Latest news with #NSTA
Telegraph
6 days ago
- Business
- Telegraph
North Sea giants ordered to seal abandoned oil wells
Britain's North Sea operators have been ordered to tackle hundreds of abandoned wells drilled around UK coasts amid fears they could pour polluting oil and gas into the sea. The North Sea Transition Authority (NSTA), which regulates the industry, has threatened to fine them millions of pounds if they continue to shirk the job. It found there are up to 1,000 wells which have the potential to leak oil and methane into UK waters – a risk that will persist forever unless they are permanently plugged. Some are drilled thousands of metres into bedrock, making plugging them even harder. The NTSA also warned that many of the drilling rigs needed to find and seal abandoned wells are being pulled out of the North Sea because windfall taxes and new regulations imposed by the Government are wiping the UK industry out. 'By law, operators must decommission oil and gas infrastructure, including permanently inactive wells, to protect the marine environment ... A backlog of more than 500 wells which missed their decommissioning deadline has built up and – unless operators quickly ramp up their activities – the figure could grow considerably,' the NSTA said. 'In excess of 1,000 additional wells are expected to be due for decommissioning between 2026 and 2030.' It added: 'Operators must immediately start tackling their backlog of wells that are already due for decommissioning to stop rigs leaving the North Sea and prevent billions of pounds of additional costs for themselves and taxpayers. 'Some companies are showing good performance in meeting their regulatory duty to decommission wells which have permanently stopped producing, but too many have delayed this work and fallen behind.' The NSTA did not name the main culprits, but its ruling applies to all companies operating around the UK now or in the past. Larger companies like Shell and BP, which were once amongst the most active in the North Sea, are thought to have a better record than the multitude of smaller companies that now dominate the UK offshore sector. Cost of decommissioning The UK oil and gas industry has been operating for nearly 60 years, during which time an estimated 8,000 holes have been drilled deep into the seabed in areas suspected of containing fossil fuels. Some were successful, leading to commercially viable reserves, but most were either dry or contained too little oil or gas to be worth exploiting. Such wells are temporarily sealed but must later be permanently plugged with marine cement that will prevent oil or gas from bubbling up into the sea at a later date. Subsea surveys have already shown that many such abandoned wells are leaking fossil fuels into the sea. However, the cost of decommissioning will likely soon outstrip the income generated by the UK's shrinking oil and gas reserves. Offshore Energies UK, a trade body, has estimated that it will cost around £25bn to decommission the redundant wells, pipelines and platforms spread across the UK's North Sea, Irish Sea and eastern Atlantic waters over the next decade.
The National
6 days ago
- Business
- The National
North Sea oil firms warned of fines over well decommissioning delays
The North Sea Transition Authority (NSTA), the industry regulator, said firms are "running out of time" to address a backlog of more than 500 wells needing to be plugged. The estimated cost of decommissioning these wells is £41 billion, which is shared between the private sector and the taxpayer according to BBC reports. READ MORE: 'No way' convicted felon Donald Trump should be welcomed in Scotland, Greens say Further delays could add £4 billion to the total cost, the NSTA warned. When an oil well reaches the end of its productive life, the operator is responsible for permanently decommissioning it. NSTA launched an investigation after identifying hundreds of wells that had missed their plugging deadlines. The regulator said the delays risk rig operators and supply chain companies relocating their equipment and personnel to other regions. If that happens, the regulator believes future decommissioning work in the North Sea would become more expensive. Currently, there are not enough rigs in UK waters to carry out all the forecasted decommissioning work. If the backlog continues, NSTA warned that more than 1000 additional wells could require decommissioning by the end of the decade. Pauline Innes, NSTA's director of supply chain and decommissioning, called on companies to act without delay. She said: "The stark reality is that operators are running out of time to get to grips with the backlog as more contractors consider taking their rigs abroad, which damages the supply chain's ability to meet demand and remain cost competitive." She added that while NSTA is willing to support firms, it will "get tough" on persistent delays. READ MORE: Lesley Riddoch: The SNP must take up zonal pricing fight – why aren't they? In 2024, only 103 wells were decommissioned to the final abandonment stage, with some form of work completed on 223 wells. However, 300 wells per year need to be fully decommissioned to clear the backlog. Industry body Offshore Energies UK (OEUK) said businesses are working to meet their obligations, but challenges remain. Decommissioning manager Ricky Thomson said: "Policy instability, including the Energy Price Levy and pauses in the Environmental Assessment process, has introduced significant uncertainty for the sector resulting in project delays and cost increases." He said the sector is working with the Government to ensure stable regulatory and fiscal conditions for safe, efficient decommissioning.
BBC News
6 days ago
- Business
- BBC News
North Sea operators 'running out of time' to plug old oil wells
North Sea operators have been warned that they could be fined if they continue to delay on the decommissioning of oil and gas wells. Industry regulator the North Sea Transition Authority (NSTA) said firms were "running out of time" to tackle a backlog of more than 500 wells to be cost - estimated at £41bn - is shared between the private sector and the taxpayer. It said that further hold-ups would cost a further £4bn. Offshore Energies UK (OEUK) said "policy instability" in the industry had created uncertainty, but said the sector was still committed to decommissioning. When an oil well comes to the end of its life, its operator has a responsibility to permanently decommission began an investigation after identifying hundreds that had missed plugging said that any delays risk rig operators and others in the supply chain moving their vessels out of the North Sea to seek work elsewhere. The regulator said that this would push up the costs in the long run. If the backlog is not addressed, NSTA said there could be more than 1,000 additional wells due for decommissioning by the end of the decade. Pauline Innes, NSTA director of supply chain and decommissioning, urged operators to act said: "The stark reality is that operators are running out of time to get to grips with the backlog as more contractors consider taking their rigs abroad, which damages the supply chain's ability to meet demand and remain cost competitive."She said NSTA was prepared to help operators when necessary but would "get tough" on those who continually delay. Significant uncertainty In 2024, only 103 wells were decommissioned to the final abandonment stage with some form of work being carried out on 223 300 need to be fully commissioned each year if the backlog is to be body OEUK said businesses were actively progressing their decommissioning obligations but that it was a complex manager Ricky Thomson said: "Policy instability, including the Energy Price Levy and pauses in the Environmental Assessment process, has introduced significant uncertainty for the sector resulting in project delays and cost increases. "The sector is working with the government to provide stable regulatory and fiscal frameworks to continue delivering safe, efficient decommissioning essential to the UK's economy, environment, and long-term energy future."
Scotsman
08-06-2025
- Business
- Scotsman
Inside the battle for North Sea control: How oil giants like BP lobbied over emission restrictions
Sign up to our daily newsletter – Regular news stories and round-ups from around Scotland direct to your inbox Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... The North Sea oil regulator weakened environmental requirements designed to control greenhouse gas emissions after being lobbied by oil and gas companies including energy giant BP, a new investigation has revealed. The findings have heightened concerns over the level of influence large oil firms have over independent UK agencies charged with managing the sector. Advertisement Hide Ad Advertisement Hide Ad A general view of the BP ETAP (Eastern Trough Area Project) oil platform in the North Sea, around 100 miles east of Aberdeen. Picture: Andy Buchanan -| Getty Images Documents obtained by The Scotsman through a Freedom of Information (FOI) request, in partnership with the investigative organisation Point Source, show BP pushed back against a wide range of proposed requirements that had been drafted by the North Sea Transition Authority (NSTA) as part of their Oil and Gas Authority (OGA) Plan. These included requirements to reduce the 'emissions intensity' of offshore oil platforms, as well as requirements to 'secure substantial and consistent total emissions reductions'. The scope of the North Sea consultation The NSTA received 32 responses from respondents that included industry bodies, relevant persons, energy transition companies and non-governmental organisations (NGOs). Advertisement Hide Ad Advertisement Hide Ad Outside of BP, the list of respondents also included Shell, Ithaca Energy - the company pushing to extra oil from the Rosebank field, west of Shetland - and Harbour Energy, which last month announced it was cutting a further 250 jobs in Aberdeen. The two-month consultation closed on November 30, 2023. People protest against the Rosebank offshore development off Shetland (Picture: Jeff J Mitchell) | Getty Images The Scotsman was denied a request to access unredacted consultation responses from other companies outside of BP involved in the consultation, with confidentiality exemptions cited. BP responses - and how the regulator adapted the oil plan In the wake of BP's communications with the NSTA, a requirement to reduce the emissions intensity was removed from the strategy document, along with a series other concessions that included relaxing requirements for the electrification of offshore platforms. Pushing back on an NSTA drive to shut down low-production fields that have high emissions intensity that was outlined in a draft plan, BP said the NSTA needed to take into consideration wider implications of shutting down these assets such as 'investor confidence' and 'risk of company defaults'. Advertisement Hide Ad Advertisement Hide Ad After changes were made to the OGA plan, Offshore Energies UK (OEUK) said in its newsletter for members the consultation had led to the NSTA "softening" the language within the document. The trade association body said: "The plan originated from the position that the offshore industries own, and will continue to own, the agenda". Mark Wilson, OEUK's HSE and operations director, added: "Regulatory intervention should only be available as a backstop if required." Lang Banks, the director of the environmental group WWF Scotland, said: 'The influence that oil companies have over the supposedly independent North Sea Transition Authority means that instead of helping to support a planned and fair transition away from fossil fuels it prioritises watering down requirements that would reduce polluting emissions. This delays action on climate change, and stalls progress on green job opportunities. 'As we head towards the Holyrood elections next year, we need all political parties to commit to ensuring Scotland and the wider UK reaps the multiple benefits that will come from a properly planned and fair transition to clean energy.' Advertisement Hide Ad Advertisement Hide Ad Labour candidate Davy Russell wins the by-election and celebrates alongside party leader Anas Sarwar and his deputy Jackie Baillie. | Lisa Ferguson Consultation documents obtained by The Scotsman under FOI legislation show BP called for deadlines to be abolished for requirements to electrify oil platforms, a move that was intended to reduce the reliance on burning oil and gas to provide power for platforms. Following the consultation, the NSTA scrapped its proposed target of making all platforms 'fully electrified' by January 1, 2030 and replaced it with a requirement for platforms to be either fully electrified or 'run on alternative low carbon power with near equivalent emission reductions' by the same date. Ahead of the publication of the final OGA Plan, BP also criticised a proposed requirement that would force oil companies to carry out an assessment of 'potential emissions savings' that was based on 'the societal cost of emissions'. The oil and gas company said that including an assessment of this kind was a departure from 'traditional practice' and could cause market distortion. After receiving submissions, the NSTA removed the phrase 'based on the societal cost of emissions' from the finished version of the plan, which was published in March last year. Advertisement Hide Ad Advertisement Hide Ad The consultation documents also reveal BP pushed back against a proposal that would require oil companies to execute emissions reduction initiatives aimed at reducing the 'emissions intensity' of an asset over a reasonable time scale and a requirement to deliver 'secure substantial and consistent total emissions reductions'. BP called these requirements 'impractical'. The NSTA changed the wording for both parts of the OGA Plan following the consultation, making the requirements less onerous for oil and gas companies. BP lowered its outlook for gas production in the first quarter of 2025. Picture: Yui Mok/PA Wire The NSTA replaced the phrase 'emissions intensity' with 'emissions' in the first paragraph, and said companies needed to 'secure substantial and emission reductions', removing the requirement for consistent improvements in the second paragraph. BP's position A BP spokesperson said: 'BP, similar to many organisations, engages appropriately with policymakers, industry groups and non-governmental organisations to offer feedback, expertise and insights into the policy-making process. This includes responses to public consultations. Advertisement Hide Ad Advertisement Hide Ad 'Our aim is to inform the development of balanced and practical policy and regulation that promotes shared objectives across the industry.' The company's view on flaring The consultation documents also show BP criticised proposals that would require oil companies to put in place plans to deliver 'continuous improvements in flaring and venting reductions' as well as a proposed requirement that 'all assets must deliver zero routine flaring and venting by 2030'. Flaring is the practice of burning off methane that is produced alongside oil and venting is when methane is released into the atmosphere without being burned. In 2023, oil and gas companies operating in the North Sea flared and vented enough gas to heat more than 700,000 homes, representing a lost market value of £250 million, according to the NSTA's 2024 emissions monitoring report. Advertisement Hide Ad Advertisement Hide Ad BP pushed back against the proposed requirements for 'continuous improvements' in flaring and venting saying this was not 'technically feasible', according to communications obtained by The Scotsman. The oil company also stated dissatisfaction with plans to require oil companies to reduce gas leaks, also known as 'fugitive emissions', on a yearly basis. BP said: 'Due to the nature of leaks and seeps, continuous reduction is unachievable as they are by their nature ad hoc.' Louis-Maxence Delaporte, an energy sector analyst at the campaign group Reclaim Finance, said: "This investigation puts the spotlight once again on BP's weak climate strategy, which relies even more heavily on oil and gas than previously. "BP has severely reduced its planned investment in so-called 'low carbon' activities, it has increased its 2030 oil and gas production trajectory and abandoned its critical target for reducing scope 3 emissions. Far from being in transition, BP is building a fossil future.' Advertisement Hide Ad Advertisement Hide Ad Other company submissions The UK-based oil and gas company Serica was one of the other companies that responded to the consultation and pushed back against some aspects of the draft OGA Plan. The company stated that requiring yearly improvements in emissions 'may not be a useful target', adding the 'overall direction should be lowering emissions'. Serica said the proposed requirement for 'continuous improvement' to flaring and venting was 'not realistic' due to 'unforeseen disruptions to production and the time it takes to implement material flare reduction projects'. The company also called for the NSTA to make the 'intent and mechanics' clearer for its proposed methodology to determine the that date oil and gas assets should be shut down. Serica was contacted for comment by The Scotsman. Advertisement Hide Ad Advertisement Hide Ad The OGA Plan was published ahead of the Court of Session in Edinburgh ruling earlier this year that permissions granted to the Rosebank oil field and the Jackdaw gas field under the previous Conservative government were unlawful and the fossil fuel giants behind the plans, Shell, Equinor and Ithaca, should have to reapply for permission. Conflicts of interest? However, significant concerns remain about the influence that large oil companies have over regulators like the NSTA, partly due to financial conflicts of interest. According to the NSTA's most recent financial results, which were published in July last year, the regulator's board members and their family members held shares in companies linked to the energy sector worth £351,258, including shares in BP. The family of the NSTA chairman Tim Eggar, who stood down in September last year, held 4,099 BP shares worth £20,331, as well as 1,875 shares in Shell worth £49,219. Advertisement Hide Ad Advertisement Hide Ad Iain Lanaghan, another NSTA director held 1,017 BP shares worth £5,044 as well as 358 shares in Shell that are worth £9,398. The NSTA said that its board did not consider these holdings sufficient to 'impair their independent judgement in board discussions' An NSTA spokesperson said: 'The OGA Plan is a robust set of requirements, which demands that industry takes immediate action to reduce production emissions on the path to net zero by 2050. 'It was finalised following extensive public consultation, including responses from several operators and, as with any thorough consultation, all responses were considered.'
Yahoo
23-05-2025
- Business
- Yahoo
Labour's tax raid to trap 1.5bn barrels of oil and gas under North Sea
Labour's windfall tax on oil and gas producers will leave 1.5bn barrels of oil and gas stuck in abandoned North Sea oil wells, according to new analysis of the levy's impacts. The predicted output between now and 2050 has fallen 40pc from 3.6bn barrels of oil equivalent to just 2.1bn barrels, according to a report from investment bank Stifel. The findings are based on data supplied by the North Sea Transition Authority (NSTA), the Government's oil and gas regulator. The slump in expected output comes after a surge in the number of companies abandoning productive wells, following Rachel Reeves's decision to extend the tax on oil and gas profits to 78pc. Ed Miliband, the Energy Secretary, has also banned new drilling. Christopher Wheaton, a Stifel analyst, warned that the tax take from oil and gas was also set to plummet, partly because of declining production volumes but also because the price of oil has fallen so far that there is no longer a windfall to tax. The report said: 'The UK North Sea industry is being destroyed by taxes that are too high, taxes which threaten energy security, jobs, investment and economic growth. 'The impact of lower investment and production is already being felt through job losses, lower tax receipts and more energy imports. 'The Office for Budget Responsibility's current forecast for North Sea tax receipts to 2030 is £10bn too high due to declining production and lower energy prices.' The forecast represents a potential headache for Ms Reeves, the Chancellor, who has left herself only a narrow margin to meet her fiscal rules and is already borrowing more than forecast. The UK has about 280 oil and gas fields that last year produced 29bn cubic metres of gas and 28m tonnes of oil. These amounts were lower than a decade ago when the UK produced 38bn cubic meters of gas and 38m tonnes of oil. The reduction has largely been driven by natural decline but experts have warned that recent tax raids on the sector have accelerated the North Sea basin's demise. The NSTA's 2023 production forecasts said that the UK would produce oil and gas equivalent to 46m tonnes of oil in 2028. But its latest forecasts, just issued, downgrade that to 40m tonnes, falling further to 33m tonnes in 2030. By 2040, the NSTA predicts the UK will be producing just 9m tonnes of oil and 4bn cubic metres of gas – way below what the country will still need by then, meaning more imports. The fresh forecasts suggest the windfall tax, or Energy Profits Levy, has roughly doubled the rate of decline. Robin Allan, the chairman of Brindex, an offshore industry trade body, said: 'An accelerated decline of North Sea output will see UK dependency on imports reach more than 85pc by 2030. The windfall tax is self-defeating and it should be removed.' The tax was first proposed by Labour in opposition but was adopted by the then Conservative government under Rishi Sunak in 2022 in response to the surge in oil and gas prices caused by the Ukraine conflict. Mr Sunak initially said it would only remain in place while the windfalls lasted. However, he and then Labour subsequently decided to retain it until 2030, even though oil prices have fallen from a peak fo $139 a barrel to about $60 now. Offshore operators say the tax is so high that there is now more incentive to decommission productive wells and claim the associated tax rebates than to expand production. Serica, one of the largest UK operators, separately warned on Thursday that Ms Reeves's windfall tax and Mr Miliband's ban on new exploration was killing off the UK industry. David Latin, Serica's chairman, said: 'The impact of the inappropriate fiscal environment, and the years of uncertainty, is taking a heavy toll. UK production fell 5pc in 2024, drilling activity is at a record low, 10,000 jobs have been lost and companies continue to exit the UK North Sea. 'All of this will reduce tax receipts going forward and, given demand which will not go away any time soon, lost production will have to be imported – imports which are worse for the environment since they involve significantly increased emissions.' A government spokesman dismissed criticisms, saying: 'The Government has reformed the Energy Profits Levy to support investment and give industry certainty and stability. 'We are delivering a fair and orderly transition in the North Sea, with the biggest ever investment in offshore wind and two first-of-a-kind carbon capture and storage clusters.' The Conservatives, the original architects of the tax, said the political consensus on the windfall levy was gone forever. Andrew Bowie, Conservative shadow energy spokesman, said: 'The report shows in the starkest terms what many have been warning about for months if not years – that the windfall tax is killing the North Sea oil and gas industry. 'Up to 10,000 people have already been laid off with 250 in the last weeks alone. And the new jobs promised in renewables just do not exist yet. Labour must think again and speed up any future fiscal arrangement for the North Sea before we see an entire industry disappear.' Richard Tice, energy spokesman for the Reform Party, said: 'A Reform government would encourage people in the oil and gas sector to get ready to explore when we win the next general election. We are urging them to have new licences ready to approve on an accelerated timeframe.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
