A long-awaited UK Government paper into oil and gas decommissioning lacks clarity on certain key areas, a trade body has said.
Westminster has published its response to a “call for evidence” on decommissioning, a consultation first mentioned by former Chancellor Philip Hammond in October 2018 and officially launched in May 2019.
Decom North Sea welcomed the publication, which can be read here, however interim managing director Will Rowley highlighted that issues around Covid-19 and the energy transition “weren’t really reflected”.
“I’m encouraged, but life has moved on quite a lot”, he said.
“It was over 14/15 months to get that response out from when it first went in. All the pandemic stuff wasn’t really reflected in here, and even the context of energy transition isn’t really reflected in here either.”
Mr Rowley referred to the paper noting the importance of a thriving decom market, but failing to acknowledge or suggest action to rekindle the sector in light of the pandemic, as operators have slashed spending forecasts by £500m over 2020 and 2021.
Such deferrals have repeatedly led to warnings about a loss of expertise in the supply chain.
Mr Rowley referred to the hundreds of suspended wells in the UK sector needing fully plugged and abandoned as an example that he would have liked to see the paper address.
“The obligation or cost doesn’t go away and forcing the activity to an earlier schedule won’t impact exploration or development, but will save jobs, businesses and more importantly the expertise needed to support export activity”, he said.
The 36-page document makes two references to coronavirus.
It said: “In light of the coronavirus pandemic we reviewed the findings in this response to ensure they were still relevant and concluded that they were.”
Exports
The UK Government also recently announced its decision to end support for international oil and gas projects – except for decommissioning work – but the paper offered “no clarity on how this will work on a practical level” as the sector seeks to export its skills and technology.
Groups such as DNS, Scottish Enterprise and the Department for International Trade are trying to figure out “what that means” for decommissioning in practise.
He said: “There’s a number of issues around the expertise, the resource, the timing, that still need to be worked out.
“We are engaged with them, so they will be worked out, but I guess that’s one area where a little bit of extra thought and relationship between what happened in the last six months and this report, a bit of joined up thinking would have probably helped a little bit.”
The paper sets out five actions for the industry to take: improving transparency of UK work available, setting performance indicators to benchmark good practice, creating a plan to encourage the trialing and adoption of new tech, improve market intelligence on global opportunities, and set out an export plan to target key international markets.
MER UK taskforces have been given six months to report back on the first four, while the Department of International Trade has been given a 12 month window for the fifth.
Mr Rowley said DNS and the OGA have already been working hard on issues such as improving transparency.
“Quite a few of these, within a matter of weeks, will have been ticked or mainly ticked so that’s really encouraging”, he said.
“The OGA, when this was put in, they saw some of the suggestions, they started work on it.”