This post first appeared on Guardian Sustainable Business.
Such was the shock of the oil price’s precipitous decline in recent months that tongues were set swiftly wagging about what the explanation could be. Killing off electric vehicles, US shale producers, or Iran’s and Russia’s economies, were all put forward as the real reason behind OPEC’s public explanation that keeping the taps open and so depressing prices is about protecting market share.
But, regardless of what’s behind it, one consequence has been big cuts in North Sea oil exploration and the accelerated decommissioning of related infrastructure, as demonstrated by Shell’s announcement that they are to begin decommissioning the Brent Delta platform.
Greener decommissioning options also save money
Whilst this is obviously bad news for Aberdeen and the other centres of the extraction economy, decommissioning also brings opportunities, and Shell’s chairman has been talking up the potential for the UK to be a world leader in the sector. And, although oil and gas is not usually a sector associated with positive environmental stories, decommissioning is a chance to buck the trend.
Recent research by Green Alliance looked at how to make the most of high value circular economy opportunities for some of Scotland’s major economic sectors, including oil and gas. We identified three routes to better environmental outcomes and cost savings. Given that decommissioning may cost £14.6 billion over the next decade and 60 per cent of this will ultimately be borne by the public purse through tax relief, getting better economic and environmental value matters.
Ways to get more value from old infrastructure
The least ambitious thing that could be done is better recycling. This is already the most likely pathway for materials taken from old rigs. There are ways to wring more value from recycled materials: for instance, a hand-held XRF scanner, an under-deployed technology, allows metals to be separated into different alloy grades. The shipping company Maersk is ahead of the game and has shown that marketing individual alloys can increase recycling revenues by ten per cent.
Better than recycling, from both a financial and environmental perspective, would be reuse. Compared to other markets, especially the Gulf of Mexico and onshore US oil and gas extraction, reuse of North Sea equipment is strikingly low. This is despite the fact that there are good markets for motors, engines, valves and other industrial equipment in other sectors and overseas markets.
The difficulty with expanding this market is a lack of information: buyers need a good inventory of what equipment is available when, and what condition it’s in. Allowing reuse companies to assess rigs prior to decommissioning, to enable easier purchase and marketing of reusable equipment, could overcome this barrier.
Reusing pipelines for CCS is a major opportunity
But the most ambitious treatment of old rig infrastructure would be not to remove it at all but to repurpose it as part of a new carbon capture and storage (CCS) network. This would lower the cost of decommissioning and help to get CCS up and running sooner and more cost effectively. Shell’s proposed Peterhead CCS project already incorporates pipeline reuse, showing that it is a viable option. To deliver this effectively requires masterplanning of the links between potential sources and sinks, and collaboration across the oil and gas sector around the shared use of infrastructure.
These examples show how ambitious governments can help: better deployment of existing technology, improved information sharing, co-ordinated infrastructure planning and innovation support. The Scottish government has a good track record, recently enhanced by the launch of the Scottish Institute of Remanufacture, the first of its kind in Europe.
The same can’t be said for the UK government although, of the actions identified above, better use of technology and information sharing should be acceptable to any government. Co-ordinating planning and funding new technology development certainly require a greater appetite for intervention. All of these are necessary for a step change. This is the challenge and the opportunity for whoever is in power after May.
