The recent appointment of a new OGA head of decommissioning raises hope that a fresh pair of eyes might question current plans for late-life assets.
If Mr Cohrs reflects on the benefits to society, the economy and the environment will he come to the same conclusion as I have: the plans are a huge misuse of taxpayers’ money.
Whilst no one can dispute the requirement to properly plug and abandon wells, asset removal is another issue. I urge Mr Cohrs to put OSPAR (removal legislation) to one side and assess the implications of the industry’s decommissioning plans bearing in mind that the taxpayer is the largest stakeholder. Mr Cohrs please consider the following:
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.’
But if decommissioning costs come in around the £60 billion estimate, the treasury (the taxpayer) will be down by around £30 billion. If the costs are higher the treasury will pay more – a huge risk to the taxpayer. The taxpayer does pay.
Environmental benefit from removal
There is no environmental benefit from removal. Indeed some of the decommissioning activities will, through seabed disruption, do more environmental harm than good. If the architecture is left in place, it will naturally continue to form a reef providing an environmental positive. Furthermore, removal is a highly energy intensive process resulting in harmful carbon dioxide and other emissions.
The most pressing environmental issue of our time is global warming. If our aim from removal 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.
There will be a green NGO backlash if installations are not removed
Senior people at the Scottish Wildlife Trust and Forum for the Future are supportive of leaving some infrastructure in place. Also, other NGOs are much more likely to be accepting when they reflect on the green energy alternative.
Removal will provide an onshore ‘jobs bonanza’
Headlines like this have been used numerous times by the media. Onshore activities account for around 2% 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 pounds 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 the economy or society?
The OGA is maximizing economic recovery
An OGA objective of reducing decommissioning costs by 35% 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 nation by using the money in green energy?
Previous dialogue by myself with the OGA, BEIS, the Scottish Government and numerous MPs has proven to be polite but futile. Mr Cohrs, will you be any different?
And a final thought. The OGA Decommissioning Task Force has no members from outside government, oil companies, or industry bodies. Surely it should rectify that.
Tom Baxter is a senior lecturer of chemical engineering at Aberdeen University