Future of the Oil and Gas Industry

Bill Grant Excerpts

Thursday 14th March 2019 Westminster Hall

[Hugh Gaffney (Coatbridge, Chryston and Bellshill) (Lab)]

Thank you for calling me to speak in this debate, Mr Walker. I thank all my colleagues on the Scottish Affairs Committee for their work in producing this report.

It would be an understatement to say that the oil and gas industry is a vital part of the Scottish economy. It contributed £9.2 billion in 2017 and, as we have heard, it supports about 135,000 jobs. It is essential to the UK’s energy security, and forecasts suggest that oil and gas will account for two thirds of the UK’s primary energy needs until at least 2035.

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.

I want to touch on some of the issues raised with the Scottish Affairs Committee, particularly by Unite and the National Union of Rail, Maritime and Transport Workers. Those unions play a crucial role in organising and representing the interests of workers in the oil and gas industry. They were both keen to emphasise the need to maximise the industry’s economic recovery to its full potential. They share the sentiment of the industry and the Government.

It is welcome that the Oil and Gas Authority will lead exploration by commissioning surveys of unexplored areas of the sea bed. The creation of the Oil & Gas Technology Centre through the Aberdeen city deal was welcome. The “maximising economic recovery” strategy cannot be implemented through significant reductions in costs, given the impact that they could have on the workforce. There is a clear case for the Oil and Gas Authority working with the UK and Scottish Governments to create strategic public stakes in the implementation of the strategy. Those stakes should include infrastructure, such as pipelines, and public investment through borrowing and national investment banks. Only through co-investment by public and private stakeholders can we ensure the strategy’s success.

The fall in the oil price in recent years led to an 18% reduction in the core offshore workforce between 2014 and 2016. It also led to a reduction in the workforce’s terms and conditions. RMT highlights the growing use of short-term and zero-hours contracts. The industry and trade unions have observed practices including the application of retrospective charges for training, the exclusion of trade unions from heliports, the denial of holiday entitlements and the ignoring of TUPE requirements. I believe that Unite is right to call for the full devolution of employment law to Scotland so that we can begin to address those issues, alongside investing in skills, apprenticeships and training in the industry.

Although decommissioning must be a crucial part of the sector deal, it must be done in a way that preserves skills, expertise and technology. It is clear to me that there should be a national decommissioning strategy to ensure that decommissioning delivers for workers and our economy. The strategy must be devised through discussions between the UK and Scottish Governments, local authorities, industries and trade unions.

I would like to talk about safety in the industry. As a trade unionist, I want to ensure that all workers are safe in their workplace. It alarms me to see the findings of a recent report by Robert Gordon University, which received responses from 40% of offshore workers from the major companies in the industry. It found that 52% of workers are dissatisfied with their work-life balance; 45% said that it takes them longer to recover from their shifts, and 57% believe that the conditions of their offshore sleeping environment have worsened. Let us not ignore workers’ concerns about offshore helicopter safety. Some 62% said that they would be unlikely to fly in a Super Puma helicopter if given a choice.

[Bill Grant (Ayr, Carrick and Cumnock) (Con)]

I share the hon. Gentleman’s concerns about the safety of workers and the avoidance of accidents. What does he think the Government can do to bring the oil companies to the table for discussions with trade unions about the important matter of the safety of personnel on their rigs and in helicopters?

[Hugh Gaffney]

I will come to that point; I take an interest in it. I recently met Oil & Gas UK, with which the unions are getting together to bring the workforce on board. Without the workers on board, no company can go anywhere. Unless companies involve their workers in the process, there is no point trying to organise the company.

I declare an interest: 27 years ago today, I took an interest in North sea oil safety helicopters when a Super Puma helicopter went down, killing 11 men, of whom my brother-in-law was one. Today is the 27th anniversary of the crash, so I welcome the report. I hope that the industry will take serious steps to address those safety concerns, particularly as employers have a duty to ensure that workers are safe in their workplace and can get home safely.

To conclude, I reiterate my support for the findings of the report, including its recommendation of a sector deal. It is clear, however, that there are challenges that we will have to address: “maximising economic recovery”, decommissioning, terms and conditions and, most importantly, the safety of the workforce.