Few people have ever seen them, except perhaps from a plane. Yet these huge, remote structures have stood planted in the North Sea, buffeted for decades by wind and wave, pumping cash into the UK economy. They are the hundreds of oil and gas platforms which churn out the equivalent of 2.8 million barrels of oil per day. But there is a strong likelihood that the North Sea will within a generation return to the unbroken grey expanse of the mid-1960s, when the first offshore rig struck gas. If the government’s predictions are accurate, most of the rigs will have tumbled by 2035.
Approximately 470 installations are to be decommissioned, including up to 14,000km of pipelines, 15 onshore terminals and around 5,000 wells. Sad though this may be for oil managers and rig workers, it is good news for one group of entrepreneurs — the decommissioning crews who will dismantle the kit and the companies that will treat and sell the hundreds of thousands of tonnes of scrap metal brought ashore.
Able UK on Teesside, the company that controversially accepted a contract to break up toxic US naval ‘ghost’ ships in 2003, has been one of the first to step forward. A year ago it set to work on the first scrap steel brought in from the largest oil platform toppled so far, a 38,000 tonne structure that originally stood in the North West Hutton field, northeast of the Shetlands. Owned by BP, this huge platform, installed in 1981 and productive until 2003, was one and a quarter times the height of the Gherkin building in the City of London. The portion above the surface — known as topsides — was demolished last year, while most of the undersea legs, known as the jacket, were pulled out this summer. The next platforms to come down after North West Hutton are likely to be Indefatigable, off the Norfolk coast, and Miller, a BP field 270km northeast of Aberdeen.
North Sea oil has been a 40-year lesson in the art of the impossible. For people born in the 1960s, it seems always to have been with us. But those born a generation earlier know different. Oil from the North Sea was once regarded as a myth in the same way that global warming and its antidotes have been in certain quarters in recent times. ‘People thought it couldn’t possibly happen, then when things were at their worst, at the time of the IMF loan, oil suddenly appeared,’ recalls Dr Hugo Manson, an oral historian at Aberdeen University. ‘People had been taught by geologists that there was no oil in the North Sea.’
The ferocious weather conditions to be endured by oilmen made discovery and commercial exploitation look even less likely. Environmental groups opposed the project, and in 1975, the year oil was first pumped from Forties, the first major field to come onstream, the Times reported the lament of North Sea fishermen: ‘In 25 years the oil will be gone and will the fish have survived at all?’ Yet it was overfishing during that period, not oil, that depleted cod stocks.
So the pessimists were wrong about North Sea oil. Instead of coming ashore empty handed, prospectors produced a glut of wealth for shareholders, oil company directors and Her Majesty’s Treasury. Just ten years after the first oil was pumped out, the government was collecting £12 billion in tax revenues in a single year, though the tax rate was set much lower than that of many other oil-producing countries. For 2008-09, rocketing oil prices still brought a tax haul of £12.9 billion, plus a major chunk of corporation tax from the many companies involved.
But those record takings conceal a changing picture. The end of North Sea oil and gas really does seem to be in sight. Though new fields have been coming onstream — notably Curlew C, run by Shell, and Maria, run by BG, the demerged exploration arm of British Gas — it is a decade since North Sea production peaked. Output has dropped this year, and the government has been quietly charting the course of the industry’s decline. Data from the trade body Oil and Gas UK shows that decommissioning will be at its busiest in 2020; government data also indicates that 22 steel and concrete installations will be uprooted in that year, alongside seven sub-sea installations (mainly pipelines) and other structures. According to oil and gas consultancy Wood Mackenzie, the current cost of North Sea decommissioning in the UK continental shelf will run to $42 billion overall until 2031.
And not many tears will be shed by other UK taxpayers as the industry embarks on its long clean-up. The risks taken by daring entrepreneurs and engineers in one of the world’s most dangerous industries are generally considered to have produced little visible benefit, despite total tax inflows of well over £200 billion since the first oil came ashore. ‘It’s difficult to know where the money went. It made us richer but it’s difficult to know what effect it had on spending and what would have happened without it,’ says Carl Emerson of the Institute of Fiscal Studies.
Meanwhile, it will take another major push to get the next generation of North Sea ventures underway — not least because both strands of new development, offshore wind power and sub-sea carbon storage, were thought only a few years ago to be as unlikely and impractical as the extraction of the oil itself once was. The idea of producing electricity from windmills several miles out to sea was passed over as too complicated and inefficient, while plans to bury carbon dioxide generated by onshore coal-fired power stations as a response to global warming seemed as plausible as a dry washing machine.
Yet engineers have been devising all sorts of methods of carbon capture and storage (CCS), and there is no reason why the process cannot become commercially viable. Indeed, the technology was originally driven by oil and gas majors in the 1970s, when petroleum prices hit then-record highs: the likes of BP and Shell, desperate to maximise output, pumped high-pressure CO2 into ageing fields, thereby flushing out an extra few thousand valuable barrels of heavy oil.
In much the same way, specialist companies are now seeking ways to store CO2 underground or in concrete bunkers — such as the foundation supports of decommissioned rigs. CO2 can be pumped into anything from depleted oil fields to deep ocean channels. The challenge is to ensure that ‘captured’ carbon can be stored securely forever — that it won’t find ways to escape again. CO2 tends to force itself upward toward areas of lower atmospheric pressure — but so far the evidence augurs well. Norwegian energy giant Statoil began storing CO2 at the Sleipner field on the Norwegian continental shelf in 1996. So far, it has stashed away 10 million tonnes of it, equivalent to the amount emitted every two years by all Norwegian cars. Statoil says that seismic monitoring so far shows ‘no sign’ of leakage.
If CCS becomes a proven, workable way of storing rogue gases, the world will breathe a little easier. And a host of British companies, many in and around the old oil capital of Aberdeen, will benefit from the new industry. But the irony is that access into depleted oil fields that might be used for storage may turn out to have been blocked in the decommissioning process. Ian Phillips, a CCS specialist and former oilman, says some of the most suitable reservoirs could be plugged, and much useful infrastructure dismantled, before ministers make up their mind how to handle coal-fired emissions. ‘No one will be injecting carbon dioxide into the stores on a big scale before 2020,’ he points out. By that time, he suggests, it could be too late.
So there are some big uncertainties to be addressed — but entrepreneurs are likely to find ways both to pump carbon back beneath the waves and to build offshore turbines, in large numbers, that are efficient enough to justify the effort. If nothing else, the story of North Sea oil testifies to brilliant, inventive engineering and shrewd long-term investment — and just how wrong scaremongers can be. Maybe today they underestimate the potential of those same skills to dig us out of the climate crisis.
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