A sectoral sustainable development study of 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

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

Objectives

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

Method

•Material flow analysis •Energy flow analysis •Value chain analysis •Case studies: – Decommissioning – Offshore energy use – Produced water – Employment

Materials as a carrier of value and energy

( Material M, Value V, Energy E )

Emissions & discharges

V < 0, Waste E M V = z

Process

(V = £x, E =E)

M ,V > z+x, E < E

Input material

Material M, Value V, Energy E

Dimensions related to the project ‘Clean seas’

Environmental Concern

Emissions/climate change 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         Landfill  

The upstream oil and gas sector

Onshore Commodity sectors System boundary - Oil & gas upstream sector (All flows have associated financial flows)

Low-grade heat Emissions

Offshore

Low-grade heat

Commissioning process Energy systems

Emissions

Recycling process

Oil Gas

Energy sectors Landfill Production Systems Decommissioning process

Elements left in-situ Produced water Produced Fluids

.

Material Flows

Solid material flow Produced fluids Oil Gas Water

Energy Flows

High-grade energy flow Low-grade energy flow

The decommissioning process

Operational energy flows

The produced water system

Decommissioning issue objectives:

1. Capture the wider (material, value and energy) implications of the various possible decommissioning solutions; 2. Present these flows in a way that allows for comparison between the solutions; and 3. Inform the development of the generic sectoral sustainable development model from the insights gained from use of the methodologies.

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.

Decommissioning costs

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%.

Typical breakdow n by m ass of large steel structure and facilities:

Jacket Pipelines Footings Topsides

Material end-points:

(Technical decommissioning options)

1. In-situ:

– Leave standing – Toppling

2. Onshore disposal:

– Reprocess (recycle and landfill waste) – Re-use (e.g. quay)

3. Offshore disposal:

– Deep sea – Shallow water (reef)

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

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.

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.

Decision support methods

How do you trade off the various ‘values’?

1. 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? 2. 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.

Impact categories

1. Quantitative impacts: • Material flows – inputs, wastes, emissions (tonnes) • Energy flows (GJ) • Value flows - expenditures, revenues (£) • UK employment (jobs) 2. Qualitative impacts and issues: • Clear seabed • Health and safety • Marine environment • Resource stocks/conservation • Landfill • Marine biodiversity/fish stocks • Fishing industry

Decommissioning solutions

In-situ Structure

Offshore Recovery

Recovered structure Recovered Material Landfilled Material Alternative use

Equivalent use process Replacement process

Summary Outcomes Matrix

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