A sectoral sustainable development study of the UK offshore oil and gas sector

1. A sectoral sustainable development studyof the UK offshore oil and gas sector Professor Paul Ekins (PSI) James Firebrace (JFA/UKOOA) Robin Vanner (PSI) Presentation to the Offshore Forum Monday 8th December 2003

2. The UKOOA-PSI Study • Two year programme • April 2003 to May 2005 • Funding • PSI externally funded by EPSRC grant under DTI Sustainable Technologies Initiative • UKOOA contribution largely in kind through data provision and industry analytical input • Governance • Joint UKOOA-PSI Management Group with representation from four companies and secretariat

3. Objectives To develop a generic sectoral sustainable development methodology To deliver useful insights into important issues for the oil and gas sector

4. Method Material flow analysis Energy flow analysis Value chain analysis Case studies: Decommissioning Offshore energy use Produced water Employment

5. Emissions & discharges V < 0, Waste E Process M M ,V > z+x , E < E V = z ( V = £x, E =E ) Input material Material M , V alue V , Energy E Materials as a carrier of value and energy (Material M, Value V, Energy E )

6. Environmental Concern ‘Clean seas’ Emissions/climate change Landfill 1. DECOMMISSIONING (footings, drill cuttings, pipelines) Material flow    Energy flow  Financial flow    2. OFFSHORE ENERGY USE (EU emissions trading) Material flow  Energy flow  Financial flow  3. PRODUCED WATER (oil in water, energy use, ‘no harm’) Material flow   Energy flow  Financial flow   Dimensions related to the project

7. The upstream oil and gas sector

8. The decommissioning process

9. Operational energy flows

10. The produced water system

11. Decommissioning issue objectives: • Capture the wider (material, value and energy) implications of the various possible decommissioning solutions; • Present these flows in a way that allows for comparison between the solutions; and • Inform the development of the generic sectoral sustainable development model from the insights gained from use of the methodologies.

12. Offshore structures • Total of 266 structures on the UK continental shelf. Key ones are: • 33 large fixed steel • 196 small steel • 11 concrete gravity based structures • And other mobile and small structures • Decommissioning experience: • Several smaller structures have been decommissioned. • To date, no large steel structures which are fixed to sea bed have been decommissioned.

13. Decommissioning costs

14. Material flows • Typical large steel structure: Around 40,000 tonnes • ~90% Steel • 2% Aluminium • 0.3 Copper • ~90% or more recoverable (economically recoverable after dismantling) • Large cuttings pile: Around 40,000 tonnes • Mostly bed-rock • Containing drilling muds ~3-4%.

15. Material end-points: (Technical decommissioning options) • In-situ: • Leave standing • Toppling • Onshore disposal: • Reprocess (recycle and landfill waste) • Re-use (e.g. quay) • Offshore disposal: • Deep sea • Shallow water (reef)

16. In-situ solutions • Pipelines & Drill cuttings • Regulated by UK DTI • Structure - Regulated by OSPAR • Only footings part of structure has a possible derogation from the presumption of ‘clean sea’ • Footings: ‘bottom part of a steel jacket including the lower jacket legs and piles fixing the structure to the sea bed’ • Not designed to be removed • Typically tens of metres high above sea bed • Only if jacket is >10,000 tonnes • If derogation from presumption of ‘clean sea’ for footings is sought: • Justification on environmental and / or safety grounds, as well as on the practicability of removal (OSPAR). • Must leave 55 metres navigation clearance

17. Onshore solutions • Re-use of unprocessed materials: • What are the materials, energy and value of the structure which would have been built if the structure was not used? • e.g. a previous decommissioned structure was cut up and used as a quay. • Process materials onshore: • Recycle: saving of raw material and possible energy savings. • What ‘value’ does the recovered material have? • A proportion of the material is unrecoverable and has to go to landfill • Therefore has negative value (gate fee) • Rates of landfill: ~10% Provides perception of ‘clean seas’ and conservation of resources.

18. Offshore disposal solutions • Deep sea disposal • Removes structure away from harm to human activities and interests. No detailed data. • Shallow water disposal • Marine conservation area (> fish stocks) • Popular in the USA – dumping of cars to develop area where people actually pay to fish. • Trace amounts of contaminants remain after cleaning Neither solution allowed in Europe under the OSPAR agreement.

19. Decision support methods How do you trade off the various ‘values’? • Economic valuation type models: • Puts all costs and benefits in monetary terms (including non- use values) • Theoretically logical • Who does the valuing? • Do people trust process if they do not like the outcome? • Materials Flow type analysis: • Systematically captures and tracks all of the significant flows of materials. • Assesses the usefulness of all material end points and input material in terms of their financial value and energy content. • Provides a summary of the wider public benefits and impacts of returning the structure to shore, and highlights the additional decommissioning costs to achieve the public goods associated.

20. Impact categories • Quantitative impacts: • Material flows – inputs, wastes, emissions (tonnes) • Energy flows (GJ) • Value flows - expenditures, revenues (£) • UK employment (jobs) • Qualitative impacts and issues: • Clear seabed • Health and safety • Marine environment • Resource stocks/conservation • Landfill • Marine biodiversity/fish stocks • Fishing industry

21. Decommissioning solutions Recovered Material Offshore In-situ Structure Recovered structure Recovery Landfilled Material Alternative use Equivalent use process Replacement process

22. Summary Outcomes Matrix

23. Conclusions • No results as yet • Results will enable: • Direct comparison between different quantitative outcomes (e.g. which decommissioning solutions use most energy/produce most emissions, which have the highest expenditures? • Discursive comparison between different qualitative outcomes (e.g. which solutions are best for fish stocks/marine biodiversity, or the fishing industry) • Different expenditures for different solutions will enable implicit valuation of the non-financial outcomes should they be adopted