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Duty-free Sales

11.10 pm

Mr. Gwyn Prosser (Dover): I wish to present a petition signed by more than 6,000 citizens of the United Kingdom, many of whom are resident in my constituency.

The petition has been signed by staff employed on Dover's successful ferry fleet and by passengers travelling with the new joint venture company P and O-Stena Line. The petitioners believe that if duty-free sales are abolished in June 1999, there will be a severe impact on jobs in Dover, in other parts of the UK and throughout the European Union. They request that an impact study be conducted before decisions to abolish duty free are ratified.

The petition concludes:

I fully support the petition.

To lie upon the Table.

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Oil and Gas Platforms

Motion made, and Question proposed, That this House do now adjourn.--[Mr. Clelland.]

11.12 pm

Mr. Anthony D. Wright: When Greenpeace and other environmental groups successfully mobilised public opinion against the deep water disposal of the Brent Spar offshore platform, they presented the oil and gas industry with a major costly dilemma--a situation which is likely to recur if recent press reports are to be believed. Brent Spar is a massive floating storage buoy, with six floating storage tanks holding up to 50,000 metric tonnes of oil. It comprises 7,000 metric tonnes of concrete and 7,500 metric tonnes of steel. At 137 m in height, it dwarfs Big Ben's tower, which is a mere 95.7 m. When it was taken out of operation, the tanks were drained of oil and sea water was pumped in, leaving a residue of oily sludge that could not be pumped into the ocean. This sludgecontains various contaminants, including hydrocarbons, polychlorinated biphenyls and various heavy metals

On the basis of cost and safety, deep-sea disposal was the preferred option for the Brent Spar. Although this decision was approved by the Department of Trade and Industry on 20 December 1994, the balance of the environmental argument--in the public's mind at least--was strongly against that method of disposal. Shell--facing the threat of consumer boycotts and direct action in continental Europe--decided, at the eleventh hour, to seek to dispose of the structure on land, although both the company and the then UK Government believed that deep-sea disposal offered the best practicable environmental option.

The cost of on-land disposal of Brent Spar is likely to be about £23 million to £26 million. The disposal will also be very labour-intensive, involving complex and potentially hazardous operations. Risk analysis suggests that the probability of fatal injury in on-land disposal is six times greater than it is in deep-water disposal. It is also estimated that using even the cheaper, deep-water method to dispose of Brent Spar would have cost £17 million. With about 150 offshore platforms in the southern North sea alone, oil and gas companies, with the Government, face a costly and politically awkward time in decommissioning oil and gas platforms.

There is, however, a third way in which to deal with the problem: recommissioning, or reuse, of platforms. In this debate, I should like to deal with that third, more sustainable option.

Dr. Ian Gibson (Norwich, North): Does my hon. Friend realise that reports in the press state that 60 more oil rigs are likely to be disposed of in the sea? Does he agree that that would be unacceptable, and that finding alternative methods of destroying or recommissioning oil rigs is important not only to the environmental lobby, but to the interests of the British people?

Mr. Wright: I certainly agree with my hon. Friend that that problem will have to be faced. However, the difficulty is one of cost. The system proposed by Versatruss could be used to deal with most of those North sea rigs. The Versatruss system will certainly be an option open to companies in dealing with their rigs.

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Although the third option would not be appropriate in dealing with all offshore platforms, I firmly believe that recommissioning will make a valuable contribution to our economy and greatly benefit the environment. However, I should explain what recommissioning entails, and how the groundwork for the future of that innovative idea is being developed in my constituency of Great Yarmouth.

The objective of recommissioning is to extend the life of platforms by refitting and reuse, reducing the cost of decommissioning and thereby increasing the efficiency of oil and gas fields. Currently, an operator is more likely to deem a field to be uneconomic not when it is dry, but when the company believes that its pounds would be better spent elsewhere. "Economic" therefore has no common definition. However, when reassessed, fields that did not seem to be profitable can often be given a new lease of life, especially with the advent of new technologies enabling reuse of platforms.

The process is being developed by the industry under the generic name of "mature asset management". Recommissioning could mean that there is not a cost burden, but residual value at the end of the process, and that a liability thus becomes an asset.

Recommissioning could have a great impact on the industry. It is envisaged that operators may decide to move platforms from one field to another--by, for example, using the Versatruss removal method and recommissioning--as a part of planned asset management.

Briefly, the Versatruss removal method involves the use of a catamaran-style technology, and has been used successfully to move platforms round the Gulf of Mexico. Versatruss is an American company that has made the wise decision of locating its United Kingdom operation in Great Yarmouth.

The body responsible for much of the innovative thinking on recommissioning is the Great Yarmouth Recommissioning Partnership, which was formed because of Yarmouth's failure to attract, in early 1996, the decommissioning of Shell's Leman BK platform. In response to that failure, in September 1996, the offshore sector of the Great Yarmouth chamber of commerce held a conference of local businesses to discuss the matter.

The conference, and subsequent workshops, consolidated the opinions and ideas of local businesses, and set out to establish how to redress Great Yarmouth's late start and initial failure in the decommissioning process. An action plan was formulated, and a steering forum--involving representatives of Amoco UK Exploration, UK Waste, AMEC Process and Energy, and Datadrum Marketing--was established. Members of the university of East Anglia's centre for environmental and risk management were co-opted on to the forum as independent experts.

On 12 June 1997, the steering group introduced the concept of Great Yarmouth as a centre of excellence for recommissioning and the energy industry, and the Great Yarmouth Recommissioning Partnership was born. That partnership offers solutions that are quicker, cheaper and safer than those of any of its competitors. The partnership's report, which goes by the title "Sustain the Flame", sums up the essence of the scheme as the four Rs: remove, recommission, reuse and recycle. It has become known as the Great Yarmouth solution.

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The industry is beginning to agree that decommissioning alone is not the answer. Recommissioning and resale can give value to an asset, which, until the Great Yarmouth solution came along, had been considered a liability. With 150 structures in the southern North sea alone, the prize for Great Yarmouth could be multi-million pound contracts to carry out the recommissioning work, with all that that means for jobs in a town with a high level of unemployment. Furthermore, turning this innovative scheme into action would greatly boost Great Yarmouth's case for an outer harbour, even though the scheme is not dependent on its construction. In fact, it is even possible that a section of a decommissioned platform could form the basic structure of an outer harbour. That is another imaginative example of the reuse of offshore technology.

The viability of the scheme has been greatly enhanced by the recommendation the European Commission made in February this year, which states that oil and gas platforms should no longer be dumped at sea. The Commission goes on to say that

The Commission concludes that rules should, therefore, be based on the principle of prohibiting the disposal of platforms at sea. The European Council will be asked to confirm that that is the policy which the Commission should put forward on behalf of the European Union in talks at the all-important Ospar convention, which will shortly determine future policy in this sphere.

As I said, a significant number of offshore platforms are located in the southern North sea. That means that the port of Great Yarmouth is ideally situated to take on the specialised work involved in the recommissioning process. Indeed, EC waste legislation is driven by the proximity principle, which supports the use of the nearest appropriate facility. There are obvious reasons why that principle is important in this particular application, as hon. Members with sea-going experience or knowledge of the North sea will understand. Movement of these relatively large structures requires good weather conditions, and, to limit the risk to life and limb from rough seas and high winds, it is important that the minimum time is spent in relocation.

Of course, the long-term use of non-renewable fossil fuels is not necessarily secure, as it does not solve the problem of climate change, which is of great concern to a seaside town such as Great Yarmouth. However,the recommissioning example in Great Yarmouth demonstrates that the oil and gas industry, academics and the Government can come together to form successful partnerships capable of producing imaginative solutions to pressing environmental problems. There is no reason why such partnerships should not be able to provide similar solutions to long-term environmental concerns such as global warming. In Great Yarmouth, there is just such an initiative to develop a centre of excellence for the energy industry, which would build on the success of the Great Yarmouth Recommissioning Partnership and provide innovative energy management energy solutions with a view to the long term.

The partnership approach adopted to advance this particular idea into action should act as an example to industry as a whole. Although the offshore industry in

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Great Yarmouth has had to weather the economic instability of the past decade, as so often happens, adversity, if not necessity, has proved to be the mother of invention.

I believe that in years to come, the Great Yarmouth Recommissioning Partnership will be seen as the founding father of a scheme that is every bit as important to the well-being of our marine environment as recycling is to our terrestrial environment. The Yarmouth solution could turn an offshore platform from the scrap iron of the sea into a Rolls-Royce of the ocean.

Finally, I firmly believe that the scheme represents a blueprint for the future, as it brings together all the relevant agencies and industry for the benefit of the local economy, and is an example of the type of co-ordinated thinking which the Government should be encouraging.

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