Scotland Act 2016 and Wales Act 2017 (Onshore Petroleum) (Consequential Amendments) Regulations 2018 — House of Lords, 2018-06-21
Topic: Energy
Oliver Michael Robert Eden (Conservative, Centre-right): My Lords, in line with the Smith and Silk commission agreements, the Scotland Act 2016 and Wales Act 2017 provide for the devolution of onshore oil and gas licensing to the respective Governments Today’s debate will focus on the devolution of Section 45A of the Petroleum Act 1998 to the Governments of Scotland and Wales. Section 45A provides the means of assurance to the relevant authority that the relevant person will be able to plug and abandon a well or otherwise provide the necessary funds for it to be done. As such, Section 45A is a key part of the licensing regime and needs to be devolved to enable Scottish and Welsh Ministers to ensure that licence obligations can be met and wells can be plugged and abandoned as appropriate. We intend to transfer Section 45A powers to Scottish and Welsh Ministers for their respective territories, using powers to make consequential amendments under the Scotland Act 2016 and Wales Act 2017. As recommended by the Smith and Silk commissions, it was agreed that powers related to onshore oil and gas licensing, aside from those relating to royalties, would be devolved to Scotland and Wales. The Scotland Act 2016 and Wales Act 2017 will transfer legislative competence for onshore petroleum to the Scottish and Welsh Governments when fully commenced, with the exception of matters relating to setting and collecting licence rentals To aid devolution, in February this year we commenced Sections 47 and 48 of the Scotland Act 2016, which transferred the existing UK onshore licensing regime as it applies in Scotland to Scottish Ministers. This means that Scottish Ministers have the powers to administer the existing onshore oil and gas licensing regime in Scotland and to create a bespoke licensing regime if they wish. It has been agreed between Welsh Ministers and the Secretary of State for Wales that provisions that enable Welsh Ministers to administer the existing onshore oil and gas licensing regime in Wales, or to create a bespoke regime if desired, will commence on 1 October 2018. Therefore, we intend make and lay negative regulations necessary to deliver this in early September I turn now to the detail of the affirmative regulations that we are debating today. The proposed consequential amendments included in this statutory instrument will make amendments to Section 45A of the Petroleum Act 1998. These amendments are consequential on the devolution of onshore petroleum licensing functions to Scottish Ministers under Section 48 of the Scotland Act 2016, and to Welsh Ministers under Section 23 of the Wales Act 2017 The consequential amendments that these affirmative regulations make reflect the role of Scottish Ministers as the licensing authority in Scotland, and allow the licensing regime to work as intended in relation to onshore areas in Scotland. The regulations provide for the position both before and after commencement of the Wales Act 2017, which makes equivalent provision for devolution of onshore oil and gas licensing to Wales As I set out at the beginning, Section 45A is a power that allows the relevant authority to issue a notice requiring a person, once they have begun to drill a well, to provide information regarding their financial affairs. If the authority is not satisfied that the person will be capable of plugging and abandoning the well following the submission of financial information, Section 45A allows the relevant authority to issue a notice requiring the person to take action. This notice could include the provision of security to the relevant authority, to ensure that the costs of plugging and abandoning the well are covered. Although this provision has not to date been used onshore, we consider that the power applies onshore, and therefore Section 45A forms part of the regime which should be transferred A negative statutory instrument will follow these affirmative regulations to make consequential amendments to the onshore licensing regime in Wales. Transferring powers from the UK Administration to a devolved Administration does not count as a regulatory provision, so we are not required to do a regulatory impact assessment. Furthermore, there has been no specific consultation on these technical amendments as they are necessary to the effective operation of the provisions set out in the Scotland Act 2016 and Wales Act 2017, which were consulted on separately The regulations assist in giving the Scottish Parliament, the National Assembly for Wales and Scottish and Welsh Ministers greater control over their onshore oil and gas resources, complementing the provisions of the Scotland Act 2016 and Wales Act 2017. These affirmative regulations are an important step towards delivering a recommendation of the Smith and Silk commission agreements and to ensure a smooth devolution of powers for onshore oil and gas licensing in Scotland and Wales to Scottish and Welsh Ministers I commend the regulations to the House.