13:30 Pete Wishart (SNP)

Critically, we wanted to explore the readiness of the sector for transition and decarbonisation. We also wanted to look at its preparedness for diversification of the skills acquired over 40 years of production and development in the North sea.

I should say first that the sector is in a reasonably good place. The resilience shown by our oil and gas industry in the face of such turbulence is to be commended. The tenacity that has been shown by the workforce and others involved in the industry is something we all recognised, and which has supported the sustainable recovery that has been put in place in the past few years. There remains a strong and positive future for Scotland’s oil and gas sector, and the opportunities of a just transition to a decarbonised future are there to be grabbed.

The industry also has to find new ways to reduce its carbon footprint and use its skills and engineering knowledge to help develop low-carbon and renewable technologies. That is no small task, and those challenges are at the heart of the Committee’s report. We address how the Government should support the industry while it gets ready for production to decline. How do we meet the UK’s energy needs, of which oil and gas will remain a major component, while meeting our climate change obligations?

I am certain that any delay will, of course, be down to the Government’s taking very seriously the recommendations in our report, and designing the deal around some of the very useful recommendations that we made—that the sector deal is forward-thinking and sets up the industry to meet the challenges of climate change, decommissioning and of the industry’s future beyond the UK continental shelf head on, rather than focusing on the usual support for maximisation of production in the short term. The days of short-termism in the North sea are over. Long-term planning and strategic thinking is required, and those are the priorities for the deal that the report outlines.

We heard that there is no end to the opportunities available if we get decommissioning right. Sectors including aerospace, data analytics, marine and offshore engineering, digital manufacturing, satellite technology and offshore wind are all open for skills and technology transfer. We were particularly taken by the opportunities in the renewable sector, and we call for the sector deal to contain specific and measurable proposals for how it will improve skill and technology transfer to the sector. Scotland gained by acquiring North sea oil. It is questionable whether we secured the benefits of discovering North sea oil; we must not lose any benefits of what happens next with renewable technology. The skills acquired in the North sea are perfectly fitted, and could be adapted, for use in renewable energy.

The sector deal must bring forward proposals for how the sector will address its carbon footprint, both in the process of producing and extracting oil and gas, and by finding ways to reduce emissions from their use. The report received a mixed reaction from some environmental groups—I will put is as delicately as that. That surprised me, due to the range of recommendations we made and the care and diligence that we gave to shaping up some of the transition recommendations. We believe in a just transition and said as much in the report. We believe that if that is achieved, we will get to a new future—a green and transformative future for the sector.

I agree with the Chairman of the Committee, who is speaking very well about the report. We received criticisms from Friends of the Earth, for example, which said that there was no coverage of the impact of climate change. Does he agree that the organisation had clearly not got as far as chapter 6?

Absolutely. When the report came out, all of us on the Committee were quite surprised by the scale of the response. I do not think there was a true examination of what we had in the report. We say in it that a transition is required, but it has to come from a position of strength. We cannot do anything that would compromise our ability to have a viable and sustainable sector that is in a position to carry out the just transition that environmental groups are looking for.

We were struck by the importance of carbon capture technology for the long-term future of the industry. The Committee on Climate Change told us that without this technology, decarbonisation of the sector will happen much more slowly and be more costly. This is one area where the Government are ahead of the industry, having announced £45 million of funding for carbon capture innovation, with more potentially available from industrial strategy funds. I know that particularly pleases the hon. Member for Banff and Buchan (David Duguid), because most of that investment will be in his constituency. It is right that it should be, because of the infrastructure that exists there.

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13:48 David Duguid (Banff and Buchan) (Con)

It is worth recognising the work that many of the large oil and gas companies have been doing to encourage a transition towards low-carbon energies. They are often cast as cartoon villains in relation to climate change, but throughout the inquiry I have commended them for leading the way in the sector, and for taking climate change seriously. That commitment was exemplified by the creation in 2015 of the Oil and Gas Climate Change Initiative, initially made up of the BG Group, BP, Eni, Pemex, Reliance Industries, Repsol, Saudi Aramco, Shell, Statoil—now known as Equinor—and Total. Significantly, it was joined in the last year by American companies—Chevron, ExxonMobil and Occidental. Having worked for many of those companies as a member of staff, mostly for BP, and as a consultant for some of the others, I can confirm that that commitment to a low-carbon future is not just lip service.

I am particularly pleased that the report recognises the potential of carbon capture, use and storage for the future of the industry. As the hon. Member for Perth and North Perthshire (Pete Wishart) mentioned, that is particularly important in my constituency. CCUS technology will be vital if we are to continue to use oil and gas in a low-carbon economy. In assets that have ceased or are due to cease production, decommissioned infrastructure can be converted to use for CCUS purposes. This report is certainly not the first time that that potential has been recognised. Banff and Buchan has been the location of previous proposals for CCUS projects, which were sadly deemed not viable at the time. I continue to believe that CCUS can be part of a great future for the energy sector in Banff and Buchan, provided that the right proposals come along.

I am particularly excited by the Acorn project by Pale Blue Dot. Unlike previous proposals, it focuses on the St Fergus gas terminal, which is the third-largest emissions site in Scotland. The St Fergus gas terminal is an attractive proposition because it is already linked by pipeline to the Grangemouth industrial complex. Unlike previous proposals, Acorn aims to achieve commercial viability by starting small and growing through additions to the core project later. Whereas a previous proposal for a CCUS power station at Peterhead would have cost about £1 billion, the cost of the initial Acorn project is estimated to be just £300 million.

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13:53 Hugh Gaffney (Coatbridge, Chryston and Bellshill) (Lab)

The industry has suffered in recent years, but is starting to come through a challenging downturn, although there are still worrying signs, such as the low levels of new well exploration. There are also future challenges for the industry, such as declining production, climate change targets and the decommissioning of oil and gas rigs. I agree with the report’s central finding that the Government must provide serious and credible support to the industry through the sector deal. A sector deal supported by the Government and industry has the potential to deliver £110 billion for the UK economy by 2035. It must help with the development of new technology to maximise the recovery of the 10 billion to 20 billion barrels of oil that remain in the UK. It must find ways of encouraging greater decommissioning of oil and gas rigs, while reducing the cost of doing so. It must ensure that the industry’s skills, expertise and technology are protected for the future, including by transferring them for use in renewable energy, subsea engineering and carbon capture. The oil and gas industry has many opportunities for Scotland and the whole UK, which we should not waste. That is why I endorse the report’s findings, including its key recommendations about a sector deal.

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14:00 Ross Thomson (Aberdeen South) (Con)

Balmoral Group, a company based in my constituency, specialises in subsea buoyancy, renewable energy products and engineering solutions. It employs 500 people and is highly dependent on the rapidly growing markets of west Africa, South America, and the gulf of Mexico. The company is clear that its opportunities for growth are truly global. Aberdeen is a global city, and oil and gas companies based in my constituency have an increasingly international outlook. The new technologies developed through the Oil & Gas Technology Centre show the great export potential that will place Aberdeen at the centre of supply chains reaching around the world into mature and emerging markets.

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14:06 Deidre Brock (Edinburgh North and Leith) (SNP)

That should include the transfer of skills to new industries, and it seems to me that renewable energy should be a major recipient of those transferred skills. Offshore wind farms and marine energy schemes would be ideal recipients of those skills. I recently had the privilege of visiting Nova Innovation, which is headquartered only a few hundred yards from my constituency office in Leith, and I was extremely impressed by the advances it is making and the pace of change in the offshore renewables industry. Nova leads the way in the tidal energy industry, and the Shetland tidal array looks like it may be at the leading edge of a new energy revolution. Just as Shetland was important in the development of the oil and gas industry, it may well be important in the development of the next energy industry.

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14:20 Douglas Chapman (Dunfermline and West Fife) (SNP)

Our oil and gas industry is awash with highly skilled individuals in possession of world-leading expertise. The sector currently supports 283,000 jobs across the UK. We must seek to hold on to those workers to retain the value they add to our economy. As I said, the Scottish Government’s transition training fund has made good progress in that regard, facilitating training for many oil and gas workers to move into renewables such as tidal, onshore and offshore wind, wave power and solar. However, the UK Government’s decision to slash funding for the renewable energy sector does not give us much encouragement. In fact, it does exactly the opposite, removing opportunities for talented individuals to utilise their skills to develop new wind technology and other low-carbon technologies such as carbon capture and storage—not so much opportunity knocks as an opportunity lost.

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14:33 Dr Alan Whitehead (Southampton, Test) (Lab)

The report also goes into considerable detail about not just the future alternative paths, but what we might call the future imperative paths for the North sea as a mature basin. My hon. Friend the Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney) mentioned that the oil industry has come through a challenging period—it is in a better position than it has been in for quite a while, given its efficiency achievements and what is happening with the exploitation of future fields—but he drew attention to the need to look at a future industry for decommissioning in the context of the climate change imperative. I was pleased to see that the report did not duck climate change; quite a few of its passages actually centred on the challenges that the fight to get us to a low-carbon economy will present for the oil and gas industry, and on how the industry can take part in that process rather than opposing it.

We must recognise that the imperative of climate change will cause us to take a considerable number of decisions about the oil and gas industry. Indeed, the report identifies a number of those decisions, one of which is the question of what we do about carbon capture, use and storage. That is not just a possible extension of activity and industry for the North sea as fields are depleted—indeed, those fields are enormous potential repositories for carbon dioxide—but can be used to the benefit of the North sea fields in their own right.

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14:43 The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)

The work streams on other things that are part of Government policy, such as diversity and inclusion as well as CCUS, have developed very well. I was pleased that the Chancellor yesterday called for evidence to identify what more should be done to make Scotland and the UK a global hub for decommissioning, as the Chair of the Select Committee has talked about.

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14:56 Pete Wishart (SNP)

The key point, which I think everyone touched on, is ensuring a just transition from a hydrocarbon past to a low-carbon future, and that the investment, skills and expertise carry on into the next stage. I do not like talking of doing away with what we have, or a lack of production. A new adventure is in store for the North sea, and that will include all the things in this report—transformational technology, underwater innovation and decommissioning.

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