Oil and gas operators are required to dismantle facilities at the end of their useful life under a marine life convention known as Ospar, signed by 15 countries and the European Union. This includes the destruction of structures above and below water; permanent sealing of wells with cement plugs; and flush out buried pipes.
So far, this kind of cleanup hasn’t happened on the scale it should have, according to Follow The Money mapping.
Existing data suggests that many wells are already out of service, with around 10% of oil and gas rigs and a fifth of pipelines no longer active. But with records scattered across different agencies, companies, governments and regulators, no one has the full picture. Definitions of “disused” differ, and many pipelines recorded as “retired” are actually still intact, further complicating the picture.
Hoping to gain clarity, the Netherlands tightened reporting rules in January 2022 to require operators to notify authorities within four weeks of a well being inactive. Before that, wells could sit idle for years without a report being filed, according to the Dutch Ministry of Economic Affairs and Climate. The ministry also claims that it has little visibility on the infrastructure that is about to be removed.
“[We have] no insight into which factories will be taken out of service this year or in the years to come, it depends, for example, on the duration of production,” a ministry spokesperson said in an email.
The Dutch regulator, the State Supervision of Mines, says the number of decommissioned wells is “increasing day by day”. “We don’t keep a current count,” a spokesperson for the regulator said.
The lack of data comes as no surprise to Jip van Zoonen, consultant and project manager for North Sea permits at Rijkswaterstaat, the Dutch executive agency of the Ministry of Infrastructure and Water Management. Cable and pipeline registration requirements were only introduced 20 years ago, long after industry began mining the seabed.
“Cables have been laid in the Dutch part of the North Sea since the mid-19th century, but not all of them are fully recorded,” van Zoonen said. “People don’t always know exactly where they all are and who they belong to.”
Even though the clean-up work is getting bigger day by day, many seabed installations have not yet figured into the decommissioning plans of the various North Sea countries, according to Follow The Money.
What is clear is that taxpayers will pay a large part of the bill. In the Netherlands, the government bears around 73% of the cleaning costs. In Norway the share is 78% and in the UK it is 40-75%, depending on the tax agreements with the operators.
In 2021, the European Commission estimated the combined costs of clean-up work in the North Sea at 30 billioneuros between 2020-30. The cost breaks down as follows:
Even after 2030, countless other wells, platforms and facilities will still need to be decommissioned, increasing total costs.
Even these numbers could be a significant underestimate. A study published in March 2021 shows that clean-up costs in the North Sea are on average 76% higher than initial estimates.
“The costs can be huge,” said Chris Lehouck, managing director of Deco Subsea, one of Belgium’s largest cleaning companies. “Sometimes there are nasty surprises, like underwater structures covered in tough cauliflower or a thick crust of seashells.”
Reasons to delay
With such high costs, governments and businesses have every interest in postponing the task of dismantling infrastructure for as long as possible.
“It’s true that people don’t always have a big appetite for teardown,” Lehouck said. “It’s a down payment on a death warrant: nobody likes to do that. But we have seen in recent years that efforts are increasing.
In the Netherlands, operators must submit a phase-out plan one year after an installation stops production. But appsof exemptions filed with the Ministry of Economy and Climate show that operators can drag out the process for years by arguing that it would be more economical to wait for the opportunity to dismantle several platforms at once.
Operators can also obtain exemptions by indicating that they might want to reuse a facility in the future, for example by repurposing pipelines to transport hydrogen or by using gas or oil fields to store CO2 captured by industry.
Last year, the Netherlands granted the French major TotalEnergies; London-based Neptune Energy; Dutch oil and gas producer ONE-Dyas; and Abu Dhabi energy company TAQA is extending its decommissioning obligations to explore CO2 storage options, among other activities, according to a Follow The Money review of official documents. Six projects for CO2 storage are currently underway in the UK, involving companies such as BP, Equinor and Harbor Energy. The UK’s North Sea Transition Authority (NSTA) says another 26 such projects are planned.
“NSTA is committed to helping industry make decommissioning and repurposing an essential part of the UK’s energy transition,” said Pauline Innes, Head of Decommissioning at NSTA. “Repurposing not only makes financial and economic sense, but is also good for the environment.”
The NSTA and oil companies have identified 100 pipelines that could potentially be used to serve a low-carbon economy. Repurposing just half of these would save the equivalent of £7billion that would otherwise have to be spent on new pipelines, and an additional sum in decommissioning costs, according to the NSTA.
Follow The Money calculated that delaying dismantling indefinitely would save oil companies a total of €10-15 billion in cleanup debt shared between the UK, Norway and the Netherlands. The figure represents a fraction of what governments might still have to pay, but remains a significant windfall for operators with heavy exposure to rigs and wells, such as BP, Equinor, Shell, TotalEnergies and Harbor Energy in the UK.
Data reviewed by Follow The Money shows that Shell does not hold many abandoned rigs, but operates most of the idle pipelines. BP and Equinor also have dormant infrastructure and are exploring ways to use it to store CO2 or for hydrogen.
Leaving obsolete infrastructure in place offers a double benefit to the oil industry: companies avoid cleanup costs and secure a central role in the offshore energy transition that could be worth billions in future profits and subsidies.
Environmental risks
If the costs of depollution are difficult to estimate with certainty, the extent of the environmental risks is even more difficult to quantify.
When inactive wells aren’t properly plugged, they can leak natural gas, which is composed primarily of methane, a potent climate pollutant. Poorly cleaned pipelines can leak residue into the sea.
Some scientists argue that it would be less damaging to leave most drilling infrastructure standing. The giant legs of the oil rigs serve as artificial reefs, encrusted with beds of mussels and oysters, while the superstructures provide secluded breeding grounds for seabirds. Digging them up, cutting them up and taking them away would only further disrupt seabed life, the argument goes.
Filip Volckaert, professor of evolutionary and marine biology at the Belgian university KU Leuven, rejects this argument, saying that the long-term damage caused by letting the infrastructure decay outweighs any temporary damage from dismantling the structures. platforms.
“Leaving everything behind in the sea creates much greater ecological pressure,” Volckaert said. “Even if some species benefit from the structures left behind… in the end, we end up with a lower quality biodiversity.”
The Dutch regulator SSM sometimes orders the withdrawal of an entire installation for environmental reasons. For example, in one case, the regulator found that Abu Dhabi’s TAQA had failed to demonstrate that there would be no “undesirable adverse environmental risks” from leaving the pipelines in place. Additionally, the pipelines were located in an area where there were many “sand waves,” which could expose pipes and snag fishing nets, the regulator found.
Test cases
While Brent Spar drew global attention to the plight of redundant North Sea infrastructure nearly two decades ago, Shell is now providing a test case for future policy.
The company is asking the UK government for permission to leave three giant concrete supports known as Brent Bravo, Brent Charlie and Brent Delta, each weighing over 300,000 tonnes, on the seabed. Once again, Greenpeace opposes Shell’s plan, arguing that the Eiffel Tower-sized structures still contain some 11,000 tons of oil that will seep into the sea as the steel legs and foundations concrete will erode.
Shell concluded that removing the structures and collecting, transporting and disposing of the oil would cause more damage than the “minimal” impact of leaving them in place. The company says the oil is encased in concrete that will take “centuries” to degrade.
“We came to the conclusion that leaving the oil in place would be the right thing to do,” said Duncan Manning, Shell’s asset manager for the Brent field. 2017.
Similarly, in Norway, Equinor plans to leave all the concrete from the so-called Statfjord A structure — totaling more than 300,000 tons of material — on the seabed.
“We understand that Greenpeace is concerned about the possible environmental consequences, and so are we,” said Equinor spokesperson Gisle Ledel Johannessen. “We expect this to take place responsibly and in accordance with the requirements of the authorities.”
The Ospar countries are to decide the fate of Shell’s Brent structures next year, setting an important precedent for the future of the basin.
The UK, which owns the largest share of oil and gas installations in the North Sea, is keen to take advantage of Ospar’s provisions that allow retired assets to remain in place in exceptional circumstances, considering the future roles of platforms. forms in carbon capture or other projects.
Belgium and Germany, which have a fraction of the UK’s exposure, want to stick to the spirit of the deal and see all outdated structures properly removed.
Belgian North Sea Minister Vincent Van Quickenborne said countries had been too quick to grant a waiver for the dismantling of facilities containing huge amounts of concrete, metal, plastic, oils and other harmful substances that will eventually seep into the sea. The space occupied by such platforms could be put to better use, he argued.
“The arguments of cost and feasibility are made too quickly,” Van Quickenborne told the research team led by Follow The Money. “That shouldn’t be an argument in this case.”
