N. Teesside could be the hub of North Sea oil platform decommissioning
Ian Jack, The Guardian, reports 8th April 2017: To witness the beginning or end of a great industry or a way of living isn’t unusual. Each generation has its list of comings and goings — great grandfathers who remember the advent of the motor car, grandmothers who recall the last factory hooter in Accrington, fathers and mothers who can say where and when they last used a typewriter or first saw a mobile phone. But for the same generation to know both — the end, say, of the car or the typewriter, as well as their beginning: this is exceptional.
North Sea oil is coming close to that distinction. Its life seems to be passing with remarkable speed. You don’t need to be impossibly old to remember the discovery of its first reserves in 1969 or its initial exploitation six years later, and while the very end is still some way off — perhaps as late as the 2050s, if the oil price goes high enough — its inevitability has recently become stark, and nowhere more so than at a recently built concrete quayside at the mouth of the Tees. This, I felt on Wednesday, looking around the quay and the adjacent hundred acres that waits to be filled by scrap, is where the ending begins.
Next month, weather permitting, a barge will dock here carrying the superstructure or “topside” of an oil rig that has been brought more than 400 miles from the Brent field, which lies between Shetland and Norway and in 1982, its peak year of production, supplied enough energy to met the annual needs of half of the UK’s homes.
Brent was the first of the big British fields — it gave its name to the international benchmark price for crude — and Shell has four big platforms there, named Alpha, Bravo, Delta and Charlie, the first three redundant and the fourth soon to be so. From their feet in the seabed to the top of their topsides, each is as high as the Eiffel Tower. Delta’s topside will be the first to be scrapped.
In a different age — the age when the Teesside engineering company Dorman Long built the Sydney harbour bridge — the story of Delta’s topside would have been an illustrated feature in a children’s magazine. A structure weighing 24,000 tonnes and bristling with living quarters, workshops, heavy machinery and a helipad will be lifted en bloc from its sea-legs by a ship, the Pioneering Spirit, that will carry it close to the mouth of the Tees, where it will be lifted again, this time to a barge, the Iron Lady, which will bring it into the quay at Seaton Port near Hartlepool. There it will be slid rather than lifted ashore.
Several superlatives are encountered on the way. The Pioneering Spirit is the largest construction vessel ever built (and possibly, at £2.2bn, also the most expensive); raising the topside will be the heaviest lift ever undertaken at sea; the new quay is said to be the strongest in Europe and situated in what was once one of the world’s largest dry docks.
Little of this, however, could be described as a British achievement. The ship was built in South Korea and the engineers who spent years designing it work for a Dutch-Swiss company. The British aspect of the process is the location of the scrapyard, which is run by a private company, Able UK, owned by a 69-year-old Hartlepool-born businessman, Peter Stephenson. Without Stephenson, the work of cutting up Delta (and Alpha and Bravo) would probably have gone to the Netherlands or Norway, and a decommissioning operation funded in large part by British taxes would be benefiting owners and workers abroad.
Compared, say, with the foreign ownership of UK train companies or Asia’s command of the London property market, a few thousand tonnes of old steel heading for Rotterdam rather than the ports of Britain’s east coast hardly represents a scandal. But the trade’s future scale is enormous.
Over the next 35 years or so, about 470 platforms and 10,000km of steel pipeline will need to be removed from the North Sea. Within those numbers, according to the decommissioning forecasts of the UK’s Oil and Gas Authority, 109 platforms (95 of them in the UK sector, the rest Norwegian) will go between now and 2025. Some of the substructures pinning them to the seabed may be left where they are, to become marine habitats: an oil company proposal contested by environmentalists.
The money that oil companies spend on decommissioning attracts tax relief in the form of rebates, which can amount to as much as 70% of the clean-up costs. As the tax originally paid was considerable — £330bn has been estimated as the total since production began — so are the rebates. Last year, tax relief exceeded the Treasury’s oil revenues for the first time.
The oil price has risen since and North Sea oil’s net loss to the government may not be repeated in the near future, but the Treasury still faces a likely total bill of £24bn by the time the last North Sea well is plugged, which is more than the construction costs of Hinkley Point nuclear power station (estimated at £18bn) and around the same as building four new Trident submarines. The political consequences, especially for the Scottish National party, are well known.
Stephenson feels, self-interestedly but perhaps also patriotically, that the benefits of this subsidy should be felt first at home. He started out as a hirer of farm machinery and now, as executive chairman of Able UK, runs as well as owns a company that deals in all kinds of dismantling, demolition, repairing and recycling. Cooling towers, petrochemical plants, tank farms, power stations, ships, oil rigs: Stephenson has got rid of some and refurbished others. Most controversially, he acquired the so-called “ghost fleet” — supply ships and tankers that had been laid up by the US Navy — and against environmentalist opposition broke them up safely in the same Seaton dock.
A small, purposeful man, he and a small staff inhabit the former offices of the North Tees power station, the rest of which he demolished. I thought he might be the last industrial capitalist in north-east England and asked him where the rest of them had gone. All he could think, he said, was the old explanation: that Europe had been lucky, in a way, to have so many of its factories bombed flat — to have to start again.
We drove across the strange estuarine land that lies between his office and the dock. There were cooling towers, only one of which steamed, and here and there chemical factories with steel chimneys that in the east wind trailed completely horizontal pennants of smoke. All were once owned by ICI — north Teesside was its magnificent manufacturing headquarters — to be complemented on the riverside by shipyards and, farther south, by an oil refinery and the steelworks at Redcar. A surprising amount of business still goes on — the landscape looks industrial as few other places in Britain now do — but of course the steelworks has closed and most of the rest is ultimately owned elsewhere.
Would this be a fine place for the North Sea oil industry to stage its last grand act? Well, somewhere in Britain, certainly — to sustain work, perhaps even to develop an expertise in offshore scrapping, and remind us of what had been.
Source: The Guardian, 8th April 2017. For the full details, see: www.theguardian.com/commentisfree/2017/apr/08/north-sea-oil-death-throes-rigs-decommission-industry
