Brent force: Shell’s Duncan Manning discusses decommissioning the iconic Brent field
Shell has submitted its plans for the decommissioning of the iconic Brent field in the North Sea. Julian Turner talks to Duncan Manning, Shell’s asset manager for Brent, about environmental risks, tax relief on decommissioning oil and gas assets, and lessons learned from Brent Spar.
The Brent oil field in the North Sea neatly bookends the history of oil and gas production in the UK.
Brought online in 1976 during an energy crisis, Brent at its peak produced half a million barrels a day. Four decades on, with production on the UK Continental Shelf (UKCS) in terminal decline, this iconic field – which lends its name to the international crude price benchmark – is being decommissioned.
Operated by Shell, Brent is situated midway between the Shetland Islands and Norway, and is served by four huge platforms − Alpha, Bravo, Charlie and Delta. Of the four, only Charlie still produces oil.
The platform topsides housing the accommodation block and drilling structures are anchored to the sea bed by much taller ‘legs’, which stand in 140m of water. The proposal by Shell to leave these 300,000t concrete bases from Brent Delta has prompted furious reaction from environmentalists.
"Shell is asking the UK Government for permission to leave behind the rig's huge concrete legs, and the oil residues they contain, to cut costs,” stated Greenpeace UK's chief scientist Dr Doug Parr.
“Under the OSPAR regulations, oil firms can only dump this infrastructure if they can prove that's more environmentally sound than attempting to remove it. Shell hasn't produced any useful evidence to this effect and seems instead anxious to wriggle out of the proper process.
“The government should not bend the rules for the sake of Shell's profits but uphold hard-won international laws. Shell and other oil firms have squeezed billions out of their platforms, driving climate change in the process. The least they can do is to take full responsibility for the clean-up."
Concrete evidence: the environmental challenges of decommissioning
Environmental concerns centre upon residual or ‘attic’ oil entombed in huge concrete storage cells within Brent Delta’s legs as well as hydrocarbons that accumulated during the production phase.
“Shell is developing technology to remove any hydro-dynamically trapped oil that is a threat to the marine environment,” explains Duncan Manning, Shell’s business opportunity manager for Brent.
“The second type of oil is sediment at the bottom of the cells composed of roughly 25% sand, 25% oil, and 50% water. We took samples to understand the composition and engaged with multiple stakeholders including Greenpeace to develop options.
“These cells are made of reinforced concrete 60m high, 20m wide and 1m thick, and will last more than 700 years. Extract sediment to the surface, shipping it to shore, recycling and removing a proportion to landfill for treatment would be an incredibly time consuming and technically challenging process. The safety of personnel in undertaking this work is also a key factor.
“We concluded that leaving the oil in place was the right thing to do. Shell’s Independent Review Group concurred, agreeing that the effect on the environment of the recovery, transport, treatment and disposal of the oil would be far greater than the minimal impact of leaving it in place.”
Lessons from Brent Spar: stakeholder engagement and OSPAR exemption
Two decades on from the Brent Spar debacle, when Shell’s plan to sink an oil storage buoy sparked protests by Greenpeace and petrol boycotts in Germany, the company says it has learned its lesson.
“Shell’s stakeholder engagement began in 2007,” says Manning. “For the past ten years we have engaged with more than 180 organisations and 300 individuals including fishermen, academics, community groups and environmental NGOs. Since the mid-1990s operators are required to make decommissioning and removal instrumental in the design of oil and gas platforms. So, there are definitely lessons that we have taken on board.”
The OSPAR regulations protecting the marine environment in the North Atlantic forbid the dumping of legacy installations or leaving them wholly or partly in place. Shell is applying for an exemption.
“OSPAR acknowledges that there are significant difficulties with the removal of certain infrastructure including gravity-based structures and jackets over 10,000t,” explains Manning. “As long you can make a case and justify the rationale you can seek a derigation from these clean sea bed regulations.
“The Department for Business, Energy and Industrial Strategy breaks that down into five categories; impact on sea users, technical feasibility, safety, environmental impact and cost. Taking the factors into consideration, Shell concluded that leaving the legs in place makes sense. We’ve even broken down the five categories into 12 sub-divisions to better explain our case to stakeholders.”
The Guardian reports that just five exemptions have been issued by OSPAR for 124 installations decommissioned since the rules came into force in 1998. Is Manning confident Shell will prevail?
“The application is very much ongoing,” he explains. “We have finished the public consultation and now Shell will respond to each of the many comments, make any changes to our decommissioning programme and then go back to the UK Government, which will engage with OSPAR on our behalf. We also received a 20-page letter from eight NGOs, which we also need to respond to, but we require further clarity from them on what they propose. Once we have that, we’ll move forward.”
Taxing times: the tax relief debate and Pioneering Spirit
Dismantling Shell’s Brent infrastructure will take ten years and cost billions. Oil companies are given between 40% and 75% tax relief on clean-up costs, a policy that has angered campaigners, who argue it amounts to yet another fossil fuels subsidy. Manning is quick to spring to Shell’s defence.
“Oil and gas operators are expected to pay tax on the total income of any field minus full lifecycle costs, which include setting up, operating and decommissioning the infrastructure,” he argues. “We get decommissioning tax relief based on the tax regime during the production phase. Brent Delta is positioned in a high tax regime, so we receive around 70% relief on decommissioning.
“However, a third of that that goes back to the Treasury in the form of corporation and income tax. The four Shell platforms have paid over £20bn in today’s money in tax during their lifetime, so while we do attract tax relief it is a tiny percentage of the money that’s already been paid to the Treasury.”
In May, the world’s largest floating vessel, Pioneering Spirit, lifted the 24,200t topside of the Brent Delta platform – a new world record – and carried it to a recycling centre 700km away in Hartlepool.
Over the next ten years £17.6bn will be spent to completely or partially remove more than 100 rigs on the UK and Norwegian continental shelves. More than 1,800 wells are scheduled to be plugged and abandoned and 7,500km of pipeline decommissioned. For Shell, it represents a mammoth task.
“Brent decommissioning is large and complex because there are four platforms with three different designs – three gravity-based and one steel jacket,” explains Manning. “Delta was the first where we’ve completed the entire process and we are learning and improving from platform to platform.
“The topside of Brent Delta is being recycled and we are switching focus to Brent Bravo. We have plugged the wells, isolated the reservoir from the surface and are preparing the platform for lifting. With Alpha, we are nearly halfway through plugging the wells, after which will prepare it for lifting. Brent Charlie is still producing but we will soon start the reservoir isolation phase on the final rig.”
And with that Shell’s presence in the Brent field will end, 40 years after the oil first started flowing.