OGA should use N. Sea decommissioning subsidies to fund renewable energy

LETTER TO EDITOR

OGA logoSir,

The UK is set to spend billions on offshore decommissioning and removal and it is generally believed the oil and gas companies will pay for this work.

This is not the case. Rather, the taxpayer will fund a large proportion through tax breaks.

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 environmental benefit.

After the task is complete, the legacy will be compliance with regulation, marginal environmental benefit, some technology we might export, the creation of little wealth and little long term employment.

From my oil and gas viewpoint, 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 £40.6 billion spend (Expert Commission Report, 2014) is not maximising value for UK plc.

decommissioning oil rigsInstead, my suggestion is – redirect the substantial capital spend required for removal into renewables: the consequence being far superior sustainability metrics. The benefits for society, the environment and the economy will be substantially greater than that provided by asset removal. 

Clearly this would require huge changes in current policy and legislation. To support my contention a comparative sustainability assessment should be undertaken. Compare the sustainability metrics for:

  • The base line – the current decommissioning plans
  • The alternative – plug and abandon the wells, make clean and safe and leave in place. Redirect the capital saved (tax payers’ money) through no-removal into renewables. 

The sustainability assessment would define and compare the three recognised pillars – people, profit and planet. For the base line, the information will be held by DECC as submitted by the operators.

This would cover the cost of decommissioning to the operator and tax payer, the jobs and other socio-economic impacts (fishing, marine transport) together with the environmental footprint (habitat, biodiversity, impact of decommissioning activities etc.).

For the alternative, the same metrics would be defined. There would be clear differences – completely different job and socio-economic signature, the renewables route would be generating money from energy sales and paying taxes and of course there would be a huge carbon reduction environmental benefit.

To my knowledge such a comparison has never been undertaken.

Furthermore, the need for the comparison is pressing as ports and fabrication yards are currently investing in facilities for supporting the current decommissioning plans.

 

Tom Baxter, FIChemE

Aberdeen

AB10 1YH

Tel: 07710 451167

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