Letter: A decommissioning industry up for grabs
27 September 2016
Sir,
North Sea oil and gas is in decline. It has entered the decommissioning phase and once the wells are closed there will be no going back. There is little sign of what was speculated to be a second oil boom back in 2014.
However, there is a potential silver lining. According to Oil and Gas UK, it forecasts
total decommissioning expenditure on the UK Continental Shelf will reach £16.9 billion
over the next decade (2015-
These decommissioning works could run until mid 2050’s. That’s a significant industry up for grabs, and one that will align with the skills of those that are currently facing an uncertain future.
In terms of Scotland’s capability for taking on this kind of work McGinley.co.uk have stated that the Government’s failure to build an effective decommissioning strategy in the UK could see work worth up to £50 billion being lost to foreign competitors with 300 platforms awaiting decommissioning and a 4,000 wells needing to be plugged and abandoned.
If left to free market conditions this work will simply go to the cheapest contractor or to countries like Norway that already have a strategy for decommissioning.
Now here’s the paradox. According to the Financial Times there is a risk the UK taxpayer
could foot up to half the decommissioning costs through tax rebates based on current
estimates. This could equate to something that is comparable to replacing the UK’s
Trident submarine fleet. The concern is the glittering prize, the decommissioning
work, will sail away and bypass Scotland and head off to non-
We only need to look across Broadbay to see a modest example. In Scotland we could see the worst of all worlds, none of the benefits of jobs and investment, and the risk of being left with the hangover of a taxpayers bill long after the oil companies have left the North Sea party. Surely this can’t be right.
More action needs to taken by the Scottish Government, and by Westminster, to ensure that Scotland does not lose out on what will become a significant industry. The action is needed now. More needs to be done to develop a competitive decommissioning capability that can win business and stem lucrative contracts going overseas.
According to Offshore Energy Today, the GMB and Unite unions appear to be frustrated with the lack of engagement following calls for meetings with Scotland’s First Minister in relation to contacts going overseas. Both the Scottish and UK Governments need to be held to account otherwise we will continue to see decommissioning contracts going overseas. We are truly off to a slow start and on our way to a spectacular missed opportunity.
The Scottish and UK Governments must wake up and do more, intervene and give assurances that they will work with the oil and gas industry to deliver a competitive decommissioning strategy. Only when we see decommissioning work going to Scottish yards will we know that they have been successful.
Innis Montgomery
6 Sheshader
Isle of Lewis