THE SMALL BLUE FLAME

Jonathan Davis celebrates the 25th anniversaiy of the landing of North Sea gas

THERE has always been an endearing touch of pantomime in the story of this country's North Sea oil and gas develop- ment. The chairman of BP insisted gravely in the early 1960s that no oil would ever be found off the Scottish coast and that he would drink any that was. Not much later, a prominent American multinational drilled right through two of the larger off- shore fields without realising that there was anything of value there.

Then, when the first oil from a North Sea field was at last landed in June 1975, who should turn up on the day to do the ceremonial opening of the valves but Tony Benn? There can hardly have been anyone the assembled oilmen less wanted to see. Dumped as industry Secretary by Harold Wilson only days before and shunted off to the backwaters of the Energy Department to cool his interventionist heels, Benn was deeply antagonistic to the oil industry.

Having cast a pall over the oilmen's opening party, he proceeded to spend the next four years terrorising them with a suc- cession of unpalatable threats — participa- tion deals, via the British National Oil Corporation, hyper-taxation, unionisation on the rigs, the works. For a brief period, Thames House South, the Department of Energy's mausoleum-like home in Mill- bank, hummed with activity as ministers and mandarins tried their hand at one of Houston's favourite pastimes: haggling over who gets what from the pot.

It is, however, 25 years ago this week that the North Sea story really began. On 4 March 1967, the first natural gas was brought ashore at Easington on the Lin- colnshire coast. At that stage, the prospect

of oil was merely a glimmer of a hope clung to by a few wild-eyed company geolo- gists, who stubbornly muttered on about fault blocks and closures in the Jurassic, much to the dismay of their accountant col- leagues back at head office.

Instead all the talk was of gas pipelines and cookers for the nation's housewives. In Whitehall and the new redbrick universi- ties, economists earnestly debated the prospects of Britain catching Dutch dis- ease, a new form of economic disability allegedly brought on by finding too much natural gas in your backyard. In the pubs meanwhile the big question was: is it going to be safe to light a cigarette in the kitchen any more? It was. Though, as Sir Denis Rooke of British Gas cheerfully liked to point out, would-be suicides ran up size- able gas bills before discovering that an oven fuelled by natural gas did not have the same lethal properties as the old town gas model.

Daniel Yergin, Harvard's leading energy authority, and author of a best-selling his- tory of oil in the 20th century, describes how when the first big oil-field was eventu- ally discovered in 1969, one of the big shots at Phillips, the American oil company which made the find, was asked at a techni- cal conference how his men had managed to diagnose the geology of the field. 'Luck,' he replied.

If serendipity had a lot to do with getting us into the North Sea oil and gas game in the first place, the question 25 years on is whether we as a nation have been quite so lucky with what it has brought us. The answer has to be yes — as long as we don't get too bogged down in econometric models, or start to rehash that tedious early Eighties debate about squan-

dered oil revenues. ('Of course they were squandered,' one economist said. 'Squan- dering is one of the few things governments are really good at.')

For those who like numbers, most of the relevant ones can be found in the Depart- ment of Energy's so-called Brown Book, its annual summary of North Sea activity. Value of oil and gas produced since 1977: £175 billion. Amount taken in tax over the same period: £75 billion. Employment effects: hundreds of thousands of direct jobs at the peak in the mid-1980s, and maybe the same again in indirect employ- ment. Balance of payments contribution: net exporter of crude oil for a critical ten- year period.

The commonsense question to ask is, however, this one: would you rather Britain had lived through the two oil price shocks of the 1970s with its own oil and gas resources — or without them? Posing the question in this way makes the often over- looked point that Britain's biggest fluke was not just to stumble on oil in the North Sea, but to do so as the world experienced the historical aberration of extraordinarily high oil prices.

To argue, with some dissident economists, that facing two oil price shocks without any oil or gas of our own would have been preferable, requires an act of faith in the competitiveness and adaptability of British industry for which post-war experience provides little sup- porting evidence. Let's not forget that the man who led the fight for the oil to be left in the ground was Sir Michael Edwardes. The trade he was offering the nation for North Sea oil was British Leyland. It didn't look a great swap then, and looks even less brilliant now.

True, nobody could seriously accuse British governments of having had a coher- ent, let alone a consistent energy policy. That, it seems, is a luxury confined to those countries, such as Japan and France, which have absolutely no indigenous ener- gy resources. The Department of Energy's finest hour, ironically, probably was under the dreaded Mr Benn, when policy was certainly all of a piece, albeit a lop-sided piece which only seemed to have a couple of four-letter words — (Coal and BNOC) — stamped on it. In more recent years, privatisation of gas and electricity has been a muddle and a missed opportunity. For 20 years, our nuclear power programme has been allowed to degenerate into a mess that could scarcely have been afforded had not the oil been there.

On the other hand, it is hard to believe that, without the buffer of North Sea oil, Mrs Thatcher would have found it quite so easy to take on Arthur Scargill as robustly as she did. Nor, but for the rich portfolio of North Sea assets held by British Gas, Britoil and BP, could privatisation have been half the fiscal and political windfall it has proved to be. No doubt historians will see other effects of this sort more clearly than we can. It is more than 35 years since Suez exposed the hollowness of Britain's post-war international pretensions. If for a few years she has walked just a little more jauntily on the world stage, oil has certain- ly helped to make it possible.

There is another aspect of the North Sea experience which is too often missed. Anyone who has spent time on an offshore platform cannot have failed to be impressed by the remarkable engineering achievement which the production of oil and gas from hitherto untried water depths and in unspeakable weather condi- tions represents. While Piper Alpha was a horrific disaster (which may yet claim Lloyd's of London among its ultimate vic- tims), the real miracle is that there have not been more losses and disasters in 25 years.

In much the same way, it is all too easy for 50 million Britons, cosy in their gas- heated living-rooms, to underestimpte the scale of the engineering achievement which enables that small blue flame in the boiler to stay alight all day. The successful conversion of Britain to natural gas stands as one of the few genuinely outstanding exercises in the history of post-war civil engineering. For that reason, no doubt, nobody ever bothers to talk about it. The boorish behaviour of the man from the gas board, and British Gas's monopoly profits, unfortunately make a better story.