Oil and gas entrepreneur Algy Cluff has said the Government could provide a multi-billion pound boost to the hard-pressed North Sea industry by cutting the subsidies provided for offshore wind farms.
Mr Cluff said the Government could use the savings produced to help firms lift flagging exploration rates in the North Sea creating benefits in areas ranging from energy security to employment.
Oil and gas industry leaders have voiced concern that North Sea exploration budgets have been slashed amid the crude price slump, raising the prospect of billions of barrels oil and gas being left undeveloped.
However, Mr Cluff believes the government could kick start a recovery by encouraging small firms to fill the gap left by the retreat of the majors.
He said the North Sea still contains much undiscovered oil and gas but will rely increasingly on the independent or smaller companies to conduct exploration, as international giants switch their attention overseas.
“We are accordingly hopeful that the new Secretary of State for Business and Energy will recognise this and offer assistance,” said Mr Cluff. “That could be achieved simply by the removal of, or even reduction in, proposed subsidies amounting to billions of pounds of taxpayers’ money for new offshore wind farms many of which are foreign owned.”
Mr Cluff suggested the Government could make a big difference by using just a fraction of the money saved to invest in exploration wells alongside firms on a needs based formula.
He added: “If such a concept becomes a reality, I can foresee a large amount of exploration activity occurring rapidly with enormous benefits to the UK’s energy, security, wealth and employment.”
Mr Cluff also claimed some wind farms were “sterilising access to gas” in the North Sea by getting in the way of exploration and production work.
But Mr Cluff’s suggestions appeared to get short shrift from the UK Government.
A spokesman for the Department of Business, Energy and Industrial Strategy said: “We’ve been completely clear about our commitment to the oil and gas industry through announcing radical packages of tax measures worth £2.3 billion to ensure the UK Continental Shelf remains an attractive destination for investment.”
Industry body Scottish Renewables said renewables and conventional energy would both have a role to play in meeting Scotland’s energy needs.
Director of policy Jenny Hogan said the UK needs to massively expand its renewable energy capacity if it is to meet its legally-binding climate change obligations.
She added: “Financial support is designed to get the offshore wind industry established and up to a scale where it can compete with other forms of energy, and has helped grow a significant supply chain employing thousands across the UK, including here in Scotland.”
“Costs have already come down substantially in recent years.”
Mr Cluff was commenting in the interim results announcement of the Cluff Natural Resources business which he runs.
Cluff Natural Resources has decided to focus on the North Sea oil and gas business after giving up on a controversial plan to create gas by burning coal held under the Forth for the time being.
In May the London-based company noted politicians on both sides of the border had imposed moratoriums on such gasification schemes, which have attracted fierce opposition from environmental campaigners.
Mr Cluff said recent activity has underlined the potential of the exploration acreage Cluff Natural Resources has acquired in the gas prone Southern North Sea.
The company said one block may hold three trillion cubic feet of gas, enough to meet the UK’s needs for one year.
In March it agreed to buy stakes in three exploration licences in the Moray Firth from Verus Petroleum for just £1.
Verus said it didn’t want to risk money drilling exploration wells with the crude price in the doldrums and would focus investment on production assets.
Mr Cluff said: “The increase and subsequent stabilisation of the oil price during the period has to some degree increased confidence within the industry.”
He noted the company had £955,000 cash at 30 June after raising £727,000 from investors in April.
Losses narrowed to £662,473 in the six months to June from £744,668 in the first half of last year.
The company said future windfarm developments would prevent oil and gas operations on the P2259 licence off eastern England.
It is considering bidding for more licences in the latest UK round.