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North Sea oil is in its death throes. But the industry has one last grand act left

North Sea oil is in its death throes. But the industry has one last grand act left thumbnail

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 (diagrams, arrows) 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 benefitting 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 northeast 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.

The Guardian    

8 Comments on "North Sea oil is in its death throes. But the industry has one last grand act left"

  1. Cloggie on Sat, 8th Apr 2017 12:56 pm 

    about 470 platforms and 10,000km of steel pipeline will need to be removed from the North Sea.

    That’s an amount of steel worth thousands of offshore wind turbines.

    The North Sea is dead.
    Long live the North Sea.

  2. rockman on Sat, 8th Apr 2017 2:22 pm 

    Again someone making something common place sound extraordinary and unique. The North Sea is a geologic trend of oil/NG accumulations. The trend was discovered, developed reaching peak, then largely depleted and thus is now in the process of being abandoned.

    Exactly as has been done previously in many other hydrocarbon trends. Such as the once prolific oil trend in PA: Pennsylvania oil production peaked in 1891, when the state produced 31 million barrels of oil, 58% of the nation’s oil that year. Yes: the world’s first great oil trend peaked 108 years before the North Sea peaked in 1999. Every oil trend that has and ever will be discovered will peak, decline and become insignificant over time.

    Nothing new to look at here, folks. Move along. LOL.

  3. Dredd on Sat, 8th Apr 2017 2:26 pm 

    “… oil is in its death throes …” – post author

    Guess what happens when you destroy the life support on the planet you inhabit (You Are Here) ?

  4. Apneaman on Sat, 8th Apr 2017 5:04 pm 

    And Nature’s grad acts/revenge are just getting underway.

    An Armada of Ice Bergs Has Just Invaded The North Atlantic

    “I have about a decade of experience with the Ice Patrol, and in my time here, and talking with people who have been here longer, I’ve never seen anything like this or heard of anything like this before,” — Gabrielle McGrath Coast Guard Commander of the US Ice Patrol.

    “Consider the situation during past ice sheet disintegrations. In melt-water pulse 1A, about 14,000 years ago, sea level rose about 20 meters in approximately 400 years (Kienast et al., 2003). That is an average of 1 meter of sea level rise every 20 years.” — Dr. James Hansen


    This week an unprecedented 481 ice bergs swarmed into the shipping lanes of a storm-tossed North Atlantic. Strong hurricane force winds had ripped these bergs from their sea ice moored haven of Baffin Bay and thrust them into the ocean waters off Newfoundland. The week before, there were only 37 such icebergs in the Atlantic’s far northern waters. And the new number this week is nearly 6 times the annual average for this time of year at 83. To be very clear, there is no record, at present, of such a large surge of icebergs entering these waters in so short a period at any time in the modern reckoning.”

  5. Cloggie on Sun, 9th Apr 2017 3:51 am 

    Now that the oil story of the North Sea is over, the empty space is going to be used to become one giant renewable energy harvesting area for up to 100 GW electricity fluctuating capacity to be generated in the shallow waters bordering Holland, Germany, Denmark and Britain.

    The fluctuations need to be evened out using mass storage. We already have a Norwegian pumped hydro potential for several weeks worth of EU consumption.

    But there is other potential as well for similar promising methods of mass storage, ammonia fuel (NH3) that can be burned in conventional power stations and high pressure air:

  6. Dave thompson on Sun, 9th Apr 2017 8:41 am 

    Industrial civilization will come to a grinding halt once the liquid fossil fuels stop flowing.

  7. newfie on Sun, 9th Apr 2017 6:24 pm 

    “Industrial civilization will come to a grinding halt once the liquid fossil fuels stop flowing.” Even coal depends on petroleum. The machines that mine it and transport it run on diesel.

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