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Scotland Aims To Stimulate Oil Decommissioning With £5M Fund

Paragon decom

Looking to spur business activity in Scotland for decom projects Scotland’s First Minister has launched a new £5 million fund that will provide opportunities for the supply chain in Scotland to benefit from the decommissioning of 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 First Minister launched the Fund at Sparrows, an Aberdeen-based supply chain company with expertise in decommissioning that has just secured a major contract to provide 102 cranes to Scottish Power. The First Minister also visited exploration technology specialists Zilift Ltd.

Ms 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.”

Jumpstart, the Scottish tax specialist which has increasingly helped to encourage innovation in UK companies, has urged firms in Scotland to seize the opportunities arising from decommissioning in the North Sea.

Jumpstart renewed its appeal following the announcement last week by Scotland’s First Minister Nicola Sturgeon of the new £5 million Decommissioning Challenge Fund .

Jumpstart said the fund will support engineering scoping work, infrastructure upgrades and innovation in salvage and transport methods at ports and harbors. It was unveiled on the day Shell published proposals for decommissioning the Brent field.

Ian Donaldson, Jumpstart’s Client Engagement Manager in Aberdeen, said, “This new money reinforces what we have been saying – that there is significant potential for innovation and improved efficiencies in the decommissioning market.

“These new efficiencies are very likely to be compliant with the requirements of research and development tax credit legislation and decommissioning companies only need to seek them out.” Related: Trump Burning Bridges In Iraq Over “Take The Oil” Comments

Donaldson pointed out that more than 5500 wells, 400 facilities and more than 10,000km of pipelines are likely to require decommissioning over the next 35 years. The emphasis will be on environmentally and economically acceptable solutions. Areas such as engineering and planning, well plugging and abandonment, demobilization of derrick barges, and platform removal are likely to be highly eligible for R&D tax credits.

Donaldson said that the fund announced yesterday was aimed solely at ports looking to cash in on dismantling the topsides of North Sea platforms, but emphasized that the tax credit opportunities applied across the whole of the decommissioning market.

More than £17 billion is expected to be spent on decommissioning on the UK Continental Shelf from 2016 to 2025, according to industry group Oil & Gas UK.

One Scottish company which has already invested heavily in the market is John Lawrie Decom which, with Aberdeen Harbour, has acquired access to a decommissioning-dedicated quayside area to receive structures for dismantling. Its environmental director Ray Grant said, “Our activity in this market continues to grow as more assets are being decommissioned.”

Brian Williamson, managing director of Jumpstart, said, “It is imperative that companies in, or thinking of entering, this lucrative new market are made aware of and investigate the potential returns that will be available from R&D tax credits.”

By Oil and Gas 360

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