Energy theme
The UK is set to spend billions on offshore decommissioning and removal. Contrary to popular belief that this is all funded by oil and gas companies, it is actually the taxpayer that funds a large proportion, as companies receive a reduction in tax as an incentive to decommission retired infrastructure. With unlimited capital we would be able to fund the complete removal of platforms, wells and pipelines. But given tightening Government budgets, this is not always the most sustainable option.
Current policy is that we should aim for the complete removal of retired offshore infrastructure, and as a country we are spending a huge amount of money for little environmental benefit.
Looking at this problem from the perspective of the oil and gas industry, the plans and policies in place look positive, supporting decommissioning and removal. This sector currently provides and will continue to provide an important part of the oil and gas business.
However, looking at this problem from the perspective of a tax payer, I am convinced that the £40.6 billion spend (Expert Commission Report, 2014) is not maximizing value for UK plc.
An alternative approach would be to plug the wells, making infrastructure clean and safe, instead of funding complete removal. This will allow Government to redirect the substantial capital spend required for removal into renewables for example, the consequence being far superior sustainability metrics. Alternatively funds could be redirected into Government budgets for health or education or used to help our ailing steel and shipbuilding industries. The benefits for society, the environment and the economy would be much greater than those provided by the complete removal of offshore infrastructure.
Clearly, considering such changes would require significant changes in current policy and legislation. The decommissioning of offshore oil and gas infrastructure in the UK Continental Shelf is principally governed by the Petroleum Act 1998, as amended by the Energy Act 2008, which sets out the requirements for a formal Decommissioning programme and the approval process. Under the Department of Energy and Climate Change (DECC) Guidance Notes on Decommissioning of Offshore Oil and Gas Installations and Pipelines, an Environmental Impact Assessment must support the Decommissioning Programme.
To support my concerns, it is suggested that a comparative sustainability assessment should be undertaken. The comparative sustainability assessment would evaluate two options;
- The base line – current decommissioning plans which recommend the complete removal of retired offshore infrastructure.
- The alternative – plug and abandon the wells, making them clean and safe. This would allow for the redirection of capital saved (tax payers money) into renewable energy projects.
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 oil and gas companies. 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, would likely lead to a much bigger environmental benefit.
To my knowledge this comparison has never been undertaken. The comparison should be government funded and undertaken by a neutral organisation, one that the non-government organisations and the public would see as being wholly independent.
I believe that the sustainability metrics will be far superior for plugging and abandoning wells, as opposed to the current approach. However what we need now is a comparative assessment to provide the evidence which could form the basis for challenging current legislation.
Tom Baxter graduated from Strathclyde University in 1975 with a B.Sc. in Chemical Engineering (first class honours). He is a Fellow of the IChemE. He started his career with ICI Petrochemicals, then moved to fine chemicals with the Swiss company Ciba-Geigy before taking a position as a Process Engineer in 1980 with BNOC (British National Oil Corporation). Through privatisation and acquisitions BNOC became Britoil then BP. Here he worked as an Operations Engineer, Development Engineer and Research Manager.
In 1991 he left BP and joined Altra Consultants as Technical Manager. He accepted a position as Technical Director with Genesis in 1998 and became the Aberdeen Business Unit Director in 2006. He returned to his role as Technical Director on 2010 together with a position as Senior Fellow in the Chemical Engineering Department at Aberdeen University, which he helped establish. Since 2003 he has been visiting Professor of Chemical Engineering at Strathclyde University.
The views of the writer do not necessarily represent the views of the Institution.