OSPAR – A Poor deal for the Taxpayer – Removal of Oil & Gas Infrastructure
Energy Voice
Tom Baxter – Senior Lecturer in Chemical Engineering, Aberdeen University
Any industrial or societal endeavor should be subject to a sustainability assessment and decommissioning is no different. The key metrics for the UK’s sustainable future are contained within the Government’s Sustainability Indicator reports published by the Department of Food and Rural Affairs (Defra). There are 35 topics. They are categorised under the three pillars of sustainability; people, planet and profit.
Oil and gas companies undertake comparative societal, environmental and economic assessments to justify their decommissioning approach. These are set within the framework of options from full removal to leave in place. The requirements of the associated marine legislation are also a vital element of the analysis, particularly the Ospar directives.
In my experience these assessments are undertaken very professionally and without bias. The plans are then submitted to the UK Department for Business, Energy and Industrial Strategy (Beis) for approval.
However, what these assessments miss is the key role of the taxpayer – the taxpayer will fund at least half of the costs, around £25billion. As taxpayers we should be asking Beis to show us that the agreed decommissioning plans are the best solution for taxpayers from a societal, environmental and economic position. That, though, has to take into account what else could be done with the taxpayers’ money, which means comparing it with the benefits of, for example, re-directing it into green energy and emissions reduction. The option of what else could be done with the taxpayers’ money to serve society is not undertaken by the oil and gas companies. That’s why I think the taxpayer is being short changed.
So, let’s have a look at how the UK’s sustainability indicators would stack up when comparing the base line – the current decommissioning plans – with the alternative, which is to plug and abandon the wells as per the base line, make clean and safe and leave in place. Take the capital saved from not removing infrastructure and redirect it into green energy.
People – Society
A key area under the “people” category is jobs. Whilst there is no doubt that decommissioning removal activities would provide jobs, the jobs are not long term – when decommissioning is complete there are no jobs. Decommissioning leaves no long-term legacy. On the other hand, by directing the money saved by leaving offshore infrastructure in place into green energy, there will be the shorter term jobs in design, fabrication and construction.
But, more importantly, there would be long term jobs associated with the operation and maintenance of green energy stations. Green energy would yield a jobs profile far superior to asset removal. Furthermore, the decommissioning money saved from leaving infrastructure in place could also be used to build a UK design and fabrication capability in green energy plant and equipment, a capability lacking in the UK and Scotland.
What are the other benefits to society from green energy?
Taxes are a very important part of a sustainability assessment. They provide funding for health, education, tackling poverty, security and pensions, among other things.
Unlike asset removal, instead of absorbing tax break funding, the renewable stations would be generating profit and paying back to the Treasury during their operating life of 25 to 30 years.
Safety at work is also a key consideration. Whilst I’m sure every effort will be made to keep employees safe during asset removal and recycling it is intrinsically a much more hazardous operation than green energy.
From any sustainable people viewpoint, I can’t see asset removal being a better option than green energy.
The Defra environment sustainability indicators include CO2 emissions, sustainable fisheries and air quality. A growing number of marine habitat experts are saying there is little environmental benefit to removal. Indeed some of the decommissioning activities will do more environmental harm than good. This is due to seabed disruption of marine colonies built up over 30 or so years. The noise impact on the cetacean community and the removal process itself is very energy intensive, with consequent harmful emissions. If the architecture is left in place, it will naturally continue to provide an environmental plus. The reefing concept has been used extensively in the Gulf of Mexico with the Rigs to Reefs programme. It provides an alternative to asset removal in which the asset is left at sea to continue supporting marine life as an artificial reef.
The most pressing environmental issue of our time is global warming. If our aim is environmental benefit, then surely making offshore infrastructure clean and safe and using the taxpayers’ money to fund green energy projects would be a much more beneficial option. Green energy has the huge environmental positive of CO2 and emissions reduction. It is unclear what benefits a clean seabed offers the environment. The North Sea contains around 20,000 wreck sites. What harm are they doing?
Profit – Economy
How can a decommissioning industry that produces nothing and uses billions 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 make profits, producing dividends and paying taxes. From any sustainable economy viewpoint I can’t see asset removal being a better option than green energy.
Point of Principle
NGOs have consistently said the oil and gas companies should clean up after themselves. The principle seems perfectly reasonable. Clearing up redundant industry architecture has got to be the starting point of any societal, environment and economic assessment. One would imagine that deciding to leave architecture in place would require a special set of circumstances. Those special circumstances present themselves in the case of offshore decommissioning.
What we can’t do is leave infrastructure in place and pocket the savings. That would result in the outrage the industry experienced with Brent Spar. Unlike Brent Spar, the green energy alternative offers the WWF, Greenpeace and others a much better option for the environment.
Ospar directives
Ospar is the mechanism by which governments cooperate to protect the marine environment of the North-East Atlantic.
As well intentioned as Ospar is, the directives are taking the nation to a very poor outcome by insisting, in most cases, on asset removal. They have to be challenged. We know so much more now than when the directives were agreed in 1998.
That challenge would come from a comparative sustainability assessment.
Undertake the people, planet and profit comparative sustainability assessment and bring the evidence to Ospar’s table. Ospar members should then be able to see green energy as having a much better outcome both for the UK and for the international community.
The Comparative Study
Who would undertake the study? Firstly, it can’t be oil and gas companies. No matter how the study was set up, the NGOs and the public would see funding by industry as biased. It has to be the government – Beis and the Oil and Gas Authority (OGA).
Once again I ask as a taxpayer, could Beis or the OGA demonstrate to the taxpayer that the current decommissioning plans will deliver a better outcome for the nation compared with the green energy alternative?
Please do not say we are following Ospar.
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