New deal required for onshore decommissioning

The UK energy sector has the opportunity to drive down the cost of onshore decommissioning but only if it can create facilities that combine dry-docks, extensive land and the ability to realise the full value of scrap metal. That is the main finding of research carried out with more than 30 senior executives in oil and gas production, the supply chain and related sectors over the last 12 months.

The results are published in a new white paper, launched today at the Offshore Decommissioning Conference in St Andrews by major port operator Peel Ports. The paper also argues that operators and government must make a shared commitment to the development of such facilities, without which supply chain and infrastructure providers will be unable to make the necessary, significant and long-term investments with confidence.

Critically, they must all be present to allow commercial and public partners in the decommissioning process to create strategic centres that will facilitate a more efficient production-line approach. Such an approach would also present the advantage of being able to co-locate the wide variety of specialisms required throughout decommissioning.

Gary Hodgson, Strategic Projects Director at Peel Ports, said: “The work that we have carried out shows there is a model for success, by combining the benefits of dry-docking, plentiful space and efficient use of scrap metal markets. If we get that right then it has the potential to transform the prospects for onshore decommissioning, reducing costs for the industry and the taxpayer, at the same time as benefiting our economy, the environment and worker safety. But we need to see a radical new ambition and commitment to create the facilities required to achieve all of these goals. That’s why we’re calling on the government, the energy sector and industry stakeholders to get round the table with infrastructure investors such as ourselves so we can deliver a new deal for decommissioning together.”

Energy industry analysts Wood Mackenzie report that there will be a taxpayers’ bill of around £24bn for the task of winding up oil and gas fields in the North Sea. 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.

For much of the UK continental shelf, Scottish ports and onshore facilities do already provide a range of benefits. However, there is competition from European ports and yards, particularly those with deep water access, which only a few Scottish ports can offer.

This research consisted of telephone and face-to-face interviews with experts from a wide range of sectors, including production, heavy lift, engineering and waste management.

The white paper describes three ‘moonshots’ that set out the level of ambition required.

  1. ‘Productionisation’ to replace the conventional project-by-project approach with more efficient batch working.
  2. Creating a ‘decom campus’ to co-locate the various specialisms involved in decommissioning and waste management.
  3. Long-term commitment from supply chain customers and government to create confidence for infrastructure investment.

The paper goes on to highlight that a combination of dry-dock, extensive development land and set-aside space for waste materials is essential for maximising financial benefits, safe operation and exportable expertise.

The full paper can be viewed HERE.

For more information on Hunterston PARC please click HERE.


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