The Cost Of Removing Redundant Oil Rigs
In Norwegian And British Sectors
The crucial decision affecting the
cost of removing Norway's North
Sea oil rigs, which oil operators had
been expecting from an all-powerful
Oil Ministry committee during the
week of September 21, has been put
off until early 1993 and transferred
to the Norwegian Parliament, the
Storting, says ministry spokes-
woman Marit Ytreeide.
Insiders suggest that the com-
mittee realized that the costs were
going to be so great - under Norwe-
gian law the taxpayer must foot
around 80 percent of the bill - that
only the Storting could take the de-
cision and vote the necessary funds.
Norway's oil operators had been
bracing themselves for the ministry's
verdict on the first of 50 oil plat-
forms to be decommissioned, Elfs
Northeast Frigg, due to be dis-
mantled next year. The extent of
the disposal ordered by the ministry
has a critical bearing on the final
bill. Officials may demand either
the basic option: steel deck and j acket
to be cut down to 55 meters (180.4
feet) below sea level to ensure safe
navigation for shipping and to com-
ply with International Maritime Or-
ganization (IMO) guidelines; or, the
By Marcus Gil
far more costly course of insisting on
the rig's entire removal except for
its seabed template. Mrs. Ytreeide
confirmed that the Frigg decision
would broadly govern the decom-
missioning of the remaining rigs,
hence the operator's avid interest.
Latest estimates of the huge cost
of cutting up Norway's 50-odd North
Sea oil production platforms when
they become redundant are put at
Norwegian Krone (Nkr)38 billion
($6.4 billion), according to Olav
Fjellsa, economist and decommis-
sioning expert at the Norwegian Pe-
troleum Directorate in Stavanger.
But getting rid of them will present
the industry with a technological as
well as financial headache.
Mr. Fjellsa said: "Norway's deep-
water concrete platforms in the
Statfjord and Gullfaks fields, by far
the world's heaviest, will be ex-
tremely expensive to remove: around
Nkrl billion to Nkr 1.5 billion ($168.1
million to $252.2 million) each. Sev-
eral are at least 100 times heavier
than the Eiffel Tower, and removing
some of them may be beyond the
capabilities of existing technology."
Dismantling the huge subsea
structures will be a formidable un-
on, Journalist
dertaking. "The removal of rigs of
this size has never been attempted
before," Mr. Fjellsa said. "Refloating
in 30-meter (98.4-foot) waves and
high winds will be difficult and dan-
gerous, especially if concrete sec-
tions suddenly slip free under pres-
sure from the clay on the seabed.
They could rocket to the surface like
champagne corks."
The 1.5 million-ton Gullfaks C
platform, towed out in May 1989, is
the heaviest object ever moved by
man. The Troll platform, due on site
in 1996, will weigh even more.
The burden on the Norwegian
taxpayer is likely to be substantial.
Under the Petroleum Act of 1985,
the Norwegian state must pay
around 80 percent of rig removal
costs, the rest by the operating com-
pany. Assistant Director Leer Berg,
responsible for legal affairs at the
oil ministry, says "companies are
forbidden to include hypothetical
costs of removal in their current
accounts."
Since operators in the Norwegian
sector already pay 85 percent oil
revenue tax on their activities, the
precise moment when it becomes
more efficient for an operator to pay
for the removal of a rig, rather than
pay tax, will be a delicate one.
Hans Frisak, Elfs spokesman in
Stavanger, says the bill for partial
removal of Northeast Frigg will be
Nkr80 million ($13.4 million), com-
plete removal, including cementing
and plugging the well-heads, Nkr 180
million ($30.3 million), and far more
if the disposal of the 6-well template
is envisaged.
If the basic option, or partial re-
moval, is chosen for every rig in the
Norwegian sector, says Mr. Frisak,
Elf estimates that the likely overall
bill could surpass Nkr40 billion ($6.7
billion).
Recently Knut Daehlin, former
chairman of Norway's Petroleum
Law Commission, said the Norwe-
gian continental shelf had only one
percent of the total platform popula-
tion worldwide, but nearly 20 per-
cent of global removal costs.
Also watching closely are
Norway's politically vociferous envi-
ronmentalists. The Stavanger-based
group Bilona has already protested,
and halted, at least temporarily, Elfs
proposal to sink the Frigg platform
in 3,281 feet of water.
(continued on page 36)
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