MEPs on the EU parliament’s Energy and Industry Committee yesterday voted in favour of new air-quality rules on emissions from ancillary plant and lifting equipment on N. Sea oil platforms.
The new law – the Medium Sized Combustion Plant Directive (MCPD) – proposed by the EU Commission would require the installation of expensive new equipment on gas and diesel engines situated on up to 200 oil rigs.
The proposal has been strongly criticised by Dr. Ian Duncan – Scotland’s sole Tory MEP – for potentially adding extra costs to the offshore industry facing rampant cost-inflation against an economic backdrop of a-near- 50% fall in the price of wholesale crude oil prices since Summer 2014.
And the industry trade association, Oil and Gas UK shares his concerns.
Duncan – who is also Energy Spokesman for British Conservatives in the European Parliament – said; “The European Commission is pushing the directive for onshore engines, only including the offshore engines as an afterthought. Offshore platforms were entirely absent from the Commission’s own Impact Assessment.
“There is no need for such a directive to extend offshore since the UK Government already regulates the air quality of North Sea Oil and gas rigs – which are only granted permits if they comply with maximum emission limits.
“These plans would create huge costs, and accelerate early decommissioning of the rigs. This would have an impact on energy security and thousands of UK jobs, while providing only minimal air quality benefits on land.”
Around 10% of the European Union’s oil and gas is produced from the N. Sea. Accelerated decommissioning would impact the future recovery of proven reserves by as much as 45%-60% between now and 2030.
This would compound the EU’s significant dependence on energy imports (53% in 2013) and an energy import bill of over €1bn per day.
In the UK the oil and gas industry supports employment for around 450,000 people – almost half in Scotland. Accelerated decommissioning would affect employment, leading to thousands of job losses across the UK by 2030, according to the Department of Energy, Food and Rural Affairs (DEFRA).
Mick Borwell, Environment Director, Oil & Gas UK, commented: “We are very concerned at the European Parliament Industry, Research and Energy Committee’s opposition to plans to exempt offshore installations from the proposed Medium Sized Combustion Plant Directive (MCPD).
“If implemented in its current form, the MCPD could require retrofits on up to 200 offshore platforms, rendering some uneconomic and accelerating decommissioning, which will leave valuable barrels of oil and gas in the ground and risk employment.
“The UK Government forecasts that we will continue to rely on oil and gas to meet 70% of our energy needs for several decades to come so it is imperative that we maximise economic recovery of our own resources.
“While C02 emissions are an issue that we take very seriously, a balance must be struck between benefits to the environment and costs to industry that would put oil and gas production and the UK’s energy security at risk.
“We urge all UK MEPs to support measures that safeguard a vital UK industry, in particular at the impending European Parliament Environment, Public Health and Food Safety Committee vote on the MCPD.”
Duncan added: “The European Commission’s ill-conceived directive is nothing short of economic vandalism.
“Anyone who has been on an oil rig can tell you that more space and extra weight are the two things you simply don’t have. The Directive is also wholly unnecessary given that the British Government already has world-leading emissions rules with which the rigs have to comply’.