Removing Old North Sea Rigs ‘Wasting Money’
DEFUNCT oil rigs and pipelines should be cleaned up, plugged and left in the North Sea and the money that would have been spent on dismantling and disposal redirected into renewable energy solutions, according to an industry expert.
Offshore decommissioning is an emerging sector being developed to deal with the 470-odd oil and gas installations, 10,000km of pipeline and 5,000 wells in the North Sea as they reach the end of their operational life.
Under current regulations it is estimated that more than 90 per cent of offshore installations will be entirely removed for reuse, recycling or disposal on land. The remainder, comprising very large steel and concrete structures, can be considered for partial removal.
Projections suggest the process of retiring the fields could cost at least £40 billion over the next 25 years or so. The UK government has set tax relief at 20 per cent to 75 per cent of decommissioning cost.
Despite the cost to operators and taxpayers, the emerging industry has been hailed as “a new beginning for the North Sea”, worth billions and bringing new employment.
Callum Falconer, chairman of Decom North Sea, the representative body for the offshore decommissioning industry, has said: “Decommissioning used to be seen as the beginning of the end. Now it’s seen as the beginning.”
However, Tom Baxter, a visiting professor of chemical engineering at the University of Strathclyde and senior fellow at the University of Aberdeen, whose career in the oil and gas sector has spanned 40 years, believes full-scale decommissioning is not the best way to spend the money.
“The UK is set to spend billions on offshore decommissioning and removal, and the taxpayer will fund a large proportion of this,” he said.
“Whilst the removal option is what should be done if capital is unlimited, I believe it is not the most sustainable option. We are spending a huge amount of money for little benefit. After the task is complete, the legacy will comply with regulation but offer only marginal environmental benefit and create little wealth or long-term employment.”
He added: “You don’t want oil companies getting out of their liabilities – they would have to properly plug and abandon the well. It would be like leaving a clean bag of nails in a duck pond.
“In many cases you’re going to spend more taking the thing out than they did putting it in, for no long-term benefit that I can see. I propose leaving virtually everything behind, provided it’s clean. That would require cleaning all the topsides, and all the components that would be full of oil.
“Some of the electronics may contain heavy metals, so you would have to remove all that. But the actual cleaning cost would be a fraction of that for taking it all away.”
The UK aims to deliver 15 per cent of the country’s energy consumption from renewable sources by 2020. Scotland has set the bar higher, with a target for double that,
However, fears have been raised over Westminster’s recent cuts to subsidies for renewables schemes.
Baxter added: “From my oil and gas lens, I am very happy with the plans and policies in place supporting decommissioning and removal. This sector currently provides and will continue to provide an important part of my business.
“However, if I take the standpoint of an informed taxpayer, I am convinced that the £40.6bn spend is not maximising value for Scotland or the UK. I say redirect the substantial capital spend required for removal into renewables – the consequence being far superior sustainability metrics.” ”
However, environmentalists say leaving infrastructure in place is not acceptable. They insist it should not be an either/or situation for protecting the marine habitat and investment in green power.
Lang Banks, director of campaign group WWF Scotland, said: “In the interests of the environment and our economy, the fact is that we need to see both the continued acceleration of renewables as well as the clean-up and restoration of our seas.
“Having made hundreds of millions of pounds in profits over the past few decades, it’s only right that the industry now cleans up its mess as Scotland looks to a cleaner, more sustainable energy future.”
