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"Decommissioning the UK’s offshore oil and gas infrastructure will cost the taxpayer £24 billion" errr... what? Why is the entity that installed the platform
by noja 6y ago
"Decommissioning the UK’s offshore oil and gas infrastructure will cost the taxpayer £24 billion"
errr... what?
Why is the entity that installed the platform there not responsible for that cost?
This article reads very much like a paid piece.
- ghouse 6y agoPrivatize the gains (assets), socialize the losses (or the liability)
- serjester 6y agoBP was owned by the British government up until 1987. Maybe it’s their rigs from back in the day? Private companies are usually required to have insurance to cover decommissioning their assets in the event of bankruptcy. I’d be very surprised if Britain wasn’t directly involved in the operation of these.
- redis_mlc 6y agoThe notable exception is nuclear plants. In the US, they just get their operating certificate extended until they fail, then the owner hires a bk lawyer. Fukushima will cost over $1 trillion to cleanup, plus the Japanese mobilized their military to source enough labor.
- throwaway2048 6y agoIf its anything like how it works in most other oil and gas sectors, they transfer the well infrastructure to shell companies for next to nothing when they are at or near the end of their useful production life, that then promptly go bankrupt. Now the big companies don't have to pay for clean up, magic.
- noja 6y agoThat only works once. If the other side expects shenanigans, then the company can prepay the cleanup cost somehow, either as an ongoing tax, as upfront fee, or as an insurance pool that you pay into. There are probably hundreds of ways of structuring it.
- throwaway2048 6y agoExcept there is zero political will to ensure such a fund is either extant, or properly funded. This story has repeated itself a lot.
- specialist 6y agoTIL: There's a million (or so) abandoned well heads in North America. Suggesting the trick happened more than once.
- qw3rty01 6y agoIt wasn't quite clear in the article, but the government isn't paying to remove the platforms, rather the cost of removing the platforms can be written off on taxes, so they (all the oil companies combined) would be paying 24bn less in taxes than they otherwise would have.
- noja 6y agoThat sounds... fair? Like a normal expenditure (it doesn't sound like tax avoidance).
- hanniabu 6y agoI think the better question is why it costs $24B...
- obmelvin 6y agoI certainly think you are asking a fair question, but I also think it is understandable that such operations would be considerably expensive. The equipment to remove oil rigs is not cheap [0] and I would assume the demand for such ships is high. Also, I can imagine that a rushed decommission can lead to various ecological disasters that would then cost more to clean up than a proper decommission (+ the added environmental damage) [0] https://www.youtube.com/watch?v=xsnW5CHrpQ8 https://www.youtube.com/watch?v=xsnW5CHrpQ8 - "How Do You Move an Oil Rig? With This Enormous $200M Ship"
- Judgmentality 6y agoI agree with the sentiment of your argument. I also agree with OP that $24 billion is a ridiculous amount of money assuming it isn't mostly graft. If the oil company had to pay for this operation entirely with its own money, with bankruptcy-threatening fines for failure to comply with strict independent oversight, I bet they could do it for 10% of that cost. This comment is purely speculation based on my loose understanding of corruption in the construction industry. I am not familiar with petroleum engineering and could be wrong as I am quite obviously guessing.