Virus crisis threat to oil platform removal decommissioning

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. (AFP)
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Updated 09 July 2020

Virus crisis threat to oil platform removal decommissioning

  • Environmentalists fear that companies will seek to leave structures in place

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

A drastic drop in revenue caused by the coronavirus outbreak has forced majors such as Total, Royal Dutch Shell and BP cutting or defering 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) 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 will 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 tons 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 center 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 tons 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.

Greenpeace’s David Santillo, a University of Exeter honorary research fellow. said: “If you allow for the option to leave it in place, almost certainly it will stay in place.”


German economy to shrink by 5.2% this year, grow by 5.1% next year

Updated 22 September 2020

German economy to shrink by 5.2% this year, grow by 5.1% next year

  • The number of people out of work is seen rising to 2.7 million this year from 2.3 million in 2019
  • The Ifo institute cautioned that there was an unusually high degree of uncertainty attached to the forecasts

BERLIN: Germany’s Ifo institute on Tuesday said Europe’s largest economy would likely shrink by 5.2 percent this year, raising its previous estimate for a 6.7 percent drop, in the latest sign the damage caused by the COVID-19 pandemic could be smaller than initially feared.
“The decline in the second quarter and the recovery are currently developing more favorably than we had expected,” Ifo chief economist Timo Wollmershaeuser said.
For 2021, Ifo cut its economic forecast for Germany to 5.1 percent growth from its previous estimate of 6.4 percent. It expects the economy to expand by 1.7 percent in 2022.
The number of people out of work is seen rising to 2.7 million this year from 2.3 million in 2019, before edging down to 2.6 million in 2021 and then to 2.5 million in 2022.
That would translate into a jump in the unemployment rate to 5.9 percent this year from 5.0 percent last year. The rate would then drop to 5.7 percent percent in 2021 and 5.5 percent in 2022, Ifo said.
The Ifo institute cautioned that there was an unusually high degree of uncertainty attached to the forecasts. It pointed to the rising number of coronavirus infections, the risk of a disorderly Brexit and unresolved trade disputes.