Scottish supply chain ‘set to benefit’ from new decom fund

Scottish government has launched a new £5 million ($6.2M) fund that will provide opportunities for the supply chain in the country to benefit from the decommissioning of the North Sea infrastructure.

The Decommissioning Challenge Fund (DCF) will support infrastructure upgrades and innovation in salvage and transport methods at Scotland’s ports and harbors. It will also encourage engineering scoping work at key sites to build business cases that will attract further private investment, the government said.

The news comes just after the oil giant Shell on Wednesday submitted its decommissioning plans for the Brent oil field kicking off an extended 60-day public consultation period. The Brent decommissioning program recommends that the upper steel jacket on the Brent Alpha platform is removed, along with the topsides of the four Brent platforms, debris lying on the seabed, and the attic oil contained within the concrete storage cells of the gravity base structures.

First Minister Nicola Sturgeon launched the fund at Sparrows, an Aberdeen-based supply chain company with expertise in decommissioning. The First Minister also visited exploration technology specialists Zilift Ltd.

Alongside the Decommissioning Action Plan, launched by Scottish Enterprise and Highlands and Islands Enterprise last year, the fund will help Scotland’s oil and gas sector make the most of decommissioning opportunities at home and abroad, said the government.

Sturgeon said: “With up to 20 billion barrels of oil and gas remaining, the Scottish Government’s top priority remains working with industry and stakeholders to maximize economic recovery from the North Sea.

“The new £5 million fund also recognizes that decommissioning is an emerging, but growing, activity in the North Sea, with £17.6 billion expected to be spent in the North Sea over the next decade.

“Scottish-based firms are already seizing opportunities, securing the lion’s share of value from a range of decommissioning activities, including project management of decommissioning programs and high value well plugging and abandonment activity.

Sturgeon added: “News today that Shell plans to apply to begin decommissioning its Brent oil field underlines the importance of planning for decommissioning. The fund builds on our Program for Government commitment to identify investment opportunities, with a view to improving capacity at Scottish ports, increasing the economic return to Scotland from a variety of removal, disposal and dismantling activities.”

Fund ‘to unlock even more opportunities’ 

Welcoming the fund, managing director of growth companies, innovation and infrastructure at Scottish Enterprise, Adrian Gillespie, said: “While the focus should remain on maximizing recovery, Scotland has the ambition and potential to position itself at the forefront of the global decommissioning industry, using our decades of oil and gas expertise. We’re already seeing Scottish companies winning business in this market and the new challenge fund will help to unlock even more opportunities for Scotland’s supply chain.

“Through our Decommissioning Action Plan, published in December, we are focused on supporting Scotland’s supply chain to maximize opportunities in this growing sector. With around £17.6 billion estimated to be spent on decommissioning on the UK Continental Shelf alone, our focus is around supporting innovation, promoting our capability, helping develop new technologies as well as ensuring the right infrastructure is in place for Scotland to fully capitalize on this significant opportunity. Working in partnership with other public sector agencies as well as industry bodies will be key to driving this opportunity forward.”

‘Encouraging news’

UK’s offshore oil and gas industry association, Oil & Gas UK, also welcomed the launch saying the news is encouraging. The organization said: “The First Minister’s announcement today of a new £5 million fund to support Scottish companies looking to take advantage of decommissioning sector opportunities is encouraging news for the many supply chain companies still struggling in the downturn. Oil & Gas UK looks forwards to engaging with the Scottish Government on how this fund will work once it becomes available in March.

“It’s important that the industry’s focus remains on maximizing economic recovery of the UK’s oil and gas while recognizing and managing the fact that decommissioning is part of the natural evolution of the UK continental shelf. Our forecasts suggest an average of £1.7 billion will be spent on decommissioning in the UK each year over the next ten years and so it is helpful that we should support the UK supply chain to develop its capacity to compete effectively.

“Looking forwards we must ensure key assets are not decommissioned prematurely and that industry continues to deliver decommissioning in a safe, environmentally sound and cost-effective manner with sufficient early planning and co-ordination to enable the UK supply chain to develop competitive industrial capability.”

Offshore Energy Today Staff