EXCLUSIVE by Scottish Energy News
Holyrood MPs discussed issues and options regarding the costs and criteria for the mammoth £50 billion N. Sea decommissioning industry at the oil and gas cross-party group in the Scottish parliament yesterday.
A number of scenarios were summarised by Louise Murray, environment manager at Oil and Gas UK, Graeme Fergusson, managing director of Fairfield Energy’s de-comm group, and Murdo MacRitchie, decommissioning project leader at CNR International in Aberdeen.
In reply to a question from Alexander Burnett, MSP, (Tory) on other similar basins to the North Sea where Scottish and UK decommissioning skills could be exported and marketed, one of the experts suggested the Gulf of Mexico as being similar to the southern North Sea, with shallow water depths and smaller platforms.
“And there is also a lot less regulation in Gulf of Mexico too,” one observed.
The question of the use of barges – instead of single heavy-lift floating cranes – to onshore scrapped platforms was raised by Tavish Scott, MSP (Liberal).
While less costly than floating cranes, the lack of deep-water harbour capacity inhibits their use in large numbers in Scotland – although port authorities in Dundee, Orkney and Cromarty Firth are keenly eyeing up their potential.
As well as almost entirely foreign-owned heavy barge and sea-lift crane operators licking their lips at the value and volume of prospect N. Sea decommissioning work, shipbuilding and oilfield engineering companies in China and Japan are also exploring these prospects.
And Scottish First Minister Nicola Sturgeon will be visiting some prospective N. Sea decommissioning bidders in China as part of her Scottish enterprise trade mission to the Far East next month.
A representative from BP in Aberdeen asked the experts if the Oil and Gas Authority was taking a ‘big-picture overview’ of the decommissioning market and if it is encouraging operators to share knowledge and co-operate in best-practice decommissioning techniques.
N. Sea regulator launches new company-specific 2018 production and decommissioning work plans for oil and gas operators
The key issue of reducing costs and/or improving efficiency in decommissioning work – as well as the scope of the works – was examined through the prism of Shell and its Brent Spar reputational management disaster in 1994-5.
In the face a global public outcry orchestrated by Greenpeace, Shell had to abandon its first option of simply abandoning the floating oil tank on the sea-bed because of the environmental risk this posed.
This reputational disaster led directly to the OSPAR international convention against ‘decommissioning by dumping’. But like every law, or rule, there are exceptions.
And currently Shell is seeking an exception to the OSPAR convention to complete removal of all offshore platforms, foundations and wells and pipelines for on-shore decommissioning and dismantling.
Instead of ‘complete removal’ Shell has applied to the Dept of Energy & BEIS for ‘special exemptions’ to the OSPAR convention where it wants to ‘de-capitate’ its now shut three platforms in its Brent field.
Shell has cited a combination of factors, such as absolute cost, relative cost-benefits of partial removal and the technical possibility – or otherwise – of removing mine workings, pipes and tunnels which are almost 50 years old, and some of which were never designed to be actively removed at the end of their working life.
The OGA regulator also wants to prevent removal of ‘common property’ pipes and infrastructure which could lead to premature closure of existing operations by one operators just because another operator further up the line has emptied one well.
The analogy here is ‘common property’ held jointly and severally between individual flat-owners in a tenement block; while they each own their own property, the roof is ‘held in common’ between them for joint and mutual repairs and keep; this prevents the owner of the flat on ground floor refusing to pay his share for roof repairs on the grounds that ‘it’s not my roof’ because he jointly benefits from the roof being in good repair.
Louise Murray from Oil and Gas UK, commented: “The Shell Brent case is currently going through the process of evaluation by BEIS and this process is not completed.
“We do not know what the outcome of the Shell request for derogation (aka exemptions) from OSPAR will be, nor when BEIS will make its decision.
“But we are not expecting derogation and that, conversely, the 500-odd North Sea platforms and infrastructure will be totally removed.”
As with the Scot-Govt decision to ban onshore oil and gas exploration by fracking – factual evidence and hard scientific facts on part-decommissioning may not feature in the decision.
But whether BEIS / Energy Minister Greg Clark accepts Shell’s plea for OSPAR exemptions – or not – it will in effect set a legal precedent and have a major consequential financial impact on the decommissioning market.
22 Feb 2018