4 ms·

It 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 t

It 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 ago
That sounds... fair? Like a normal expenditure (it doesn't sound like tax avoidance).
hanniabu 6y ago
I think the better question is why it costs $24B...
- obmelvin 6y ago
  I 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 ago
    I 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.
    - nitrogen 6y ago
      How does that $24bil compare to oil revenue? Big numbers aren't scary if they are contextualized by even bigger numbers.
      - Judgmentality 6y ago
        You're missing the point. It's like the $10,000 toilet seat covers the US military paid for. I'm not saying they can't afford it. I'm saying it's graft. https://www.washingtonpost.com/business/capitalbusiness/the-air-forces-10000-toilet-cover/2018/07/14/c33d325a-85df-11e8-8f6c-46cb43e3f306_story.html https://www.washingtonpost.com/business/capitalbusiness/the-...
        nitrogen 6y ago
        Paying $10k for one toilet seat might be graft. We have to ask what the engineering specs were. $10k for an ISS toilet seat might be reasonable. And that $10k might be buying something else they don't want on the budget, which is near enough to graft as makes no difference. But paying $1mil for many toilet seats probably isn't graft if you run 10,000 profitable paid toilets. Until someone can successfully decomission a fleet of oil rigs for way less than $24bil, we don't know if it's a good price or not, but especially if it's a small fraction of the overall lifetime value of the oil produced, it might not be a big deal.
      - perl4ever 6y ago
        I had no clue, but it seems to be in the ballpark of 8 years revenue for "the world's largest offshore drilling contractor". So it sounds like a lot to me. [Edit: if that was pounds not dollars, then more like 11 years]
    - obmelvin 6y ago
      Very fair. Perhaps I'm misunderstanding the math as well - my understanding was 24B was the cost to decommission 350 platforms which comes out to about 68M a piece. I can't claim to know enough to judge whether it could be done drastically cheaper, but yes I'm sure there is some inflation in costs
  - Gwypaas 6y ago
    That's a small vessel in the grand scheme of things, and only works for floating platforms, which can be towed if time is not an issue. For fixed installations let me introduce you to the completely crazy Pioneering Spirit. https://www.youtube.com/watch?v=D5xXmEHPFp8 https://www.youtube.com/watch?v=D5xXmEHPFp8 - Dismantling a platform in the North Sea https://en.wikipedia.org/wiki/Pioneering_Spirit_(ship) https://en.wikipedia.org/wiki/Pioneering_Spirit_(ship)
    - obmelvin 6y ago
      Thank you for sharing!! I'm very fascinated by these huge engineering projects/machines.
- wizzwizz4 6y ago
  £24 billion, or about $33 billion.
- a1369209993 6y ago
  Actually, if we're really talking about a tax writeoff, the cost of removing the platforms would be much greater than 24B£ - specifically, if would be enough that, if the income used to pay for it were included in the company's taxable income, the marginal income tax alone would be 24B£.
- qw3rty01 6y ago
  Another thing that wasn't super clear was that this is the total tax relief for all oil rig decommissions for every company, not per oil rig.
leoedin 6y ago
That money isn't being thrown into the sea though - it's being paid to all sorts of salvage companies, offshore specialists etc. It's not like the government will suddenly have 24bn less than they would otherwise.

noja 6y ago

That sounds... fair? Like a normal expenditure (it doesn't sound like tax avoidance).

hanniabu 6y ago

I think the better question is why it costs $24B...

obmelvin 6y ago
I 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 ago
  I 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.
  - nitrogen 6y ago
    How does that $24bil compare to oil revenue? Big numbers aren't scary if they are contextualized by even bigger numbers.
    - Judgmentality 6y ago
      You're missing the point. It's like the $10,000 toilet seat covers the US military paid for. I'm not saying they can't afford it. I'm saying it's graft. https://www.washingtonpost.com/business/capitalbusiness/the-air-forces-10000-toilet-cover/2018/07/14/c33d325a-85df-11e8-8f6c-46cb43e3f306_story.html https://www.washingtonpost.com/business/capitalbusiness/the-...
      - nitrogen 6y ago
        Paying $10k for one toilet seat might be graft. We have to ask what the engineering specs were. $10k for an ISS toilet seat might be reasonable. And that $10k might be buying something else they don't want on the budget, which is near enough to graft as makes no difference. But paying $1mil for many toilet seats probably isn't graft if you run 10,000 profitable paid toilets. Until someone can successfully decomission a fleet of oil rigs for way less than $24bil, we don't know if it's a good price or not, but especially if it's a small fraction of the overall lifetime value of the oil produced, it might not be a big deal.
    - perl4ever 6y ago
      I had no clue, but it seems to be in the ballpark of 8 years revenue for "the world's largest offshore drilling contractor". So it sounds like a lot to me. [Edit: if that was pounds not dollars, then more like 11 years]
  - obmelvin 6y ago
    Very fair. Perhaps I'm misunderstanding the math as well - my understanding was 24B was the cost to decommission 350 platforms which comes out to about 68M a piece. I can't claim to know enough to judge whether it could be done drastically cheaper, but yes I'm sure there is some inflation in costs
- Gwypaas 6y ago
  That's a small vessel in the grand scheme of things, and only works for floating platforms, which can be towed if time is not an issue. For fixed installations let me introduce you to the completely crazy Pioneering Spirit. https://www.youtube.com/watch?v=D5xXmEHPFp8 https://www.youtube.com/watch?v=D5xXmEHPFp8 - Dismantling a platform in the North Sea https://en.wikipedia.org/wiki/Pioneering_Spirit_(ship) https://en.wikipedia.org/wiki/Pioneering_Spirit_(ship)
  - obmelvin 6y ago
    Thank you for sharing!! I'm very fascinated by these huge engineering projects/machines.
wizzwizz4 6y ago
£24 billion, or about $33 billion.
a1369209993 6y ago
Actually, if we're really talking about a tax writeoff, the cost of removing the platforms would be much greater than 24B£ - specifically, if would be enough that, if the income used to pay for it were included in the company's taxable income, the marginal income tax alone would be 24B£.
qw3rty01 6y ago
Another thing that wasn't super clear was that this is the total tax relief for all oil rig decommissions for every company, not per oil rig.

leoedin 6y ago

That money isn't being thrown into the sea though - it's being paid to all sorts of salvage companies, offshore specialists etc. It's not like the government will suddenly have 24bn less than they would otherwise.