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Shell seeks exemption to North Sea rules

SHISHMAREF, AK - JULY 09: The Chukchi sea is seen near Shishmaref, Alaska, on July 9, 2015. Earlier this year the Obama administration approved Shell Oil to begin drilling for oil in Arctic regions, including the Chukchi sea. Shishmaref has also had to build a seawall due to a decades-long problem with coastal erosion that has shrunk the size of the barrier island the town is built upon. The town was originally supposed to be relocated to a new site, though that plan has been put on hold. (Photo by Andrew Burton/Getty Images)©Getty

Royal Dutch Shell wants to leave behind steel and concrete structures as large as the Empire State Building when it abandons one of the biggest oil and gas fields in the North Sea.

The decommissioning plan for the Brent field, 115 miles north-east of the Shetland Islands, will require exemptions from international regulations, which demand that all traces of oil and gas production are removed after offshore operations end.

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Shell said on Monday it had concluded that the safety and environmental risks involved in removing much of the Brent infrastructure would far outweigh the benefits. It plans to submit its proposals for approval from the UK’s Department for Energy and Climate Change by the end of this year.

The case marks an important test of rules on what should happen to abandoned oil and gas fields in the North Sea as energy groups decommission operations in the coming decades as reserves run down.

Countries in the north-east Atlantic are bound by the Ospar regulations, agreed after the furore in the 1990s over Shell’s abortive plan to dump its Brent Spar oil storage facility in deep waters off the Scottish coast. However, exemptions from the “leave no trace” rules are allowed if companies can demonstrate that full removal of infrastructure would be too difficult or risky.

Shell said this was the case for hundreds of thousands of tonnes of concrete and steel subsea structures beneath its four Brent platforms.

North Sea decommissioning has climbed the industry agenda as the sharp fall in oil prices of the past two years has weakened the viability of a declining basin that was already among the most expensive places in the world to drill offshore.

But companies are looking for ways to lower the cost of closing their North Sea facilities — forecast to reach £30bn-£60bn by the 2050s — as lower prices curb profits.

Shell said it had consulted widely, including with environmental groups and the fishing industry, while drawing up its Brent plans and that a 60-day consultation would start once they were formally submitted.

The decommissioning project is being headed for Shell by Duncan Manning, a former Royal Marine who was involved in security planning for the 2012 London Olympics. He acknowledged there would be some risks to shipping and fisheries from leaving the structures in place. But these could be reduced by navigation beacons and other measures to warn vessels away from the area.

Environmental groups have also raised concerns over multiple “cells”, each the size of Nelson’s column, which surround the base of the main subsea structures and contain sediment, water and oil. Mr Manning said these would also be left in place but the oil would be siphoned off.

The “topside” of the oil and gas rigs would be removed and transported by the world’s biggest ship — 382m long and 124m wide — to be dismantled at a yard in Teesside. Shell is aiming for 97 per cent of the material to be recycled.

Three of its four Brent platforms have already ceased production and Shell has been working on capping the 154 wells in the field for the past 10 years. It expects the project to take another decade to complete.

At its peak in the 1990s, Brent accounted for 13 per cent of the UK’s oil and gas needs and Shell said the field had produced £20bn of revenues for the Treasury since it started producing in the 1970s.

More recently-installed platforms were designed with decommissioning in mind but Mr Manning said Brent was part of the first generation of North Sea facilities which were never intended for removal.

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BDC 318 : Jul 2024