Offshore Petroleum Licensing Bill

Clause 1

Duty to invite applications for offshore licences

I beg to move amendment 12, page 1, line 3, at end insert—

“(1ZA) The OGA must not invite any new seaward area production application licences until the Secretary of State has by regulations brought into effect a ban on flaring and venting relating to new offshore installations other than that required in an emergency.

(1ZB) The Secretary of State must by regulation make such provision so that the OGA is only permitted to invite seaward area production application licences after 2030 once a prohibition is in place on routine flaring and venting for all offshore installations operating in UK waters.

(1ZC) A statutory instrument containing regulations under subsections (1ZA) and (1ZB) is subject to annulment in pursuance of a resolution of either House of Parliament.

(1ZD) In subsection (1ZA) and (1ZB)—

‘flaring’ means the burning of hydrocarbons produced during oil and gas extraction;

‘venting’ means the release of un-combusted hydrocarbons directly into the atmosphere.”

With this it will be convenient to discuss the following:

Amendment 15, page 1, line 3, at end insert—

“(1ZA) The OGA must not invite any new seaward area production application licences until the Secretary of State has by regulations brought into effect a requirement that—

(a) all new seaward area production application licences require a specific field commitment of a net zero carbon footprint reached through developing the Carbon Capture Utilisation and Storage network or such other means as deemed appropriate; and

(b) a percentage, to be specified in regulations but not less than 30 per cent, of all new seaward area production application licences specifically align petroleum extraction with the refining of petroleum at the Grangemouth oil refinery.

(1ZB) A statutory instrument containing regulations under subsections (1ZA) is subject to annulment in pursuance of a resolution of either House of Parliament.”

Amendment 7, page 1, line 4, leave out “in each relevant year” and insert “on a case-by-case basis”.

Amendment 2, page 1, line 6, at end insert—

“(aa) the climate test (see section 4ZD)”

Amendment 8, page 1, line 6, at end insert—

“(aa) the energy and job security test (see section 4ZD)”

I refer the House to my entry in the Register of Members’ Financial Interests.

On Second Reading, I said that this Bill was something of a distraction and not necessary on the basis that the North Sea Transition Authority can already grant licences annually or, indeed, whenever it considers it necessary. That will not change with the Bill. I also noted at the time that the two statutory tests in the Bill have been designed in such a way that the computer always says yes to new oil and gas licences, but I also said that I would work with other like-minded colleagues to improve the Bill and bring in further tests that need to be met before any new oil and gas production licences are granted. That is what I and other Members have sought to do.

Amendment 12 seeks to do two things. First, it would stop the invitation of new production application licences until the Secretary of State has introduced a ban on the flaring and venting of methane by new offshore installations. Secondly, it would require the Secretary of State to prevent licensing rounds from 2030 if a wider ban on flaring and venting is not in place. Along with other Members who have signed up to the amendment, I argue that this is an entirely reasonable ask that the Government and all Members should be able to get behind, given that all it modestly seeks to do is put into statute existing guidance on flaring and venting that was issued by the North Sea Transition Authority.

Let me set out the precise wording of the principles that the NSTA expects industry to follow in relation to flaring and venting across all UK continental shelf areas. First,

“flaring and venting and associated emissions should be at the lowest possible levels in the circumstances”.

Secondly, there should be

“zero routine flaring and venting for all by 2030”.

Thirdly,

Can my right hon. Friend explain why it would be better to import liquefied natural gas, with four times the amount of CO₂ produced, rather than have our own gas? His regulations would not apply to the foreign-produced gas we import.

My right hon. Friend makes an important point: LNG has a higher carbon-intensity footprint. But the majority of the gas that we import comes by pipeline from Norway, and the production intensity of Norwegian gas is around half that of the UK’s.

Will my right hon. Friend give way?

If I may, I will continue. In their response last year to the Environmental Audit Committee’s report on accelerating the transition from fossil fuels and securing energy supplies, the Government doubled down on the NSTA position. Responding to the EAC recommendation, which called for the banning of flaring from UK installations, the Government noted that they had already signed up to

“make every effort to ensure that routine flaring from existing oil fields ends as soon as possible, and no later than 2030.”

The Government response went on to highlight the NSTA guidance that new developments are approved on the basis of zero routine flaring and venting.

My right hon. Friend the Member for Wokingham (John Redwood) raised the issue of imported gas. I will just point out to him that, unfortunately, flaring is still a common practice in the UK. By contrast, Norway banned routine flaring in 1971, and the carbon intensity of Norwegian gas production is around half that of UK domestic production.

The marginal gas we would import would come from Qatar or the United States of America. There is not an infinite supply of Norwegian gas, so my right hon. Friend is missing the main point.

With respect, I do not think I am missing the main point. The point that the Government are pursuing is to ensure that we have less use of fossil fuels overall and that we expand our renewable capacity, including nuclear, which I know my right hon. Friend supports. That is where we should be going with this strategy. The ban on flaring in Norway is one of the key reasons that Norway has become a leader in the cleaner production of oil and gas, which this Government have clearly indicated that they also want for UK production.

I am looking forward to hearing the Minister’s response to amendment 12. I hope he will say that, given that it is consistent with Government policy and guidance, the Government will introduce a similar amendment in the other place. If they choose not to do that, I am pretty sure that a similar amendment will be tabled in the other place anyway, and that it is likely to be supported. I would just humbly observe that if the Government whip against this or any similar amendment, either in this House or in the other place, they will put colleagues in the absurd position of effectively having to vote against existing Government policy. I am really looking forward to listening to what the Minister has to say.

Order. We are in Committee, so I remind Members that the Chair should be addressed by name or as “Chair” or “Madam Chair”, as Sir Alok Sharma did, and not as “Mr Deputy Speaker” or “Madam Deputy Speaker”.

Before I call the shadow Minister, I want to make it clear that I will be calling those who have amendments down first and I will then move on to others, going from side to side.

I would like to speak to our amendments 17, 18, 19 and 20, to comment on other amendments before us today and then to place all this into the context of the Bill as a whole by way of what will effectively be a stand-part contribution. This Bill remains an ill-advised, pointless piece of political posturing—

Don’t pull any punches!

That was the mild version.

As the right hon. Member for Reading West (Sir Alok Sharma) has informed us, the Bill legislates for something that happens anyway. It will make no difference to bills, according to the Secretary of State. It will make no difference to our energy security, according to the former chair of BP. It will undermine the independence of the North Sea Transition Authority, according to the NSTA’s own board, and it and will reinforce the perception around the world that the UK is rowing back from climate action, according to the former COP President, the right hon. Member for Reading West. We regret that this insubstantial and damaging Bill has proceeded this far, and we will vote against it on Third Reading.

We do not need this one-clause Bill. We need instead a strategy for managing the North sea that supports our energy security, meets our climate commitments and secures the economic and jobs benefits of the transition to a low-carbon economy. We would have liked to debate a new clause setting out a new principal objective for the North Sea Transition Authority that would have put such a strategy into effect. However, because the Bill is so short and tightly drawn around the narrow issue of mandatory licensing rounds, amendments to put a more sensible strategy into place are regrettably not in order. We must therefore take the Bill on its own terms, even if that means treating it with significantly more respect than the drafters have treated this House with in presenting such a trivial and nakedly political proposal.

We have in the Bill at present two tests that should be passed if the Oil and Gas Authority is to proceed with mandatory licence issuance, and we know that the two tests cannot be failed. It is a fact that if properly drafted—we might come to that in a moment—liquefied natural gas will always be more greenhouse gas-intensive in production than UK natural gas and we will always be in a position where gas and oil produced in the UK and in a declining North sea field will not meet our total demand for gas and oil.

The shadow Minister has said that getting more of our own gas out of the North sea would help our security of supply and reduce CO₂ because it would displace imported LNG, so why does he not support that proposition?