Celia Weston
EUROPE’S oil and gas companies face a $23- billion bill for disposing of offshore rigs and platforms in the wake of the resurgence of the political controversy which dogged the Brent Spar.
This is the key finding of a confidential report commissioned for the European Union’s environment and energy directives and discussed at a private meeting late last month. It details concerns about the fate of more than 1 600 offshore installations, most of which will end their life within 30 years.
Estimates in the 600-page report put costs at $23-billion for removing steel structures alone – excluding concrete base substructures and the disposal costs of floating production facilities. The study estimates a cash outlay of $890-million to $1-billion each year for 25 years.
Such reports are commonly used as a prelude to the European Commission preparing legislation. Difficulties for the exploration and production companies would increase if the EU decided it were politically expedient to legislate to limit the disposal methods companies are allowed to use.
The report says: “Typically oil and gas fields have an economic life of 20 to 40 years and it therefore follows that a much larger decommissioning programme will be required over the next decades, predicted to peak during the period 2010 to 2020.”
EU environment commissioner Ritt Bjerregaard, who intervened during the Brent Spar oil storage buoy controversy, wants to be seen to take a hard line. But information in the report will also be available to the Oslo/Paris commission (OsPar), which controls the rules for dumping and waste disposal at sea and includes all European countries.
Other EU commissioners are likely to back a call from Bjerregaard to get tough on oil companies through legislation only if OsPar’s decisions are seen as not hard-line enough.
The sea-based activity working group of OsPar was to consider the rules for decommissioning offshore installations last week. Its recommendations will be put to the full commission meeting next June.
The oil and gas industry will continue to argue that disposal at sea should not be ruled out as an option.