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Virus crisis threatens to set back oil platform decommissioning

Virus crisis threatens to set back oil platform decommissioning

By Benoît PELEGRIN: July 12, 2020:

Oil companies are being forced to cut spending due to a fall in global oil prices, threatening funds earmarked to dismantle dated off-shore rigs, despite environmental risks.

A drastic drop in revenue caused by the coronavirus outbreak has seen majors such as Total, Royal Dutch Shell and BP having to cut or defer expenditure by billions of dollars.

Decommissioning platforms is not “one of their top priorities”, according to Sonya Boodoo, an analyst at Rystad Energy.

She told AFP the allocated budgets for such activities would likely decrease by at least 10 percent over the next two years.

Before the outbreak, the UK Oil and Gas industry association estimated that firms planned to dedicate £1.5 billion ($1.9 billion, 1.7 billion euros) per year up to 2027 on decommissioning infrastructure in the North Sea.

The bill would have been the largest for any country in the world, analysts note, as hundreds of installations need attention in the coming decades.

“Many of the UK’s platforms were built and designed during the 1970s,” Romana Adamcikova, an analyst at Wood Mackenzie, said in a report earlier this year.

“Little thought would have been given to how those structures would be removed at the end of their life.

“Now, the environmental impact of decommissioning has become a thorny issue.”

UK Oil and Gas has counted 1,630 wells set to be dismantled in the next decade in British waters — the equivalent of nearly one rig every two days and requiring more than 1.2 million tonnes of concrete and steel to be removed.

Since 1998, the Convention for the Protection of the Marine Environment of the North-East Atlantic, known as OSPAR, prohibits leaving in place — either wholly or in part — disused offshore installations.

But even after surface structures are removed, the seabed can still be littered with the industry’s detritus.

OSPAR also sets out a process for considering exemptions, known as “derogations”, to the prohibition which allows operators to ask to leave some structures in place in certain scenarios.

The aging Brent oil field, discovered in 1971 and located 180 kilometers northeast of the remote Shetland Islands, is a prime example of the controversy the issue can generate.

Brent is a benchmark for international crude oil prices that, after nearly 50 years of pumping, finds itself at the centre of contention within OSPAR, which comprises 15 individual governments as well as the 27-member European Union.

Shell, who has exploited the field since 1976, has said it wants to leave in place parts of four decommissioned platforms, which would include 40,000 cubic meters of sediment containing about 11,000 tonnes of oil.

The firm said it had explored potential re-use options, such as carbon dioxide storage and wind farms, but did not consider them “credible” due to the age and distance from shore of the Eiffel Tower-sized platforms, OSPAR said.

The operator considered there to be minimal environmental and safety legacy risks from leaving them in place, it added.

But the plans provoked a furious reaction from environmental campaigners. Greenpeace activists stormed two of the structures in October to display banners reading: “Clean up your mess, Shell!”

Meanwhile, Germany led an outcry at a special OSPAR meeting in the same month, branding the plan “absolutely unacceptable”.

It asked the company to at least set out proposals to clean the structures.

“They have to be cleaned, and that’s where there’s a big issue at the moment,” said Greenpeace’s David Santillo, a University of Exeter honorary research fellow.

“If you allow for the option to leave it in place, almost certainly it will stay in place,” he told AFP.

Britain has pushed to relax the rules but has seen strong opposition from the other countries.

The long-term fate of the Brent platforms remains “under consideration”, according to Britain’s Offshore Petroleum Regulator for Environment and Decommissioning (OPRED).

© 2020 AFP

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