Clarification needed after Brexit result, says BSRIA Published:  01 September, 2016 A recent BSRIA survey has highlighted a desire for clarification of the exit deal among members, with the anticipation of a short-term downturn until Article 50 of the Lisbon Treaty has been implemented. The survey showed Brexit has had a “sharply negative impact on an already slowing work stream”, with those consulting engineers surveyed expecting a general slowdown in investment until clearly defined plans for trade tariffs have been outlined, along with details of whether the UK will remain in the European Economic Area, and how labour availability from the EU may be impacted on. Other results from the survey suggest there may be a delay in infrastructure spending due to ‘government turmoil’, as well as signs that companies are less willing to move into new office space after the result, with a resulting impact on office construction and investments. Clair Prosser, BSRIA press officer, said: “One respondent commented: ‘EU legislation with respect to the building industry could be of benefit once the final negotiations of BREXIT are completed and could make the industry less constrained by influences from Brussels’.” Overall, the survey suggests the current uncertainty will reduce construction activity in the UK, with an “almost wholly negative” impact on the construction market until the exact nature of the exit is understood. Of particular concern to respondents was the future of EU energy policies and the Energy Performance of Buildings Directive (EPBD). Ms Prosser added: “There were more frank comments: ‘A loss of confidence of overseas investors – this has already occurred on some of the larger projects, though not those with German investors in particular’, but more encouraging feedback: ‘An increase in overseas investment due to value of the pound in apartments within London, maintaining the growth in apartment block construction’, finally: ‘difficult to say, we are in a funny limbo period at the moment, so don’t expect much to happen positively or negatively until we enact Article 50’.” The results were attained from supplementary questions asked of consulting engineers in the August BSRIA Business Bulletin questionnaire. Source link

It will end one of the UK’s most successful industries but decommissioning also offers a silver lining ©Brian Jobson / Alamy The Pioneering Spirit, a catamaran the length of five jumbo jets, will next year sidle up to Royal Dutch Shell’s Brent Delta oil platform in the North Sea, 115 miles north-east of the Shetland Islands. Its hulls will manoeuvre either side of the platform’s legs and it will grip on with 16 specially reinforced beams. Then in a single motion, it will lift the 24,000-tonne “topside” of the platform — accommodation block, helipad, drilling derrick and all — away from its legs, before carrying it back to shore to be dismantled. More On this topic IN The Big Read In doing so, the ship will have undertaken the heaviest lift ever attempted in the North Sea. More significantly it will also have begun what is expected to be a wave of decommissioning across the North Sea, as oil companies struggling with low prices shut down production and pack up one of the UK’s most successful industries of the past 50 years. Between now and the mid-2050s, around 470 platforms, 5,000 wells, 10,000km of pipelines and 40,000 concrete blocks will have to be removed from the North Sea. Decommissioning takes place regularly in other mature basins such as the Gulf of Mexico but nowhere in the oil industry will such a major clean-up have happened in such a short time. People who have spent their lives in the industry are going through what some call a “grieving process”. Mal Hunter, who works on the Kittiwake platform east of Aberdeen, says: “We hear about platforms getting shut down, never to produce again and people get deflated. But it [decommissioning] offers continued employment, so those that stay in work are pretty happy.” Many in the north of Scotland hope decommissioning can provide a lifeline for the local economy, which has been battered by the collapse in oil prices since mid-2014. It could even turn the area into a centre of excellence from where expertise and technology can be exported worldwide, say supporters. But if it goes badly, costs will escalate, vital pieces of infrastructure could be abandoned with oil left under the sea, and the UK taxpayer could be liable for tens of billions of pounds. “Decommissioning is a bittersweet pill,” says Matt Betts, UK vice-president at Halliburton, the world’s largest oil services company. “Nobody wants to have to close down platforms, but it is inevitable that they will have to.” Making a loss For the first time, the British offshore oil and gas industry is plugging and abandoning more wells than it drills. Production, which has fallen two-thirds since its peak 16 years ago of 4.5m barrels of oil equivalent a day, will stop in more fields than are being started up. “Decommissioning has happened before,” adds Mr Betts. “But we’ve never seen anything on the scale of what is about to happen in the North Sea.” The industry has always known that it would have to decommission ageing platforms, but the process has been accelerated by an oil price that has crashed from $115 in the summer of 2014 to around $50. This has left half of the operators in the North Sea — the most expensive place in the world to drill for oil — running at a loss, according to figures from Company Watch, which monitors corporate financial risk. These companies face a difficult decision: should they continue to produce oil and gas at a loss, hoping to make the money back if and when the price rebounds or do they pack up altogether, incurring millions of pounds of decommissioning costs in the process? It is prohibitively expensive to come back and start drilling once a well has been left, so any decision to leave is final. Once a company decides to abandon a facility, the hard work begins. It must first make the reservoir safe, a process that involves removing tonnes of steel from the well and sealing it up to make sure no oil or gas escapes. Only then can a company think about how to remove the structures that sit above the well, the process that Shell is about to undertake at Brent Delta. Companies calculate it will cost an average of £10m to plug and abandon a complex North Sea well. Removing the physical structures could be far more expensive. On Brent Delta it will cost several billion pounds, according to Shell, and take hundreds of workers years to complete. Oil and Gas UK, the industry body, suggests it will cost nearly £17bn over the next 10 years to remove around 80 platforms and their associated infrastructure. The estimated cost to complete the entire job through to the 2050s ranges between £30bn and £60bn, a figure that has risen on several occasions as the scale of the task has become clear. “We keep saying decommissioning spend is going to be higher and higher,” Davi Quintiere, a senior manager at Accenture’s energy practice, recently told a conference in Aberdeen. “We are terrible at forecasting and we will continue to be.” Part of the problem is that few companies have attempted it, especially in conditions like those in the North Sea, where waves can swell to 40m high. “It is difficult to decommission a platform,” says Mr Betts. “It is very difficult to do so in water as deep and bouncy as the North Sea.” Cost cutting Shell was due to remove the topside at Brent Delta — which rises 160m above sea level — this year. But difficulties in building the reinforced beams caused a delay, highlighting that the decommissioning industry remains in its infancy. Another brake on the process is the fact that companies make no financial return from taking apart a platform and so many are hesitant to make the decision. Operators are legally obliged to take down platforms at some stage but with the oil price fall putting pressure on balance