As much as 470,000 tonnes of material are expected to be removed from the UK North Sea by 2022. (Image credit: Zero Waste Scotland, RSA)

Some 24 elements from a typical North Sea production platform can be reused by as many as 12 other industries, including pumps, valves, tubular steel pipework, power cables, platform piles and anchor chains, according to the report commissioned by the government-funded initiative Zero Waste Scotland in partnership with the Royal Society of Arts and Commerce (RSA).

If oil sector companies can embrace new material certification requirements and veer from recycling towards reusing, the value of these assets can be increased by between five and seven times, representing a third of the total value of an installation at the decommissioning stage, the North Sea Oil and Gas Rig Decommissioning & Re-use Opportunity Report, said. The circular economy would create new jobs and skills in a region recently hit hard by job cuts due to low oil prices.

“We’re coming from a very low ebb in terms of reuse,” Maurice Golden, Circular Economy Manager, Zero Waste Scotland, told DecomWorld.

“We’ve got 90-plus percentage rates for recycling and a tiny percentage rate for reuse, so lots of our work is about trying to rebalance that,” he said. The majority of the current reuse has been smelting in steel mills and done outside the UK.

There are 651 operational installations, 81 decommissioned installations, 24 closed installations and 4 other installations on the UK Continental Shelf, according to a 2015 installations inventory report by OSPAR, the north-east Atlantic conservation commission.

Some 19 installations are listed as decommissioning projects and remaining installations include around 300 subsea production systems, eight large concrete substructures, 31 large steel jackets and 220 other steel jackets, according to a report by DecomWorld, published in July.

                        UK forecasted decommissioning expenditure

Chart Source: Zero Waste Scotland, RSA

Stubbornly low oil prices have raised expectations for decommissioning activity in the high cost North Sea production region.

Up to 140 fields on the UK continental shelf (UKCS) will be decommissioned in the next five years under the assumption that oil rises to $85/bl, according to a report by Wood Mackenzie in September.

If oil prices settle at $70, a further 50 UKCS fields may be plugged and abandoned earlier than forecast, Wood Mackenzie said.

Inventory push

After conducting a series of industry workshops, the authors of the new Re-use Opportunity Report, identified six classes of offshore oil and gas assets which have significant reuse potential.

Steel sections from jacket and topsides, pipelines, and anchor chains and cables could be reused, while vessels and tanks, accommodation blocks and winches could be reconditioned and reused, it said.

However, the North Sea lags behind the Gulf of Mexico in terms of up to date asset data registers and this is holding back the creation of reuse markets, Maurice Golden, Circular Economy Manager, Zero Waste Scotland, told DecomWorld.

“If you look at Texas, there are miles and miles of yards along the coast with every piece of equipment you could possibly imagine in them. If you go up to a piece of equipment you can look at its ticket and that'll have a reference number that'll give you every health and safety inspection on that equipment so you've got confidence that you can reuse it,” Golden said.

“In the UK if you're buying a used generator for £2 million and you’re not 100% sure of all the paperwork, you might prefer to spend £3 million on a new one,” he said.

The oil and gas industry can learn from reuse practices in other industries, Golden noted.

“Every plane you get on will have a whole host of remanufactured parts on it because that’s just what they do,” he said.

In some industries, re-manufacturers offer warranties following testing procedures, to provide purchases with confidence, he said. He cited gearbox reconditioning as one example.

Testing costs

The below chart shows how the assessment of the materials would reduce uncertainty over the likely volume and character of the items available for re-use and how it would narrow the range of likely financial outcomes, reducing perceived risk. 

Source: Zero Waste Scotland, RSA

While re-using materials can increase their value by as much as seven times, from the point of view of operators, the savings are small compared with overall oil field costs. The costs of new inspection processes would have to be carefully managed across the industry.

Material and equipment retrieved from the North Sea would require close examination to satisfy licensing authorities, Paul Lambert, technical director of materials and corrosion engineering at consultancy Mott MacDonald, told DecomWorld.

“The difference between the simplest low carbon steel you can imagine and the type of material that they are using on the North Sea structures is marginal, and it’s often down to the level of certification. You could buy the same piece of metal for £1 or £10 and the difference is that you know how it’ll behave at –20°C, and you pay for that knowledge.”

Sophisticated inspection processes would introduce new costs for the oil and gas industry, he noted.

“A physical inspection would check the metal with ultrasonics and radiography to look for the defects that could lead to fatigue, and then there would be an awful lot of number crunching going on with numerical modelling, and a lot of money is spent running the software models that prove these things are safe.”

The increased costs involved in meeting certain safety standards could see firms downgrade the function of re-used items.

For example, onshore decommissioning firm John Lawrie Group has made a business of reusing steelwork as piling in the construction industry. Piling involves inserting large amounts of steel, wood, or concrete into the soil of the ground to create a sturdier base for construction, and the material used is of relatively low value.

New markets

Dan Epstein, lead author of the report, and the former Head of Sustainability for the London 2012 Olympic Games, noted platform owners and operators could boost social and environmental credentials by participating in the circular economy.

Markets needs to be created, potentially using an agency as a broker, so that buyers from different industries can access the different materials available, he said.

The offshore oil and gas sector must offer a consistent flow of materials to incentivise new investments on land.

According to industry body Oil and Gas UK, nearly 470,000 tonnes of material are expected to be removed from the UK North Sea between 2013 and 2022.

“It’s a complicated business to create a route to market, and to make it economically viable what you really need is to have enough steel over a long enough period that you can build an industry around it with a proper eco-system,” Epstein said.

Specific investments would be needed to stimulate new supply chains subsectors able to handle the large quantities of material. Waste management firms could play a major role as they could “build a landing location and take the scrap and generate value from it,” Epstein said.

Tax change needed

Golden argues that the state has an important role to play in encouraging reuse. An important move would be the setting of zero rate VAT on remanufactured goods.

“If you’re putting a brand new compressor into the North Sea then it’s zero-rated because it’s offshore; but if you’re installing a remanufactured one onshore then you’ve got to add 20% to the cost,” he said.

Other useful initiatives would include a state sponsored asset register for offshore components so that companies involved in re-use could assess the possibilities before the equipment comes ashore. Golden also said the government could procure land for a material storage yard, on which companies could rent space.

A new law could be introduced, of the kind that has limited the use of plastic bags in UK supermarkets. Laws introduced this year require large UK retailers to charge customers 5 pence for plastic bags, while smaller retailers can charge for bags on a voluntary basis.

Introducing similar kinds of regulation in the decommissioning supply chain could boost the development of re-use measures, Epstein said.

“When we were doing the Olympics we set targets for the use of secondary building materials and we found that when you set the supply chain that challenge they find really good solutions.”

The re-use targets led to 73% of the concrete for the Olympics Aquatics Centre being made up of a by-product from the Cornish china clay industry, while demolition waste and blast furnace ash was used to supplement aggregates used in construction.

Zero Waste Scotland and RSA now plan to present a more detailed case for the circular economy based on the offshore decommissioning sector.

The next stage will be the development of a rigorous and detailed evidence base to support re-use of materials, considering the technical, economic, environmental and social impact use for each class of asset, it said.

New studies will set out the expected volumes of materials, provide more detail on the value to firms, and inform the interventions required by government.