Hamish Scott, our Strategy Director, sets out the reasons why ‘business as usual’ is not an option for decommissioning.
With energy industry analysts Wood Mackenzie reporting that there will be a taxpayers’ bill of around £24bn for the task of winding up oil and gas fields in the North Sea, the decom sector is facing tough questions about the cost effectiveness of existing solutions. The OGA’s target for the industry to reduce decommissioning costs by 35% is seen as by some as ‘ambitious’ and by others as achievable. It may turn out to be both, although there are far too many uncertainties to predict this currently with any significant confidence.
While much of the decommissioning work will inevitably be concentrated on offshore activities, onshore activities have the potential to secure greater efficiency, better yield from scrap, and more jobs for UK workers. These include dismantling and demolition; cleaning and handling of hazardous waste; reuse, recycle and disposal of all wastes; and temporary storage of economically-viable by-products.
However, as the OGA’s Decommissioning Strategy notes, the UK industry is largely unfamiliar with large scale decommissioning projects. It is recognised that although much can be learned and transferred from other sectors and industries, there is work to do to create the right commercial cultures and conditions.
There is also competition from yards abroad, particularly those with deep water access, which only a few Scottish ports can offer. It is also the case that steel recycling facilities and other final disposal options are not located in Scotland, meaning the economics of storage and transport need to be carefully considered. Jobs for UK workers and the opportunity to add value to scrap are being lost.
One thing that is abundantly clear is that new solutions are required. Our work to understand the onshore decommissioning landscape has explored what is required to create and implement a realistic means of securing significant cost reductions and related benefits in safety, the environment and UK plc’s export capabilities.
You can read the full details in our white paper HERE.
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