By TOM BAXTER
As the pace of decommissioning work picks up in the North Sea as ageing production assets come to the end of their working life in a mature basin, there’s more to the costs than meets the eye.
‘The Oil Company pays’
The following is a quote from Shell – ‘Shell and Esso will be paying the decommissioning costs. The tax relief we will get back is not a subsidy or a new cost to the taxpayer – it’s a refund – i.e. the tax has already been paid by Shell and Esso in previous years.’
This is spin: Going forward, if decommissioning costs come in as per the £50 billion estimate, the treasury (the taxpayer) will be down by around £25 billion. If the costs are higher the treasury will pay more – a huge risk to the taxpayer. The taxpayer does pay.
‘There is an environmental benefit from removal’
There is no environmental benefit from removal. Indeed some of the decommissioning activities will do more environmental harm than good. If the architecture is left in place, it will naturally form a reef providing an environmental positive.
The most pressing environmental issue of our time is global warming. If our aim is environmental benefit surely making the offshore infrastructure clean and safe and using the taxpayers’ money, earmarked for removal, to fund green energy projects would be a much more sensible option.
‘Removal will provide an onshore ‘jobs bonanza’
Headlines like this have been used numerous times by the media. Onshore activities are around 3-5% of the overall decommissioning costs. The jobs are transient; once the task is complete there is no follow on activity. There will not be a jobs bonanza.
However, the green energy option will provide many more sustainable jobs in design, fabrication and construction. The green energy stations will also provide continuous operations and maintenance jobs during their 30 – 40 year life.
‘Decommissioning is good for the economy’
How can a decommissioning industry that produces nothing and uses billions of taxpayers’ money be good for the economy? The investment has no legacy – we take something to bits, we have not built a factory or provided new infrastructure to serve society and the economy.
Also, much of the removal money will go to the heavy lift companies – the UK has none.
On the other hand, green energy will be UK based and unlike decommissioning it will pay taxes providing for health, education, tackling poverty etc. Furthermore, unlike decommissioning, green energy will be providing society and the economy with an essential commodity – power for industry, electric transport and heat for homes. What does returning a fraction of a percent of the North Sea seabed acreage provide?
‘There will be technology spin off’
What is this – some cutting and explosive technology, some novel use of a gas axe? Hardly a huge revenue generator.
‘We must follow the OSPAR directive’s
OSPAR is the mechanism by which fifteen Governments of the western coasts and catchments of Europe, together with the European Community, cooperate to protect the marine environment of the North-East Atlantic.
As well intentioned as OSPAR is, the directives are taking the nation to a very poor outcome. So why are we not challenging them? We know so much more know than when the directives were agreed in 1998 – the consequences of global warming for instance.
Even OSPAR should be able to see green energy as having a much better outcome for the international community.
‘The OGA is maximising economic recovery”
The Oil and Gas Authority’s (OGA) role is to regulate, influence and promote the UK oil and gas industry in order to achieve their statutory principal objective of maximising the economic recovery of the UK’s oil and gas resources. It is an executive agency of the Department for Business, Energy and Industrial Strategy (BEIS).
How can the current plans for decommissioning be maximising economic recovery? An objective of reducing removal costs by 30% is a good aim. But why remove in the first place when we can do so much more to maximize the economic benefit to the UK by using the money in green energy?
Sadly the OGA have told me that their role is to ensure OSPAR is followed and not to challenge it. Surely if we are witnessing a very poor use of taxpayers’ money the OGA should be lobbying Westminster. That’s not their job I’m told.
‘The Scottish Government is maximising economic recovery’
See above. I’ve discussed the green energy alternative with a number MSPs and the Scottish Government. I’m told that’s a Westminster and OGA matter. Because it is not your responsibility does that mean you do not challenge something that you see is clearly wrong?
By the way Mrs Sturgeon, that £5 million Decommissioning Fund is an audience-playing, paltry gesture.
Note to OGA and The Scottish Government: There is an elephant in the room.
TOM BAXTER is Senior Lecturer in Chemical Engineering at Aberdeen University.
He is also a Fellow of the IChemE and previously worked in the North Sea oil and gas industry as an Operations Engineer and Development engineer with a major British oil exploration company.