Miliband’s wind turbine blitz will leave North Sea littered with ‘abandoned rigs’

Plans to run down the North Sea threaten to deprive the industry of the funds for a clean up effort

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Ed Miliband’s wind turbine blitz threatens to leave the North Sea strewn with rusting oil rigs because of a lack of equipment needed to dismantle the retired platforms. 
The Energy Secretary’s rush to build new offshore wind turbines risks depriving the oil and gas sector of the heavy-lift ships and cranes needed to remove the rigs, industry trade body Offshore Energies UK (OEUK) has warned.
In its annual report on decommissioning, OEUK’s Ricky Thomson warned there was a “direct clash” between the demands of oilfield decommissioning and the rollout of wind power.
He predicted that matters will come to a head by 2028, when a record number of rigs are set to be removed just as turbine  installation climbs to unprecedented levels.
There are currently only four or five vessels in the world capable of lifting the biggest platforms clear of the water, OEUK estimates.
The largest is the 1,250-foot long, twin-hulled Pioneering Spirit, the biggest vessel of any type afloat and capable of lifting 50,000 tons.
OEUK estimates that Britain will need to decommission some 2,000 wells over the next decade, with the rate of 200 a year far in excess of what it has been achieved before.
Costs from decommissioning will account for 33pc of all oil and gas expenditure by 2030 — when they will exceed the industry’s outlay on capital spending and investment.
The squeeze will be exacerbated by the Government’s decision in the Budget to hike a windfall tax on oil industry profits to 38pc – a move OEUK said will result in many more operators deciding to cease production.
Mr Thomson said plans to run down North Sea output also threaten to deprive the industry of the ability to fund the clean up effort.
Ashley Kelty, head of oil and gas research at Panmure Gordon, said he expects the higher windfall tax to push firms that have been eking out production over the edge, leading to surging demand for the dismantling of platforms.
“I don’t think the Government has any concept of how the tax changes and other policies for shutting down the North Sea are going to impact demand for decommissioning,” he said.
“They’ll be putting pressure on wind farms to add as much capacity as possible, but they haven’t realised that the oil industry needs the same equipment.
“It’s a massive issue. There will be abandoned rigs, which will bring environmental issues with platforms that are left unattended.”
Mr Kelty said that as well as the risk of decaying infrastructure polluting the ocean, the imbalance of demand and supply will prompt the owners of specialist vessels to hike their rates – forcing wind-power firms to demand higher subsidies and pushing up energy bills.
European wind-power operators will also struggle to secure sufficient capacity to meet their target of installing 160 gigawatts of turbine capacity by 2030 because of competition from Asia, he said.
OEUK said there are particular concerns around the northern North Sea, where a large number of platforms have reached the end of their working lives.
The water there is much deeper than further south, making the removal of defunct rigs and infrastructure more difficult, while the oilfields are far from the nearest deepwater ports.
UK firms also face competition for vessels from decommissioning in the Gulf of Mexico, southeast Asia and Australia, and potentially from drilling for carbon capture and storage.
Mr Thomson said one solution may be to establish a fleet of barges to undertake dismantling without needing to transport rigs to the quayside.
He warned that it was vital that Labour did not run down North Sea production to the extent that companies are unable to fund the capping of wells and subsequent clearance work, forecast to cost more than £2bn a year including the removal of 90,000 tons of subsea structures over the next decade.
“We need to ensure that we have a stable landscape on the political side of things, so that production is happening while we are decommissioning in order to pay for this,” he said.
“The mix has to be even. We need to ensure that we are not just driving costs through the roof.”
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