The world's biggest scrapyard
To invest in putting new steel in the North Sea, or in bringing old steel back on shore?
You'd be forgiven for being a bit confused.
Last week, a high-powered gathering in Edinburgh of renewable energy companies, financiers and government ministers was highlighting the opportunities for putting vast quantities of capital into offshore wind.
The reluctance of financiers is the biggest obstacle to the potential for a renewables boom.
This week, at a lower-key gathering in Dunblane, oil companies and financiers are highlighting the opportunities for decommissioning oil installations.
The figures are a bit vague, but there's no disagreement that they're huge on both accounts.
Earlier this week, Deloittes and marine energy consultancy Douglas-Westwood jointly issued a study reckoning on a £19bn bill over the next 30 years to decommission platforms, well-heads and pipelines.
Its report said there's a need for four new onshore breakers' yards, and investment in a new type of super-heavy-lift ship, capable of lifting 15,000 tonnes out the sea.
One company, Allseas, is already ahead of it, signing a contract with a Korean shipyard this summer to build a gigantic ship capable of lifting 25,000 tonnes of oil platform or 48,000 tonnes of topside. The twin-hulled Peter Shelte will be 380 metres long and 117 metres wide.
Recycling steel
Industry body Oil and Gas UK, which has organised this week's conference, reckons the costs are far greater.
It's updated the offshore sector's reckoning of decommissioning, decontamination and recycling to reach a whopping £27bn.
That's not just a cost, of course. It's also a vast business opportunity.
And the recycling opportunities could be an important part of feeding into the renewables boom.
More than 90% of the kit being lifted out of the North Sea can be used again.
Oil and Gas UK has included 630 installations in that reckoning, 260 of them platforms.
Bubbles under
There are 10,000km pipelines to be chopped up and recycled, and 5,000 wells need capped. In all, it adds up to around 2.4 million tonnes of steel.
The cost is now double what the industry was calculating only five years ago.
One subject that bubbles under the decommissioning project, but not playing a prominent role in Dunblane, is the lesson learned from the Brent Spar platform.
Environmental campaigners showed Shell Expo 15 years ago that they have strong views about the industry's approach to decontamination.
They stopped plans for ocean dumping at that time.
By taking the recycling route, that 14,000-tonne structure found a new life as the foundations of a Norwegian ferry terminal.
Hullo, I'm Douglas Fraser, and I'm business and economy editor at ³ÉÈË¿ìÊÖ Scotland. Welcome to my blog, where you can read my take on money matters, viewed from a Scottish perspective.
Comment number 1.
At 7th Oct 2010, Wee-Scamp wrote:Well here we go. Another opportunity we won't invest for.
As you say Douglas, Allseas have already ordered a new heavy lift vessel from Singapore.
What you should probably have said is that Allseas is Swiss based and doesn't even have an office in Scotland but will now pick up a lot of the N Sea decommissioning work.
There is nothing here for Scotland other than low value added work. Much like renewables.
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Comment number 2.
At 7th Oct 2010, GeoffWard wrote:Although Teesside has bid for the rig&topside breakage, in conjunction with Corus, I feel sure that Norway will prove to be the preferred receiver of decommissioned structures.
Very deep deepwater access and shorter haulage distances militate against a Scottish / English breakage site. But perhaps Corus and massive state subsidy will swing it.
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