40 years.
We must focus on the industry’s potential. I read something in the PricewaterhouseCoopers report or in the Oil & Gas UK—
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 seeks to delete all reference to it?
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 taxation choices, coupled with the Government’s language and its use of the word “progressive”, that made me wonder what the tone of the debate would be. I was not sure what the Government was driving at through its use of the word “progressive”. On that basis, we did not feel able to agree to the motion, but I agree with the lion’s share of the PWC report.
The quotation that I was about to mention says that there is a need for
“talking up the opportunities for growth and ... dispelling the perception”—
I emphasise that word—
“of managed ... decline.”
All parties in the Parliament want to push forward on that; it is something that the industry must get right if we are to extract the 12 billion to 24 billion barrels of oil that it is predicted are still in the North Sea. As has been pointed out, the value of that oil will be greater than the value of the oil that we have already extracted, which amounts to the best part of 40 billion barrels.
In an intervention, Tavish Scott mentioned decommissioning, the potential value of which, I understand from the PWC report, is enormous, as is the opportunity to export the relevant skills, if the decommissioning process is successful. I note that 37 per cent of that is set to take place by 2020.
It is worth reflecting on some initiatives that the UK Government and Oil & Gas UK have taken forward over the past few months. They are working together constructively to ensure that future announcements and future changes are in the interests of all stakeholders, Government and the industry itself. I am pleased that work is being done to attempt to resolve decommissioning uncertainties in advance of the 2012 budget. I note that consideration is being given to the case for introducing a new category of field that would qualify for field allowance, and I note the announcement, in July of this year, of an increase in the ring-fenced expenditure supplement from 6 to 10 per cent. In addition, a new fiscal forum has been set up and is due to meet in the early part of 2012.
The industry has enormous potential. It has already made an enormous contribution to Scotland, the UK and the wider world, through the exports that the minister mentioned. It is in all our interests that the stakeholders continue to work together over the coming months and years so that we can measure the industry’s future not in years, but in decades.
I move amendment S4M-01349.2, to leave out from “calls” to end.
We move to the open debate. I can allow speeches of up to seven minutes.
15:29
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 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 colleagues in arguing that our oil and gas resources are precious to us. The Scottish Government’s motion records the huge investment in oil and gas, and the massive resources that come from the industry, which generate revenue for public services throughout the UK.
It is important that we extract oil and gas in an environmentally responsible manner and with regard to human safety. I shall comment on both of those issues. It is also important that we use our oil and gas resources wisely and as efficiently as possible, but I suspect that that is a debate for another day, possibly next week when we debate climate change.
The oil and gas industry is hugely carbon intensive, in both the extraction and the use of gas and oil. However, there is a great deal of expertise in the industry, which is now considering how we can turn a high-carbon industry into a lower-carbon industry. As Lewis Macdonald highlighted, we need to ensure that there is sufficient training to enable the next generation to enter the industry. We must also make links with universities, so that the industry gets the best quality of research.
The minister highlighted the new opportunities for development, which are significant. However, new development is ever-more challenging, not just geographically but because of the climate in which companies will operate over the next few years. As the industry moves to deeper and deeper fields, the operating challenges are tougher and the stakes are even higher.
Last year, a report from the UK Parliament’s Energy and Climate Change Committee highlighted the impact that a major oil spillage in the UK could have on taxpayers. That should concern us not just in relation to developments off our own shores—I think that British-based companies need to act to British standards wherever they operate in the world. That is important not only for fair competition in the oil and gas industry here and for workers who go from Scotland with multinational companies to use their skills across the globe, but for environmental standards.
We know that the cost of mistakes and accidents can be huge. As Lewis Macdonald so eloquently commented, Piper Alpha reminds us of the huge human cost of error. More recently, the environmental cost of the Deepwater Horizon leakage in the Gulf of Mexico was enormous. That was a huge wake-up call to the industry throughout the world. The fact that the Gannet Alpha incident in August this year was our most serious oil spillage for 10 years reflects well on our industry, but it is also a reminder that we need to ensure that health and safety and environmental standards remain central.
I was keen to hear what lessons Scottish ministers had learned from the Deepwater Horizon disaster. I was particularly keen to hear about contingency measures. Will the minister talk about those in his concluding remarks? In particular, I am thinking about information that is given by oil companies and responses that can be made by the Scottish Environment Protection Agency and Marine Scotland once they have the information.
For most people, the environment is out of sight and out of mind, particularly if it is the marine environment and especially if it is hundreds of miles off our shores. However, now that our new marine acts have bedded in across the UK, I am interested to hear from the minister how the Marine (Scotland) Act 2010 has delivered us a framework for a more sustainable marine environment. That is a huge opportunity and I hope that the Scottish Government is taking it forward.
For me, the underlying principle must be the precautionary principle, which means that our approach to the marine environment must be underpinned by robust science and information. That situation must be challenging for companies at the levels at which they now operate, and it is challenging in terms of transparency for both regulators and Government.
The oil and gas industry is not just about a sustainable marine environment. New technologies such as fracking, particularly in the shale industry, are now being promoted. I am keen to hear from the minister in his closing remarks what work is being done to evaluate the risks to our environment from fracking; in particular, I am keen to hear what risk assessment has been done on groundwater and water resources and whether SEPA has been tasked to examine how local carbon impacts could be assessed and the issue of hydraulic fracturing.
Fracking was mentioned briefly during themed questions on rural affairs and the environment, but the issue deserves some attention in a wider debate on oil and gas, because we need information on it urgently. Planning officers who have not been trained on the fracking issue or have not dealt with it will have to deal with it in a professional, efficient manner. There is a role for the Scottish Government in ensuring that planning authorities are up to speed on the issue.
Experience in the US has demonstrated that irresponsible use of fracking technology leads to huge environmental costs. In some areas, the water has become so contaminated that people can set it alight as it comes out of domestic taps. We do not want to see that in Scotland. In that regard, there is a major role for a regulator such as SEPA or our local planning authorities, which must ensure that they are up to speed on the issue. The Scottish Government needs to give leadership on that. I am keen to hear what discussions the Scottish Government has had with planning authorities to ensure that they can exercise their duties properly.
I want to comment briefly on health and safety in the oil and gas industry. There are major challenges in that regard at deeper depths. The comments on health and safety in Lewis Macdonald’s amendment are important and need to be part of our discussion. We need to state clearly that we support the highest priority being given in our marine environment not only to environmental standards, but to health and safety. The role of trade unions and their members is important in that regard, alongside that of employers, regulators and the Government.
We need to ensure that, even with our very good track record in the oil industry in Scotland, we have a safety culture that is deeply embedded in every aspect of oil and gas production. That is crucial, because it can take only a minor mistake somewhere for tragedy to ensue. Lewis Macdonald’s comments about Piper Alpha are utterly relevant for the industry now. It is important that the trade union movement plays a vital and positive part in the industry.
I hope that the Labour amendment will be supported and that the environmental aspects of oil and gas are logged. On the carbon capture and storage proposals for Peterhead, we need to take a wider approach to oil and gas, so that proposed development would be crucial in giving us the experience in Scotland of carbon capture and storage, which we could export. It is important to ensure that our carbon-intensive industry can still proceed but that it does so with a smaller carbon footprint. That technology is hugely important, not only for us in Scotland; I hope that we can export it to the rest of the world. Retrofitting existing plants is the way forward.
I hope that the minister will pick up on some of my questions in his closing speech.
15:44
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 15 years. In the previous session of Parliament, Jamie Stone and I were the only members who had experience of working in the industry. I am not sure whether any of the new intake of MSPs has worked in the industry.
I welcome both the PricewaterhouseCoopers report and the motion, particularly the recognition of just how important it is to maintain and improve Aberdeen’s position as an energy hub. The report is right to stress that Aberdeen will not secure that role for the future without concerted effort and it will require extensive vision, collaboration and real improvements to the infrastructure and skills development opportunities that are on offer in the area. Organisations such as Aberdeen city and shire economic future—ACSEF—the Aberdeen and Grampian Chamber of Commerce and the higher education institutions in the area all recognise that and are working collaboratively to ensure that it happens.
The north-east colleges are collaborating more than ever before, not least with the signing of a federation agreement between Aberdeen and Banff and Buchan colleges. However, as Mark McDonald mentioned, the report states that we must encourage the energy industry to collaborate more with Aberdeen’s academic institutions to ensure that Aberdeen is home to the skills that the energy industry needs for the future. Lewis Macdonald and other north-east MSPs have been to briefings from our colleges and our universities in the past few weeks and we know that they are working hard to make that happen. A seamless education from technician training and apprenticeships through to PhDs and management skills can be provided by the academic institutions in the north-east if they work together.
That makes the first half of Lewis Macdonald’s amendment very relevant. Health and safety pervades everything that the oil industry does. Indeed, if anyone goes to an event sponsored by BP or the oil and gas industry they are given a little card that says to ensure that they hold on to the rails and not to carry anything when they are going down the stairs, particularly blunt instruments or glasses. Health and safety pervades everything that is done, even onshore, and it comes from the importance of health and safety offshore.
Quality of life and good infrastructure in the city are hugely important in making Aberdeen a world-class energy capital for the future. That highlights the importance of projects such as the Aberdeen western peripheral route, which cannot be overstated. The report is right to highlight the need to ensure that the long legal delays it has endured are avoided in future infrastructure projects. Encouraging greater air links to strategically important locations should also be a priority and there is a strong argument for devolving air passenger duty for just such a purpose. It is important that we all do as much as possible to ensure the viability and continuity of the new route from Aberdeen to Frankfurt.
The economic opportunities that are offered by the energy sector—both in oil and gas and in renewables—to Aberdeen are enormous and it is essential to the Scottish economy that efforts to secure them are fully supported. That brings me to the last line of the Government’s motion, which is perhaps one of the most telling recommendations in the PWC report. The North Sea oil and gas industry needs
“fiscal certainty and targeted incentives ... from the UK Government.”
Fiscal certainty and targeted incentives are, unfortunately, the direct opposite of what we got from Danny Alexander and the UK Government.
The UK Government’s tax raid on the oil and gas industry came without warning or consultation and, if anything, was the absolute antithesis of the fiscal certainty that the industry requires. The Scottish Government has called for a statutory consultation period before changes to oil and gas taxation take place in the future. Surely we should all agree that such a measure would go a long way towards giving the industry confidence that it will not unexpectedly be raided again in the future.
The tax increase made no recognition of the effort required, the costs of exploration and development or the variation in how profitable different fields are. Some months ago, the Scottish Government submitted proposals to mitigate the worst effects of the tax grab by calling for a rate of return allowance before a field is liable for the supplementary charge, an investment uplift allowance or an extension of the field allowance for small or technically challenging new fields.
Those measures would encourage the industry to continue investing in exploration and the development of new opportunities. The lack of response to those much-needed proposals has been deeply disappointing to many in the industry, particularly as around a quarter of the previously planned projects have been sufficiently affected by the UK Government’s actions to reduce the probability of them proceeding.
Significant investments in the North Sea have been announced since the increased tax bombshell was dropped, but they are in projects with the highest yields or the most investment already committed to them. The marginal fields are the most heavily affected. Oil & Gas UK has warned of a two-speed industry emerging on the UK continental shelf. Projects involving more than £12 billion of investment that could have led to £15 billion to £20 billion of tax revenues have been put in doubt as a result of the UK Government’s ill-considered actions.
A few years ago, a politician spoke out to condemn the then UK Government’s focus on squeezing out short-term revenue from the oil and gas industry at the expense of investment that was needed to get the most out of the North Sea. That politician was George Osborne. The contrast between his comments in 2007 and his actions as chancellor can only be considered as representing hypocrisy of the worst kind. I hope that he has invested £150-plus in buying Alex Kemp’s two volumes on the history of the oil and gas industry in the UK, and that he learns from them.
I support the motion.
15:51
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 order to take part in that visit, we were taken through RGIT offshore survival training in Aberdeen. I confess that when Lewis Macdonald was describing his friend in the Piper Alpha events, some thoughts about that went through my mind. I was upside down in 3m of water and strapped into a seat, and was told to count to eight before I got out through the window of the mock-up helicopter. I commend the experience to Mr Ewing. I do not know whether he has had the opportunity to undertake the RGIT training yet, but it is advisable for ministerial life to do such things. A person thinks of lots of things in such moments: their friends, enemies and even people in their own party. Given that men and women who go offshore have to undertake that training every four years, it is useful for those of us who have exciting opportunities to learn more about the industry to undertake that course.
I agree with much of what the minister said at the outset. He mentioned that confidence is fairly high in the continental North Sea and west of Shetland, and that capital expenditure is strong. I agree with those sentiments and share that sense of where the industry is. I also agree that there was no consultation on tax changes with the industry. I think that he used the word “regrettable”. I entirely agree with that, but say gently to him, particularly in light of the previous speech, in which we heard calls for statutory consultation periods, that it is important that the Scottish Government is consistent on that principle when it introduces tax rises to businesses in Scotland. I commend a statutory consultation period to the ministerial front bench.
Will the member take an intervention?
I will finish my point.
If the minister’s Government is proposing a statutory consultation period, I agree with it, but let us see it also applying that approach to tax changes in Scotland.
I want to say something in the interests of being helpful. I am sure that Tavish Scott will wish to know that a consultation is under way on our public health levy proposals, which businesses can take part in.
I am not sure that we saw much consultation before that measure was announced. Mr Ewing might wish to reflect on that with his ministerial colleagues.
Will the member take an intervention?
I would like to make some progress.
I want to say something about the importance of the oil and gas industry now. In very difficult economic times—these are economic propositions, not political propositions—with the euro zone in utter crisis and meltdown, the oil and gas sector, which members have eloquently described with statistical evidence, is one of the few areas of growth in the UK and Scottish economies. As a result, it needs the support of Governments across the country.
As the minister pointed out, BP and its partners are to invest £4.5 billion in the Clair Edge developments, which will extend the field’s life past 2050, and in the past six to eight weeks £8 billion has been announced for investment in continental shelf exploration. Those staggering numbers are on top of Total’s £3 billion to £3.2 billion investment in the Laggan and Tormore fields. I know of no other industrial sphere in the UK that is seeing that kind of investment and the industry deserves no little credit for the work that it is doing and the investment that it is making.
Nevertheless, we should all be mindful of Sarah Boyack’s powerful argument about the environment. Indeed, those of us who lived through the Braer incident in Shetland will know that we are never far away from the consequences of what can go wrong. It is important that the highest environmental standards are maintained. I have seen with my own eyes the weather conditions to the west of Shetland when one moves over the edge of the continental shelf and into intensely deep waters; those conditions will certainly be a challenge to a civil engineering project that is unlike any we have undertaken in UK waters up to now.
In recognising the economic importance of oil and gas, I commend to the minister and his Government three very brief suggestions for achieving the kind of growth in our economy that we need to keep people in and to grow work. First of all, I agree with Lewis Macdonald and other members about skills and I hope that we can help and support the minister in seeking to reverse the cuts that will be made to further education. He will know from his constituency, as we know from our own patches, the impact that such a move will have on college courses and on what can be achieved for the industry. As the Oil & Gas UK briefing for this debate points out:
“Earlier this year, an ... Industry ... survey found that more than half of firms in the oil and gas sector warned that skill shortages are their number one challenge.
The survey estimated”
that if these things could be sorted over the next five years
“the prospects could mean 15,000 more jobs”.
That presents a great challenge for the Government. Given that responsibility for skills and education is devolved, the minister and his colleagues are in a very good position to take up that challenge, plug those skills gaps and create 15,000 more jobs that the Scottish economy desperately needs. We need to do everything we can in that respect and if the minister can find some way of addressing that 27 per cent real-terms cut he will have my full support. After all, it is a very important consideration for the industry in taking these matters forward.
Secondly, given that this is one of the few industrial sectors in Scotland that is growing and has the potential to grow even more, I suggest that the minister realign the enterprise agencies, which obviously have a role to play in the oil and gas industry, to ensure that there is a firm concentration on it.
Finally, on overseas work, the minister rightly mentioned the work that Scottish-based businesses are doing right across the globe. When, this week, I visited Kurdistan with the Westminster Foundation for Democracy, I found that the Wood Group was there. In fact, in the past six months alone, British exploration companies have spent £3 billion in that country, which has the fourth richest reserves in the world and represents a potentially huge area for Scottish business. I hope that the minister can find space in his busy diary to undertake visits and lead delegations to those parts of the world, which have huge potential for the Scottish businesses in this sector and where we might build on the enormous success that we have seen over many years.
16:00
Sometimes, we Aberdonians are accused of inbred pessimism. Presiding Officer, you witnessed my pessimism this morning when, in response to someone who asked how I was, I said that I was fair to middling. That is sometimes how we look at things. I remember that, in the early 1970s, when I was a young lad at the harbour with my grandfather watching the Queen flick a symbolic switch to turn on an oilfield, a guy next to my grandfather said, “It’ll nae last five minutes, loon.” That kind of pessimism, I am afraid, has been displayed by politicians over many a decade since those early discoveries—“It’ll nae last.” I am glad that we have a major breakthrough in the chamber in the fact that everyone is saying that we have a number of decades of oil and gas to come.
In his opening speech, the minister said that there may be more than £1 trillion of revenue out there in the North Sea. Depending on what survey we look at, there may be up to 35 billion barrels of oil left out there. The income from that would be £2.45 trillion, which is a phenomenal sum. We must do our level best to extract as much as we can from the North Sea fields over the coming decades. I agree with Sarah Boyack about carbon capture and storage. Peterhead, if the CCS project goes ahead there, has a part to play, because pumping the carbon into the existing pipeline networks could force more oil out, so that we get even more revenue. Although I agree that we should be at the forefront of CCS technologies, we are now a little behind, unfortunately. We had a stall on Peterhead previously, a stall on Longannet and we are now back to Peterhead. The UK Government needs to make some decisions on this so that we can get the most we can out of the North Sea. I see Tavish Scott shaking his head, but that is the reality. We are behind because the investment has not been put in place.
I am sure that Mr Stewart will be gracious enough to agree that £1 billion of investment was available but that the industry had to meet certain criteria to obtain it. Is that not an appropriate way for the Government to behave?
There is £1 billion available, but nobody in Westminster wants to spend that £1 billion. It is a bit like the fossil fuel levy—£200 million is available, but we are getting only half of it now, after years of arguing for it. There has to be a certain amount of honesty here. If the UK Government is going to make that investment, let it do so and not keep the money for ever and a day while other areas of the world are allowed to advance in the technology.
I agree with Tavish Scott that we also have to be prepared for the decommissioning of fields. I want to make sure that all that work comes to Scotland.
Health and safety have featured a lot in the debate today, and rightly so. I was at the oil and gas remembrance service just the other week in Aberdeen. There are very few folk in my area who have not been touched, or who do not know somebody who has been touched, by a tragedy in the North Sea. We have made great strides, but there is further work to do and we cannot rest on our laurels.
Skills are the most important thing. We have heard today that 15,000 jobs could be created in this sector in the next five years if we get this right. We have got to get this absolutely right. Sometimes, there is a little doom and gloom in the chamber about education and providing the skills for the future, but I am extremely optimistic about some of the things that I have heard in recent times. As Maureen Watt mentioned, many of us visited Aberdeen College the other day. It is extremely exciting that the college hopes to have an oil rig simulator up and running soon. That will give the necessary practical skills to the folk at that college.
The member will be aware that, in the 1970s, the Offshore Supplies Office was set up to try to ensure that British industry got its fair share of work on the UK continental shelf. Sadly, it was abolished. Does the member share my view that we need the son of the Offshore Supplies Office to do a lot more to help Scottish and British industry?
We need to encourage all of our supply chain to bid for contracts, and we must do everything that we can to secure contracts for companies here. However, I remind the member that we are bound by European Union procurement rules, so it might not be as easy as he thinks.
The greatest asset that we have is the people. I have a brother who is currently working in Perth, Western Australia, and folk I went to school with are all over the world using skills that were developed in Aberdeen and the North Sea. We must continue to ensure that the skills are developed.
What I take from the PWC report is that we need to look at having some kind of academy, which I hope would be in Aberdeen. It does not have to be forced on the educational institutions in Aberdeen, because it seems that the University of Aberdeen, Robert Gordon University and Aberdeen College are moving that way anyway.
My key message is that we must build the skills for the future so that Aberdeen, the north-east and Scotland as a whole remain at the forefront of the oil and gas industry, not only here in the North Sea but worldwide.
16:07
I was getting a little nervous earlier, because at one point I thought that the minister was going to touch on every remark I planned to make during the debate.
He is that sort of minister. [Laughter.]
Exactly—and the debate has touched on just about everything else that I was hoping to say.
Kevin Stewart must be an affa canny loon, because he turned the minister’s £1 trillion into £2.45 trillion and he turned his pessimism into optimism in a short space of time, which should be rewarded.
I, too, will speak about skills. It is a question of people—Lewis Macdonald said that we are talking about people, and Tavish Scott and others mentioned the colleges. I was with the other members on the visit to Aberdeen College when we were talking about the partnership between Aberdeen College and Banff and Buchan College. There is a great future.
I am also aware that Robert Gordon University and the University of Aberdeen are looking at improving the skills sector. They are very much aware that there is a skills shortage. The Oil & Gas UK brief has told them that, and there is a lot of evidence of the need for us to meet the skills shortage in the industry.
I had the great fortune to be at the Offshore Europe conference, which is the largest oil and gas conference outside the United States. During the visit, the first thing that came forward every time was the optimism for the future—despite the chancellor’s taxation raid without consultation. The second thing was the message that we need to be aware of how we will fill the gap in the skills shortage. Kevin Stewart mentioned that he has a relative in Perth, Australia. That is fantastic, but that skill has left the north-east.
I have an aside. We seem to be using the term “Aberdeen” as a generic term for Aberdeen, Aberdeenshire and the north-east. I know that my colleagues are not parochial when they refer to Aberdeen in that respect, but I come from and live in Aberdeenshire. The minister mentioned subsea technology; the largest subsea technology firm, Subsea 7, is in Aberdeenshire—in Westhill in my constituency.
On parochialism, I will also flag up the Highlands. As the member will know, Nigg, where a facility is reopening, had a tremendous track record in fabrication, for example in making jackets. On the member’s earlier point, Nigg is also setting up a skills academy, which is an example to the whole of Scotland and the UK.
I thank the member for those enlightening comments.
In the skills sector, there are opportunities not only for Aberdeen, Aberdeenshire, the north-east and the Highlands but for the rest of Scotland. Why should there not be opportunities in Paisley, Inverclyde and Glasgow, where there was fantastic engineering and shipbuilding in the past and where those skills still exist? We can encourage that, because the sector still requires fabrication and manufacturing technology. We can take the industry to the whole of Scotland and not just the north-east corner.
We must encourage youngsters at school to understand the opportunities. Lewis Macdonald said that there is still a lifetime of work in the sector. That is true, but we must ensure that youngsters who are at school understand the prospects of a career in the oil and gas sector. I was encouraged by some of the information that has been produced. Some of the statistics are impressive, but one that has stuck with me is that a recent survey found that 81 per cent of firms in the sector are looking forward to growth and that 63 per cent of them are looking to transfer some skills into the renewables sector. We have a future—there is no doubt about that. That point must be taken into our schools so that children realise that there is a future in the sector. In Westhill academy in my constituency, secondary 2 pupils are looking at the issue and engaging with the sector. The curriculum for excellence is a stepping stone towards that future.
In conclusion, I give a message to the Prime Minister, the chancellor and others at Westminster who have been talking down Scotland: Scotland is open for business.
16:12
I speak in support of the amendment in the name of Lewis Macdonald. As the minister did, I congratulate BP on the welcome announcement about its investment in Scotland. I am honoured and privileged to represent the constituency of Cowdenbeath, in which two oil industry giants are located—Shell and ExxonMobil. Over the years, I have made it my business to understand some of the challenges that confront those companies and to work together with one of my Westminster colleagues, Gordon Brown, who also has the Shell and Exxon plants in his constituency.
In the first two sessions of Parliament, I was a good attender at the meetings of the cross-party group in the Scottish Parliament on oil and gas. I cannot remember why that changed—the reason is lost in the mists of time—but it did. However, at that time, I visited the Britannia platform and more than one oil and gas exhibition. I also went to Norway when the UK minister Brian Wilson signed an agreement on undersea pipelines to the UK. I also met representatives of Statoil to learn how it tackled the issue of recruiting young people into the industry and making it attractive to them. Statoil did not seem to have the same problems with recruitment that we continue to have, so maybe we still have something to learn from it.
We know about the struggles of the unions to organise in the oil industry. Unite, which represents process, technical, support, contracting and engineering construction workers, is the largest trade union in the offshore industry, followed by the GMB and the RMT—the National Union of Rail, Maritime and Transport Workers. I should declare an interest in that I have been a member of the GMB for many years. Over the years, the unions have played a critical part in the industry, particularly with regard to health and safety.
To return to the local scene, the jobs in my constituency mean a great deal to the area. The rates income provides a real contribution to the Fife economy. Many contractors and subcontractors in the central belt benefit when the two oil giants prosper. Burntisland Fabrications, which is based in Burntisland and Methil, is a local company that is important in the oil industry. My constituents also work offshore, on the oil rigs and safety vessels.
Like many others, I was concerned about the ship-to-ship proposals for the River Forth. Aided by Catherine Stihler MEP, I took a petition on the issue to the European Parliament. I have followed the issue and keep vigilant on it.
I recently had reason to look again at photographs of the Piper Alpha disaster. The scars from that time are seared into all our minds. Whether we be company managers, trade union health and safety representatives or politicians, that disaster will ever more serve to remind us of what can happen. My husband was a full-time trade union official and was closely involved with the union firm of solicitors and the families of those who tragically lost their lives in Piper Alpha. Their trauma lives on through the people about whom Lewis Macdonald spoke so eloquently and everyone who was involved in the aftermath of that terrible disaster.
If ever we needed to be reminded that offshore oil and gas exploration is classified as a major hazard industry, the words “Piper Alpha” surely bring that home to us. The industry and Government continue to work hard to ensure that the UK offshore legislative framework represents best practice on major hazard regulation. That is as it should be. We must never let our guard down on safety.
Against the background of the Macondo incident in the Gulf of Mexico, I note that the European Commission has been leading a regulatory review. I also note that it has now published a draft regulation on offshore oil and gas safety in a drive to reduce risk further. I understand that Oil & Gas UK is opposed to those proposals. It says that they risk undermining the current high UK safety standards by introducing a period of uncertainty and confusion, during which the industry would be required to make the transition from the existing UK regulation to the new EU regulation. Oil & Gas UK is also concerned about the shift in regulatory control away from member states to the EU.
If I can be so bold, I say to the minister that, if I were in his shoes, I would seek an early meeting with Oil & Gas UK on the issue and would meet the unions that are involved in the oil and gas industry in Scotland. I would also meet Scotland’s members of the European Parliament to express concerns about the proposed directive, seek a meeting with Her Majesty’s Government to express our most serious concerns and seek a meeting with the relevant European commissioner at an early date to support the concerns that the industry and others express.
Helen Eadie makes her points well. I reassure her that I have already expressed those views to the UK Government at the recent PILOT meeting, to MEPs whom I met recently and to Oil & Gas UK. I share the sentiment that the existing regulatory regime is the best one for the job.
I thank the minister for that assurance, but I hope that he will also ask for a meeting with the European commissioner, because our voice should be heard directly in Brussels, not only via the member states.
Members: Hear, hear.
There is provision for that under the existing agreements and framework. We should work with all the trade unionists who perceive a dilution of the health and safety regulatory framework. This is not the time to move regulatory control away from the UK as the member state.
I am concerned to note from the briefing papers that we have received for the debate that more than half the firms in the oil and gas sector that OPITO surveyed warned that serious skill shortages were their number 1 challenge. We have all said that that is a matter of real concern, but how can we improve the links with industry?
At lunch time, we heard of the huge waste of talent among thousands of unemployed young people. Why are their talents not being harnessed? What are the links between them and industry? How can we improve them? We need discussions with the industry to determine how we can shift those young people from being unemployed to being in paid employment, learning trades and skills.
Oil and gas companies are the UK’s biggest investors and the supply chain is worth £5 billion to £6 billion in exports. Let us politicians make the connections for those young people. I can point the industry in the direction of some of the young people whom I know in my constituency and beyond. When we have wonderful young people in our country who are eager to learn and play their part, it is a travesty that those connections are not being made effectively and that there are more than 100,000 unemployed young people in our land.
16:20
I speak in favour of the Government’s motion. A number of colleagues who have spoken in the debate today come from the north-east, so they have obvious links to the industry. The reason why I am speaking might be because we have exhausted our supply of SNP back benchers from the north-east.
Dennis Robertson is away now, but he made the point that the motion refers to Aberdeen when it should really refer to Aberdeenshire. I will extend that a bit further—it should include my constituency of Cumbernauld and Kilsyth. The industry is important throughout the country, and there are companies in my constituency that form part of the supply chain for the sector. A number of people in my constituency work in the sector. In fact, one of the individuals who lost their life in the helicopter crash that was mentioned earlier resided in the Cumbernauld area, so I know that members’ points about health and safety are well made. That is why I am happy to speak in the debate.
The sector is important to all Scotland; it has been so in the past, and it is vital to Scotland’s future, which I will touch on a little later. I think that it would be useful if I quantify the current position of the industry in Scotland first. As the motion states, the industry supports the employment of 196,000 people throughout Scotland. Last year, an average of 2.2 million barrels of oil and gas equivalent was produced per day from the North Sea, and approximately 40 billion barrels has already been extracted in total.
The oil and gas industry has contributed more than £300 billion in tax revenue to the UK Exchequer, which comes out at £60,000 for every man, woman and child in Scotland. In the past year alone, £13.4 billion has been contributed to the Exchequer, and it is estimated that, over the coming five years, starting this year, £61 billion will be raised. The sector is a significant part of the Scottish economy.
Lest anyone think that the sector is in decline, OPITO—the UK oil and gas industry’s focal point for skills, learning and workforce development—makes the point that 81 per cent of oil and gas companies expect their business to grow over the next five years. As Tavish Scott noted, the sector is growing. OPITO also makes the important point that 63 per cent of oil and gas companies expect to diversify into wind power in that timescale, which illustrates the link-up with the renewables sector to which the motion refers. I hope that I can return to that subject later.
I welcome the investment in skills for the industry. We have seen quite clearly that this Administration recognises the importance of a skilled workforce for the oil and gas sector, and the potential for engineering expertise to transfer into renewables technologies, to which the motion also refers.
In October, the First Minister announced 2,000 modern apprenticeships for the energy industries, with an additional 1,000 flexible training places in energy and low carbon. Jewel and Esk College announced that its new centre of excellence in engineering and clean technology will create more than 1,000 apprenticeships in the energy and oil and gas industries over four years, so there is investment in the skills base for the sector.
The debate has been very consensual, and I preface my next remarks by saying that I am not trying to inject controversy unnecessarily. However, it is important that we reflect on how we can benefit from the oil and gas revenues that accrue from the North Sea, because for far too long we have not been able to benefit here in Scotland. Given the moneys that are forecast to flow from the North Sea over the coming years, the opportunities for Scotland are significant indeed.
Quite often, we hear it said—to be fair, we have not heard it said much today, but we have heard it said often in the past—that we should not read too much into oil and gas revenues because they are fluctuating in nature and the resource is finite. I accept that that is the case, but I always think that it is ironic that we must be the only people on the planet to have the boon of oil and gas and to react in that fashion—some people, at least, react in that fashion; Kevin Stewart’s anecdote about the man at the event when he was young illustrated that point well.
We should put all this in context. We should remember that the UK Government has benefited from this resource, even though it is a fluctuating source of revenue and a finite resource. The UK Government has used it to underpin budget after budget. If it is good enough for the UK Government, we should maybe consider whether it is good enough for us.
I said that I did not want to be too controversial, lest I break the consensus across the chamber, and I am not necessarily trying to make a constitutional point. I happen to believe that the best way to achieve control over these resources is through independence. However, as Tavish Scott can tell us, Shetland has had its own oil fund for a great many years. I hear him say, “It’s Shetland’s oil.” Indeed, it might be Shetland’s oil, but that demonstrates that the argument that we should create such a fund for Scotland is not necessarily a constitutional one. I hope that we can all get behind the idea of Scotland having greater access to the revenue that is created by its oil and gas.
We should be investing that revenue in the renewables opportunity that is ahead of us. In April, total renewable energy generation capacity in Scotland was 4,417MW.
The member needs to start winding up.
That is significant, but we need to do much more. If we took the money that we generate from the North Sea and invested it in that sector we would provide job opportunities for people in the sector in the future. That is how we should utilise North Sea oil and gas in future years.
16:27
Like Jamie Hepburn, I will mention my region in a minute, but first the Aberdeen half of me will speak with some passion on this subject.
It is not for me to rehearse the history of oil and gas in the North Sea and Scotland, save to highlight one event in the 1970s, when a civil servant in London—a Government adviser by the name of McCrone—advised the Government of the day that if Scotland had control of its own oil resources, it would be a very rich country indeed. We have just heard that, had that been the case, Scotland would be the sixth richest country in the world. Of course, we were told—for obvious reasons—that the oil would run out in 30 years’ time. That was scaremongering, which, in some quarters, travels a parallel road called renewables—c’est la vie.
Here we are, more than 30 years later, with £300 billion having been contributed in tax revenues—billions of pounds regrettably dissipated in consumption by successive London Governments, rather than used to create a vehicle for infrastructure investment. Here we are—it is like a second homecoming—with a further 40 years of deposits ahead of us and, as the minister said, an asset base worth £1 trillion in the North Sea, with deep-sea drilling and exploration off the west coast of Shetland.
Now comes my regional bit. Dennis Robertson mentioned the various regions of Scotland. I am trying, through a freedom of information request, to establish with the Department of Energy and Climate Change whether there are substantial deposits off the Ayrshire coast. I was told during the election by an exploration engineer who had worked in the oil fields in the early 1980s that there had been two successful drillings, but they had been capped by Mrs Thatcher—not by her personally, although I believe she could have done it—because the riggs might have affected Trident submarine routes.
As many members have said, this is not just about Scotland’s oil as the raw material; it is much more about what it has spawned.
I put it to Mr Brodie that, in the 1970s and 1980s, it was impossible to gauge the lifespan of oil fields given the price of oil at that time. More marginal fields have now come into production because of the high price of oil. Does he agree that such estimates are more accurate now than they were then?
I sincerely hope that Mary Scanlon understands that we have moved on since those days. I do not believe that price was the only criterion that was used.
Raw material supply is key to overall energy, sitting as it will alongside supply of renewables and revenue from renewables. It is key to being a—if not the—primary revenue earner. Despite the £13.5 billion that was raised in the previous tax year—a quarter of all corporation tax received by the London Exchequer—still the investment comes from BP, Shell, Conoco, Chevron and Apache. All those companies and more will produce not just the raw material, but, as members have mentioned, the skills, the jobs, the knowledge transfer and the professional supply chain skills, some of which will be totally interchangeable with those required in the renewables industry. Those are skills in services that will be exportable, as Gavin Brown said, and emerging oil exploration in Brazil and China, for example, affords great revenue-earning opportunities for Scots-based oil and gas professionals and companies. Scotland’s pioneering engineering and logistical management is also being re-burnished, with 88 per cent of operators expecting to increase their staff over the coming year and 81 per cent expecting to do so over the next five years. The important point within that is that, as was announced in October, 2,000 modern apprenticeships and 1,000 flexible training places will be created.
Leaving aside my hope that the south-west of Scotland will share in that largesse, it is accepted that, as Mark Higginson, a senior partner at PWC, said in the report:
“We have a remarkable—and potentially unrepeatable—opportunity to position the city as an international energy centre of excellence”.
The oil and gas industry, like the renewables industry, is vital to Scotland’s future. In our waters, it’s Scotland’s oil. Even Michael Portillo said earlier this week that Scotland should have an “appropriate” share of North Sea oil and gas revenues. He is now being nudged slowly—with others—towards the inevitable. I do not believe that anyone in this chamber demurs from the principle that, going forward, this nation should secure the energy income, in all its forms, to create investment opportunities rather than allow it to be frittered away again in consumptive behaviour.
The debate has been consensual and I seek a coalition—a proper coalition—in the Parliament in which we work together to achieve fiscal stability with full political support; to crystallise our oil and gas recovery and the jobs that come with it; and to internationalise and export the skills and services from the global centre of excellence that will be Aberdeen.
I call Gavin Brown. Mr Brown, I can give you seven minutes.
16:33
Chic Brodie has started to quote Michael Portillo as his new friend in waiting. He obviously takes seriously everything that Michael Portillo says. In the same interview, Michael Portillo said that First Minister Alex Salmond knows that he cannot deliver independence and that he is now playing
“a new game where he pretends he’s after independence but hopes we settle somewhere in the middle”.
I wonder whether Mr Brodie would like to quote Mr Portillo a little further.
Mr Brodie also said that the debate has been consensual. That was probably true in the first half of the debate, when all those who spoke came forward with ideas and propositions. However, somewhere in the middle it seemed to deteriorate slightly. After the first utterance of “independence”, every back bencher felt the need to reiterate the point and to cancel all bets about having a consensual and constructive debate.
Forgive me for my arrogance, but I assume that I am one of the people to whom Mr Brown is referring. Does he recognise that I firmly placed in context the call for an oil fund? It could happen under the current constitutional arrangements. Why not?
I would never describe Mr Hepburn as arrogant—I do not know what on earth made him think that.
It is interesting that Mr Hepburn did not use the phrase “oil fund” in his speech. That is because the SNP is a bit frightened of the concept of an oil fund. In 2009, it launched a consultation about how to set one up. That consultation ran throughout 2009 and 2010 and it is still running, with no progress on the issue. The reason why it has gone nowhere—and why I suspect that it would not be hugely successful in the current climate—is that, unless there is a surplus, there would be nothing to put into the oil fund. Running deficits, as we are, under a tight fiscal regime, where would the money come from to put into the fantastic oil fund that Mr Hepburn wishes to set up?
Maureen Watt managed to spend four great minutes talking about her experience in the industry, but then she just had to let go. She was unable to finish off that speech with positive contributions and started describing UK ministers as displaying “hypocrisy of the worst kind” and so on. She might want to reflect further on the question of the statutory consultation period. As Tavish Scott said, the Scottish Government is keen on statutory consultation, as long as somebody else is doing it. It is a little bit less keen on statutory consultation when it has to conduct it.
Will the member give way?
I will take this intervention if Mark McDonald will tell us what statutory consultation is going on regarding the retail levy.
On the basis that the levy has not been implemented, we are currently consulting on it. Even if the member does not agree with me about that, does he agree that it is somewhat facetious to try to draw equivalence between the health levy and the tax grab on the oil industry?
I am not sure that it is facetious at all. Mr McDonald has an interesting interpretation of the word “consultation”. In my mind, consultation happens before the announcement of the proposal that a Government is going to implement.
Will the member give way on that point?
Certainly not.
We know exactly how much the Scottish Government is going to take as a cash grab—to use its term—from the retail sector: £110 million over the next three years. We know who is going to have to pay that, too. We know just about everything about it, yet the Government is going out to consultation on it. I would like to hear a little bit more about that.
Maureen Watt’s second point concerned the Scottish Government’s fantastic proposals for new oil taxes, which are covered in the detailed piece of work that it submitted to the Treasury. I read the submission. Think how complex the industry is. Think how many elements are involved in it. The submission from the Scottish Government is just seven pages long. Five of those pages explain a bit about the industry and a mere two pages explain three taxes. Mr Ewing can shake his head, but that is a fact.
Will the member give way?
In a moment.
Nowhere in the document does the Government say how much would be raised by the taxes and how much might be forgone by the Treasury, nor does it explain what impact those taxes would have on jobs and investment. However, perhaps at this late stage—we are into injury time—Maureen Watt is going to give us an answer.
Does the member agree that those five or seven pages are much more than Danny Alexander had before he made his decision on oil tax?
Obviously, we are not going to get answers about the detailed work that the Scottish Government has done.
Parts of the debate were a little disappointing.
Do I have six minutes or seven minutes, Presiding Officer?
You have eight minutes.
In that case, if Kevin Stewart still wants to intervene, he can. His big criticism was that he was disappointed that CCS has not gone further faster—I think that everyone in the chamber is disappointed about that—but it is simply incorrect to say that moneys were not available, as Tavish Scott pointed out, probably from a sedentary position. The reality is that £1 billion was made available but, regrettably, the Longannet project would have cost £1.5 billion.
I pointed out that there was £200 million in the fossil fuel levy, only half of which has been released thus far. I, too, could say that I am going to invest £1 billion in something that will never happen, and I think that that is the intention of the Westminster Government. It has said that it will invest in CCS, but it has turned down the Peterhead proposal and the Longannet proposal, and is now considering another proposal for Peterhead. Will the Peterhead project be refused funding again, with the result that the Government goes back to Longannet?
The idea of Kevin Stewart putting money into carbon capture and storage is more credible than the idea of the SNP putting money into it. I note, in passing, that the Scottish Government’s level 4 figure for CCS investment is about £10 million, for which we could probably build a power station car park.
My time is almost up. The debate started well and it is important that it ends well. The industry has a huge amount to look forward to as we move forward in the north-east. It has enormous potential not just in oil and gas, but in decommissioning and renewables, which can be complementary to oil and gas for a long time.
16:41
This has been an excellent debate on a crucially important subject that is vital to the future prosperity of Scotland and the UK. Members from across the chamber have spoken with passion and understanding about the oil and gas sector from a variety of perspectives. For example, Gavin Brown talked about finance, Mark McDonald spoke eloquently about tax and stability, and my colleague Sarah Boyack raised the environment. Lewis Macdonald had excellent points to make on skills and training, and I was impressed by those that Kevin Stewart and Dennis Robertson made about the regional economic impact of the industry, particularly in the north-east. We should not forget, either, the eloquent contributions of Maureen Watt and Tavish Scott on health and safety.
The industry has a history and culture all its own, which were etched into the Scottish consciousness by the radical theatre group 7:84, which produced the popular community play, “The Cheviot, the Stag and the Black, Black Oil”—I remember watching it as a very young student in the mid-70s. On the same theme, Bill Forsyth’s “Local Hero” gave a vivid account of the industry’s impact on remote communities. With more tragic overtones, Sue Jane Taylor’s sculpture in Aberdeen’s Hazlehead park remembers the victims of the Piper Alpha tragedy.
The history of the industry has been well documented by Lewis Macdonald and Fergus Ewing, but its early history, which is less well known, has not been mentioned, so I will touch on it briefly. In the 19th century, James “Paraffin” Young had a shale-oil industry in the central belt; arguably, he was the pioneer of the current industry. Perhaps even less well known is the secret US/UK Government operation during world war two that produced hundreds of tonnes of oil in Sherwood forest in Nottinghamshire, which supplied the fuel for allied fighters and bombers. Churchill is alleged to have said that it was the best kept secret of the war.
Last week I had another look at the Tony Benn diaries, which I am sure that many members have looked at. In reading them, I was really struck by the sense of optimism and expectation that existed in the public psyche in the early 70s around the discovery of oil and, indeed, gas in the UK continental shelf. Members will all be aware that Tony Benn was the Secretary of State for Energy. It is alleged that he had been demoted to that post by Harold Wilson. I looked at a tabloid cartoon from the time, which said that, because energy was so important, his next demotion would be to the position of Prime Minister.
Mr Stewart mentions the UK minister at the time. Does he regret the fact that that minister did not take the opportunity to establish an oil fund when oil was first struck?
Surprise, surprise—I could have predicted that that would be the question that the member would ask. If I had been the minister in the 1970s, I would have had to decide whether I wanted a capital fund or a revenue fund. It might have been valid to have set up an oil fund in the 1970s, but Tony Benn came up with two initiatives that are worth looking at, on which the member may wish to comment. The first was to have a nationalised British National Oil Corporation, which was vital at the time, and the second was to set up the Offshore Supplies Office, which I referred to earlier.
Sadly, as members will know, the Tories privatised the production business in 1982 and Britoil was taken over by BP in 1998. The minister will be aware that I lodged a series of questions to him on the Offshore Supplies Office on 28 September. In his answer, the minister referred to Professor Alex Kemp, who in my view is probably the leading academic guru on the oil industry.
Hear, hear.
I am glad that I got some support from Kevin Stewart. That is reassuring.
I will quote from the minister’s response to my question. It states:
“the work of the Offshore Supplies Office lead to an increase in the share of the UKCS market obtained by British industry and many companies obtained benefits which enabled them to flourish both domestically and overseas in later years”,
and cites
“the development of sub-sea technologies as a particular success story.”—[Official Report, Written Answers, 21 October 2011; S4W-03020.]
My question to the minister is this: do we need a new Offshore Supplies Office to support Scottish industry and manufacturing and help them to grow and develop, particularly with a view to increasing supply chain capability? I take Kevin Stewart’s point about obsolete EU procurement rules; nevertheless, I still feel that there is a gap in the market.
Gavin Brown made some excellent points about the contribution that oil and gas make to the UK economy. As we heard, oil peaked in 1999 and gas peaked in 2000. I agree with the many members who referred to the fact that vast resources remain. There is a range of views: Oil & Gas UK estimates that between 15 billion and 24 billion barrels of oil and gas remain, and the Department of Energy and Climate Change estimates that about 20 billion barrels remain—the estimates are within a range of accuracy.
As many members have said, the industry is clear that it does not like surprises from the Government and that fiscal stability is key. Members should not take my word for that—the Westminster Energy and Climate Change Committee, which has MPs of all colours, criticised the Tory-led Government for its attitude to the oil and gas industry in the 2011 budget, which included a windfall tax on the oil and gas sector.
Maureen Watt made a good point about the danger of having a two-speed UK continental shelf, which would mean that large, robust projects go ahead but marginal and difficult projects stall.
It is also vital that we talk about skills. Lewis Macdonald, among others, spoke clearly about the issue.
In an intervention, I mentioned the great example of the work that Roy MacGregor of Global Energy is doing in Ross-shire by reopening the Nigg yard. That is a very important development for fabrication in both oil and gas and renewables. We should not forget other crucial yards, such as Arnish on Lewis.
It is important to set up the skills academy to provide not only vital modern apprenticeships but skills for older workers and to create linkages with hospitality and life sciences.
In the oil and gas industry, we have a global centre of excellence; key skills in engineering, manufacturing and technology; a significant and established provider of primary energy, employment and investments; and a key industry for exports and tax revenues.
I make a plea to the minister to reconsider his view on our amendment. He said earlier that he does things because he is “that sort of minister”. If he is “that sort of minister”, please will he reconsider our amendment? We would appreciate his support for it.
16:48
I have thoroughly enjoyed the debate. It has been largely constructive, which is what the industry wants from the Parliament in debating its future at this important time.
I am certain that Tavish Scott meant his advice in the kindest possible way when he suggested that I could confine myself to an underwater chamber for, I think, a prolonged period, before taking myself off to Kazakhstan—
Kurdistan.
I am happy to say to Tavish Scott that I have already met a delegation from Kazakhstan, at the Offshore Europe event earlier this year, and that, as it happens, I have also met a delegation from Kurdistan. Both meetings were very useful.
We will continue to engage with delegations from other countries, many of which are seeking, as Tavish Scott knows, to avail themselves of the expertise that exists in Scotland, especially in subsea technology. More and more countries in the world are starting to embark on subsea oil and gas extraction. Dennis Robertson pointed out the skills that we have acquired in that sector—in the interests of geographical balance, I should say that Westhill is the world centre of subsea technology—and those are the skills that are required in the world, for the reasons that have been mentioned by many members.
It has been an important aspect of the debate that many members, including Helen Eadie, have spoken, in some cases quite movingly, about their personal experience of family members and people they have known. Lewis Macdonald talked about a friend who, fortunately, survived, and Mark McDonald spoke of a young man whom he was at school with who, sadly, did not. It is a salutary reminder of the extreme, hazardous nature of deep-sea, west of Shetland exploration and oil and gas extraction.
Those dangers have not gone away. Maureen Watt pointed out companies’ vigilance about safety, which is the correct approach. We can never be complacent about safety in the industry. My impression from my exchanges with people in the industry is that that is their view, too. I will seek to meet workforce representatives in the weeks and months ahead to ensure that their perspective is fully understood and appreciated as we pursue the issue.
Almost all members rightly focused on the importance of skills investment in the sector. If there is one thing that the sector wants from Parliament, it is to ensure that appropriate priority is given to skills development and funding. Indeed, skills are one of the six strategic priorities that are being addressed by the oil and gas industry advisory group, which I chair. We support OPITO in the partnership approach to meeting the needs of the sector. The recently established college-industry energy partnership will allow us to take that work forward.
In February, the Scottish energy advisory board, which is chaired by the First Minister, endorsed a skills investment plan for the energy sector, which was published in March and which set out the potential jobs in the sector until 2020. I am pleased to say to Parliament that an industry-led skills action group is being chaired by Colin Hood, formerly of Scottish and Southern Energy. We have great confidence that the work that Colin and his colleagues are doing will help us with the extremely difficult task of ensuring that the skills are available for the sector.
As we are a majority Government, the buck stops with me. I will not seek to evade responsibility or adopt that droopy mantra, “It wisnae me.” It is me. It is my job to do it. What has emerged from the debate is that I can expect cross-party co-operation in that extremely challenging task. All of us share Helen Eadie’s sentiment that too many young people in Scotland do not have employment. Plainly, there are opportunities in the oil and gas sector. Matching one with the other is a difficult challenge, for all sorts of reasons. However, she made a fair point, which we take on board because all of us share those important objectives.
We are fortunate that we now have an industry that is focused on maximising recovery, pursuing fiscal certainty, securing Aberdeen’s long-term future as a global energy player, seeking to ensure that the funding is more available, where appropriate, and ensuring that Government is focused on working together with it in the pursuit of our objectives.
My perspective, as the minister who has relatively recently assumed responsibility for taking forward the massive opportunities in the oil and gas sector, is that we are looking forward, not back, and that we have an alignment of objectives in the industry, in the Government, in academe and across political parties. That is a serendipitous event of which we should take full advantage. Beneath the political interchange in the chamber is a common objective in relation to the potential of oil and gas. That potential is so large that it is difficult to contemplate it. As I said earlier, the value of the remaining oil and gas could be £1 trillion, which is a denomination that we do not hear frequently in the Scottish Parliament.
What is far more important is that, at end of the day, it is about people. We wish to ensure that Scotland’s people, most especially its young people, have an opportunity to take part in this important industry. I know from discussions with Lewis Macdonald, Gavin Brown, Tavish Scott and members of my own party, such as Mark McDonald, that there is a shared view in the industry that graduates are coming forward and many people are coming up to retirement, but there is a gap in the middle. That is a very specific facet, the explanation for which is perhaps that it was thought that the oil and gas industry did not have a future. Well, it does have a future and not just for one, two or three decades but for four certainly and, I suspect, probably for five decades and many more. As John D Rockefeller said in the 1930s, the world has been running out of oil since I was a boy. The likelihood is that we will continue to see more discoveries of oil in the future.
I turn to another matter that arose in the debate and on which many members commented. Dennis Robertson led the charge by pointing out that, although Aberdeen is the oil capital of Scotland—and, we would argue, of Europe—Aberdeenshire is important, too. That led to a number of members quite rightly pointing out that the oil and gas industry plays a significant part in all parts of Scotland. Indeed, in that regard, I was pleased to attend the opening of FMC Technologies Inc’s extended office facilities in Bellshill, where it is taking on an additional 240 employees.
FMC Technologies is a US company, headquartered in Houston, that decided to invest in Bellshill in Scotland after its board in the USA had considered alternatives in Singapore, South America and elsewhere in Europe. The company decided to invest in Scotland because of Scotland’s expertise in subsea technology and the availability of young people who they felt would be excellent employees, as indeed they are, and because Scotland is a great place in which to invest, with—I hope this is accepted across the board—a fairly sympathetic ministerial team to whom they have ready access, assisted by an excellent Scottish Enterprise service that is fully devoted to pursuing such investment.
Whether it is FMC in Bellshill, Shell and Exxon in Cowdenbeath—as we heard from Helen Eadie—INEOS in Grangemouth, whose role is vital for the Scottish economy, British Gas in Aberdeen or, indeed, Roy MacGregor’s Global Energy Group, which is about to create 2,000 jobs in Nigg—a truly marvellous and exciting opportunity for the Highlands—the oil industry is truly a Scottish national industry of which we can all be rightly proud.