HC Deb 13 May 1998 vol 312 cc491-6

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Clelland.]

11.12 pm
Mr. Anthony D. Wright

When Greenpeace and other environmental groups successfully mobilised public opinion against the deep water disposal of the Brent Spar offshore platform, they presented the oil and gas industry with a major costly dilemma—a situation which is likely to recur if recent press reports are to be believed. Brent Spar is a massive floating storage buoy, with six floating storage tanks holding up to 50,000 metric tonnes of oil. It comprises 7,000 metric tonnes of concrete and 7,500 metric tonnes of steel. At 137 m in height, it dwarfs Big Ben's tower, which is a mere 95.7 m. When it was taken out of operation, the tanks were drained of oil and sea water was pumped in, leaving a residue of oily sludge that could not be pumped into the ocean. This sludge contains various contaminants, including hydrocarbons, polychlorinated biphenyls and various heavy metals

On the basis of cost and safety, deep-sea disposal was the preferred option for the Brent Spar. Although this decision was approved by the Department of Trade and Industry on 20 December 1994, the balance of the environmental argument—in the public's mind at least—was strongly against that method of disposal. Shell—facing the threat of consumer boycotts and direct action in continental Europe—decided, at the eleventh hour, to seek to dispose of the structure on land, although both the company and the then UK Government believed that deep-sea disposal offered the best practicable environmental option.

The cost of on-land disposal of Brent Spar is likely to be about £23 million to £26 million. The disposal will also be very labour-intensive, involving complex and potentially hazardous operations. Risk analysis suggests that the probability of fatal injury in on-land disposal is six times greater than it is in deep-water disposal. It is also estimated that using even the cheaper, deep-water method to dispose of Brent Spar would have cost £17 million. With about 150 offshore platforms in the southern North sea alone, oil and gas companies, with the Government, face a costly and politically awkward time in decommissioning oil and gas platforms.

There is, however, a third way in which to deal with the problem: recommissioning, or reuse, of platforms. In this debate, I should like to deal with that third, more sustainable option.

Dr. Ian Gibson (Norwich, North)

Does my hon. Friend realise that reports in the press state that 60 more oil rigs are likely to be disposed of in the sea? Does he agree that that would be unacceptable, and that finding alternative methods of destroying or recommissioning oil rigs is important not only to the environmental lobby, but to the interests of the British people?

Mr. Wright

I certainly agree with my hon. Friend that that problem will have to be faced. However, the difficulty is one of cost. The system proposed by Versatruss could be used to deal with most of those North sea rigs. The Versatruss system will certainly be an option open to companies in dealing with their rigs.

Although the third option would not be appropriate in dealing with all offshore platforms, I firmly believe that recommissioning will make a valuable contribution to our economy and greatly benefit the environment. However, I should explain what recommissioning entails, and how the groundwork for the future of that innovative idea is being developed in my constituency of Great Yarmouth.

The objective of recommissioning is to extend the life of platforms by refitting and reuse, reducing the cost of decommissioning and thereby increasing the efficiency of oil and gas fields. Currently, an operator is more likely to deem a field to be uneconomic not when it is dry, but when the company believes that its pounds would be better spent elsewhere. "Economic" therefore has no common definition. However, when reassessed, fields that did not seem to be profitable can often be given a new lease of life, especially with the advent of new technologies enabling reuse of platforms.

The process is being developed by the industry under the generic name of "mature asset management". Recommissioning could mean that there is not a cost burden, but residual value at the end of the process, and that a liability thus becomes an asset.

Recommissioning could have a great impact on the industry. It is envisaged that operators may decide to move platforms from one field to another—by, for example, using the Versatruss removal method and recommissioning—as a part of planned asset management.

Briefly, the Versatruss removal method involves the use of a catamaran-style technology, and has been used successfully to move platforms round the Gulf of Mexico. Versatruss is an American company that has made the wise decision of locating its United Kingdom operation in Great Yarmouth.

The body responsible for much of the innovative thinking on recommissioning is the Great Yarmouth Recommissioning Partnership, which was formed because of Yarmouth's failure to attract, in early 1996, the decommissioning of Shell's Leman BK platform. In response to that failure, in September 1996, the offshore sector of the Great Yarmouth chamber of commerce held a conference of local businesses to discuss the matter.

The conference, and subsequent workshops, consolidated the opinions and ideas of local businesses, and set out to establish how to redress Great Yarmouth's late start and initial failure in the decommissioning process. An action plan was formulated, and a steering forum—involving representatives of Amoco UK Exploration, UK Waste, AMEC Process and Energy, and Datadrum Marketing—was established. Members of the university of East Anglia's centre for environmental and risk management were co-opted on to the forum as independent experts.

On 12 June 1997, the steering group introduced the concept of Great Yarmouth as a centre of excellence for recommissioning and the energy industry, and the Great Yarmouth Recommissioning Partnership was born. That partnership offers solutions that are quicker, cheaper and safer than those of any of its competitors. The partnership's report, which goes by the title "Sustain the Flame", sums up the essence of the scheme as the four Rs: remove, recommission, reuse and recycle. It has become known as the Great Yarmouth solution.

The industry is beginning to agree that decommissioning alone is not the answer. Recommissioning and resale can give value to an asset, which, until the Great Yarmouth solution came along, had been considered a liability. With 150 structures in the southern North sea alone, the prize for Great Yarmouth could be multi-million pound contracts to carry out the recommissioning work, with all that that means for jobs in a town with a high level of unemployment. Furthermore, turning this innovative scheme into action would greatly boost Great Yarmouth's case for an outer harbour, even though the scheme is not dependent on its construction. In fact, it is even possible that a section of a decommissioned platform could form the basic structure of an outer harbour. That is another imaginative example of the reuse of offshore technology.

The viability of the scheme has been greatly enhanced by the recommendation the European Commission made in February this year, which states that oil and gas platforms should no longer be dumped at sea. The Commission goes on to say that all except a small number of the 600 or so installations in European waters can be safely and economically removed and taken to land for recycling and safe disposal. The Commission concludes that rules should, therefore, be based on the principle of prohibiting the disposal of platforms at sea. The European Council will be asked to confirm that that is the policy which the Commission should put forward on behalf of the European Union in talks at the all-important Ospar convention, which will shortly determine future policy in this sphere.

As I said, a significant number of offshore platforms are located in the southern North sea. That means that the port of Great Yarmouth is ideally situated to take on the specialised work involved in the recommissioning process. Indeed, EC waste legislation is driven by the proximity principle, which supports the use of the nearest appropriate facility. There are obvious reasons why that principle is important in this particular application, as hon. Members with sea-going experience or knowledge of the North sea will understand. Movement of these relatively large structures requires good weather conditions, and, to limit the risk to life and limb from rough seas and high winds, it is important that the minimum time is spent in relocation.

Of course, the long-term use of non-renewable fossil fuels is not necessarily secure, as it does not solve the problem of climate change, which is of great concern to a seaside town such as Great Yarmouth. However, the recommissioning example in Great Yarmouth demonstrates that the oil and gas industry, academics and the Government can come together to form successful partnerships capable of producing imaginative solutions to pressing environmental problems. There is no reason why such partnerships should not be able to provide similar solutions to long-term environmental concerns such as global warming. In Great Yarmouth, there is just such an initiative to develop a centre of excellence for the energy industry, which would build on the success of the Great Yarmouth Recommissioning Partnership and provide innovative energy management energy solutions with a view to the long term.

The partnership approach adopted to advance this particular idea into action should act as an example to industry as a whole. Although the offshore industry in Great Yarmouth has had to weather the economic instability of the past decade, as so often happens, adversity, if not necessity, has proved to be the mother of invention.

I believe that in years to come, the Great Yarmouth Recommissioning Partnership will be seen as the founding father of a scheme that is every bit as important to the well-being of our marine environment as recycling is to our terrestrial environment. The Yarmouth solution could turn an offshore platform from the scrap iron of the sea into a Rolls-Royce of the ocean.

Finally, I firmly believe that the scheme represents a blueprint for the future, as it brings together all the relevant agencies and industry for the benefit of the local economy, and is an example of the type of co-ordinated thinking which the Government should be encouraging.

11.23 pm
The Minister for Science, Energy and Industry (Mr. John Battle)

I congratulate my hon. Friend the Member for Great Yarmouth (Mr. Wright) on winning tonight's debate. He has done more than secure an Adjournment debate; he has become the champion for Great Yarmouth on many issues. I hardly ever enter a Division Lobby without being lobbied by my hon. Friend on behalf of his constituents and he is welcome to continue to do that. He has a particularly pioneering vision for employment possibilities in his constituency and we should all follow his example.

I was amused and encouraged by my hon. Friend's reference to a third way—a particularly resonant political theme at present—and the way in which he introduced it into the debate. He proposed the recommissioning of oil and gas installations as a third way between land disposal on shore and disposal at sea. Recommissioning should not be confused with decommissioning. It involves reuse rather than dismantling and presents a practical option which should be considered seriously.

Government policy is to presume in favour of and encourage the land disposal of redundant North sea oil and gas installations. Studies have shown that, in practice, most offshore installations will be brought on shore for reuse, recycling or disposal. The majority will be brought ashore and, as my hon. Friend suggests, reuse may then be the most attractive option for decommissioning.

It is, of course, for the operators to produce detailed proposals for the decommissioning of any particular installation, taking into account all the applicable environmental regulations and policies. Recovered equipment can be reused by the same company, sold to another operator in the UK, or even exported. As my hon. Friend said, not all equipment and structures will be suitable for reuse. Some may not provide the necessary fatigue life for economic reuse and others may simply be old technology, so the option of scrapping and recycling steel and other metals must continue to be available.

Nevertheless, it has been estimated that most gas platforms in the southern North sea are suitable for removal in one piece. Indeed, it is interesting to look at the experience in the gulf of Mexico, where, although platforms tend to be smaller than those used in the North sea, some 40 per cent. are reused. It is happening already and has been found to benefit the operators and the contractors who refurbish the platforms. Of course, it also benefits the environment. Finally, lower costs, achieved through the reuse of platforms, mean that economically marginal fields are more likely to be developed.

There are approximately 250 offshore oil and gas installations on the UK continental shelf. The majority will reach the end of their useful lives during the next 25 years, but the peak years for decommissioning activity are expected to be between 2003 and 2012. Only a handful of platforms are likely to be decommissioned each year over the next four or five years, but there will be some demand for recommissioning in the near future. For example, the owners of the Maureen platform have recently advertised its imminent availability for recommissioning, and the Balmoral field's semi-submersible is on the market for reuse when production ceases.

It makes quite a difference, of course, if platforms are designed for reuse. I am glad to inform hon. Members that many designers and fabricators take that approach. If they can build into the design the possibility of reuse, we are halfway to resolving the problem and technological solutions can be built in. As a result, some structures have very long life cycles. For example, the British Petroleum Harding field has a jack-up platform which can be moved between developments, and Conoco's Viking-Phoenix field is using a new generation of gas gatherer minimum facilities platforms that are designed with a working life of 20 years. During that time, they will be recovered and moved to other fields when required. Reuse has been built into the design.

It is also helpful that the industry has learnt a lot about the science and engineering of fatigue assessment and structure requalification. Future buyers will have assurances about the long-term structural integrity of the products. Advanced monitoring and inspection techniques will allow companies to estimate the remaining life of the platform and topsides to assess the potential for reuse. That is welcome.

I commend the efforts of the Great Yarmouth recommissioning partnership. The port of Great Yarmouth is the principal operations centre for the southern North sea and has over 30 years' experience of gas exploration and experiment. It has participated in the load-out of numerous offshore structures and has provided quayside construction facilities to the industry. Many operators have based their southern North sea operations in Great Yarmouth. Nearly 5,000 employees work in and around Great Yarmouth in the supply chain, employed by companies such as AMEC, Kvaerner and the Wood group.

The Great Yarmouth recommissioning partnership has a strong base on which to build. The partnership includes the university of East Anglia, Amoco, AMEC, Kvaerner, UK Waste, the chamber of commerce, the Great Yarmouth port authority and other local and regional authorities and official bodies. They have been able to put together a comprehensive picture of requirements for the removal of structures in the southern North sea and are offering the additional element of the recommissioning of equipment and jackets, so opening up possibilities for more of the currently marginal fields to be developed. That is economically and environmentally advantageous. Rather than the big companies simply hitting the big wells and then clearing off, I want the full exploration of marginal fields. The partnership can help to make it economic to develop marginal fields and get maximum use from existing fields, rather than moving away when they are only half exploited, ensuring that the UK continental shelf is properly, sensibly and environmentally sensitively exploited.

All the participants in the Great Yarmouth recommissioning partnership are fully aware of the need to take a medium to long-term view of the market for decommissioning and recommissioning and have identified the infrastructure required to meet the market demand. Most important, they have committed substantial amounts of money and resources to the project. It is an excellent example of partnership between private and public bodies, which we regularly talk about. We want to encourage partnership between local authorities and private sector companies, along with the public port authority. It is a model for other towns.

Technology has not been forgotten in the partnership. As the Minister responsible for science, engineering and technology, that is dear to my heart. I do not think that we can emphasise technology enough. New techniques are being introduced to facilitate recommissioning. I particularly welcome the fact that the Great Yarmouth Recommissioning Partnership has successfully attracted to Great Yarmouth a company that will offer and develop further a technique new to the North sea that can provide a competitive alterative to heavy lift vessels in many cases. My Department is at hand to give advice to the partnership if it wants to take further any applications for research funds. We shall give full support and back-up in the light of my hon. Friend's requests and his positive and imaginative approach.

In conclusion, I congratulate members of the Great Yarmouth Recommissioning Partnership on getting together to work in this area so positively and for spotting a market opportunity that may provide significant employment in Great Yarmouth in the early years of the next century. That is foresight. They are also dealing with new technology and addressing the need to tackle environmental challenges while providing employment. It is what I call a three-term equation of win, win, win. I commend the comments of my hon. Friend the Member for Great Yarmouth for wider consideration. I shall certainly do my best to take them further.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes to Twelve midnight.