UP TO 40 North Sea platforms are in danger of being shut down early because of the collapse in the price of crude oil, a new analysis shows.
The figures from specialist adviser Hannon Westwood will alarm George Osborne. The chancellor introduced a raft of tax breaks in March to revive Britain’s troubled industry, but they had little effect in the face of the oil price dive from $115 last summer to less than $50.
The collapse, coupled with the North Sea’s high operating costs, has pushed many operations deeply into the red. Last week Maersk Oil became the latest company to pull the plug rather than restructure to reflect the new price environment.
The Danish giant said its Janice platform, which pumps oil from three fields about 175 miles southeast of Aberdeen, would be closed next year.
The decision is the latest in a flurry of similar moves. The Department of Energy and Climate Change last month approved Shell’s plan to decommission the first of its platforms that pumped oil from the giant Brent reservoir, after which Britain’s benchmark crude is named.
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This month a floating platform that had been anchored for 18 years over the Mac- Culloch field, 150 miles northeast of Aberdeen, was towed back into port on the River Tees in Middlesbrough. That field, too, had run dry.
The worry for Whitehall is that the monster decommissioning bill, estimated to be at least £30bn, will start to bite years earlier than expected. The government will foot about 60% of the costs.
The North Sea’s oil and gas infrastructure includes eight concrete platforms, 254 steel ones, 280 subsea production systems, 21 tankers converted into floating platforms and thousands of miles of pipeline. These will all have to be dismantled and removed.
Hannon Westwood said that 30 to 40 offshore operations needed a price of at least $50 a barrel to break even. Oil plunged to £43 the week before last but staged a recovery last week, closing at more than $48.