Darling Says North Sea 'Absolutely Critical' to UK Energy Security

The North Sea was, is and will be 'absolutely critical' to delivering the energy needs of the country, Trade and Industry Secretary Alistair Darling will say today.

He will underline the continuing importance and vibrancy of the industry in facing the challenge of energy security as the first Secretary of State to Chair the Pilot meeting of oil and gas representatives, in Aberdeen.

He will hail the 'pioneering spirit' driving the second wave of North Sea exploration. With major recent investments from the multi-nationals totalling over £100m. And welcome the announcement on Friday of an oil find by Reach - a small Banchory based company - which has linked up with Petro-Canada.

Mr Darling said:

"Aberdeen is the centre of a second wave of North Sea exploration. Absolutely critical to delivering the energy needs of all of us in the years to come. Anyone questioning the health of the industry needs only remember - £100m for new HQs in the last few months alone- to see it is strong.

"Self-confident, innovating, looking to the future not the past. That is the industry we see today. That is why it is important I'm here to hear directly from those delivering. Delivering local jobs, delivering for the country."

Welcoming the latest innovation today with the announcement from Reach of a new oil find, he said:

"Alongside the investments of the giants, small companies are innovating, linking up and developing new finds. We back that with the new license available for small companies with big ideas.

"With up to 15 - 20 billion barrels remaining in North Sea reserves it will be the power of ideas, the pioneering spirit that has made Aberdeen what it is today, that will drive new discoveries.

"We will stand behind that every step of the way."

He will also announce that the Government has today begun a consultation on plans for having more offshore gas storage and creating new 'energy platforms' for the unloading of liquefied natural gas (LNG).

Alistair Darling said:

"We know in the future our energy supply situation will change, but it is clear the North Sea will remain critically important.

"We know from our Energy Review that by 2020 we could be importing as much as 80 - 90% of our gas. We need to be ready for this and ensure we have the right facilities to help us import and store the gas we need.

"We think that part of the answer lies in using the offshore areas around the UK, including the North Sea, more cleverly. New technologies mean that it is possible to now store gas under the sea in salt caverns. It is also possible to create 'energy platforms' offshore where LNG can be transported, regasified, and piped to the UK mainland. Our legislation needs to be updated to ensure we can take advantage of this".

The consultation document sets out:

•   the UK's changing gas supply situation, and the implications of increased gas imports

•   the part that new gas supply infrastructure offshore could play in securing future UK
    gas supplies

•   the need for an appropriate regulatory framework to consent to such developments
    offshore

It seeks views on options to clarify and modernise existing legislation to provide a fit-for-purpose offshore regime covering offshore gas storage and offshore unloading of LNG.

1.   The REACH company was formed in 2002 to explore oil and gas in the North Sea. They are announcing this oil find today. The discovery was found under a 'Promote license'.

3.   The 'Promote' licence is offered at one-tenth of the cost of a traditional licence for the first two years, to encourage smaller companies with good ideas to apply for acreage and work up prospects to either sell on or bring in other investors.

4.   The consultation published today is in relation to the storage of natural gas in the UK offshore area, with its associated security of supply implications, for which DTI has lead departmental responsibility. This consultation is not in relation to the storage of CO2, known as Carbon Capture and Storage (CCS).

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Posted 24/11/06

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