The process of decommissioning will be long and complex. It will require the removal of 470 installations, more than 10,000km of pipelines, 5,000 wells, innumerable drill cuttings and 15 onshore terminals – all in some of the most difficult climatic conditions faced by any industry anywhere in the world.
Decommissioning the North Sea will be one of the largest and most challenging infrastructure projects of the next few decades. Success in that venture will depend upon the close collaboration of Government and the industry.
One of the biggest challenges for decommissioning will be meeting the demand for skilled jobs. There is already a well documented shortage of qualified workers in the Oil and Gas sector, with pay inflation a clear concern for many businesses in the industry. In decommissioning, which tends to draw less attention than activities such as exploration, this problem may be exacerbated.
Meeting that challenge through educational policy is occasionally criticised as a long-term solution to a short-term problem. But, in truth, without making these changes in our education system – by increasing the focus on STEM subjects and by getting businesses more involved in colleges and universities – that short term problem will persist through the decades.
In decommissioning, we are talking about a project whose timetable stretches out over the next 30 years. It is absolutely right that we look to education as a means of meeting the requirement for skilled and qualified workers.
Beyond education, the Government will also have a clear role in maintaining the environmental credibility of the decommissioning process. Tackling pre-1999 installations, which may involve substantial quantities of material being deposited at sea, has the potential to reinvigorate public interest in this process. The sector will undoubtedly be held to the highest standards of environmental responsibility and the Government has a vital role to play in steering the industry through that scrutiny.
Finally, but perhaps most importantly, there is the financial support that the Government will bring to the project. HMRC’s £20bn commitment to decommissioning means that 60% of the costs will be shouldered by the government of the day. Parties of all spectrums have lent their support to that figure, but I would caution that the ability of any government to meet that obligation would inevitably be placed in doubt by a shrinkage of the tax base to less than 8.5% of its current total, in the event of Scotland leaving the UK.
As shadow energy minister, I was supportive of the announcement in October of the first ‘decommissioning relief deed’.
It is right that the Government recognises that its offer of financial support must come with the maximum assurance for investors. This is a requirement not just for the project of decommissioning, but for ensuring the health of exploration and extraction in the North Sea by providing the sector with certainty about the terminal phase of such projects.
These points touch on the obligation for Governments and the industry to cooperate, but they also point to real opportunities. Concerted collaboration, one of the key themes of Sir Ian Wood’s interim report on oil and gas in the North Sea, has the opportunity to drive down costs and increase efficiency.
If we can meet the challenge of decommissioning successfully, we will have built a new, highly skilled industry in which the UK can truly excel and take the global lead.
Tom Greatrex is MP for Rutherglen & Hamilton West and the shadow energy minister
Recommended for you
