Decommissioning inspiring new era of industry-wide collaboration
Worldwide spending on offshore decommissioning is set to grow by more than 5% annually over the next few years, led by programs in the North Sea and Gulf of Mexico. But with facility removal and P&A activity set to continue for several more decades, the industry has recognized the need for greater collaboration in order to develop and implement more efficient and lower-cost approaches.
Decommissioning isbecoming a major preoccupation for the global oil and gas industry with analysts predicting expenditure of around $32 billion over the next four years. The offshore market is projected to reach $8.76 billion by 2025, with a compound annual growth rate (CAGR) of 5.05% between 2017 and 2025. Europe is the largest and fastest growing market for offshore decommissioning, followed by North America, with the UK and Norwegian sectors of the North Sea set to experience the highest offshore decommissioning spending.
The gradual decommissioning of aging and mature infrastructure, wherever that may be in the world, will continue for decades. It is therefore imperative that the industry works as efficiently as possible to transfer learning, develop new business models, and embrace new technology.
Advances have been achieved in the processes involved in removal of platforms in the Gulf of Mexico’s outer continental shelf. Sharing the lessons learnt, from well P&A technologies to business strategies and personnel management, will help drive the creation of a new, more dynamic decommissioning sector, where a different kind of mindset is required.
With the transition from late-life operations into decommissioning, many may see this as the ‘sunset’ era for the sector and career prospects. In fact, opportunities abound to transfer and learn new skills to meet the demands of the developing supply chain serving this sector and its export capability in planning and execution management. For example, the University of Aberdeen is believed to be the first in the world to offer a master’s degree in decommissioning offshore installations.
Retention and recruitment will be a major theme at this year’s SPE Offshore Europe conference and exhibition in Aberdeen on Sept. 3-6. Following the success of the event’s inaugural Decommissioning Zone in 2017, this area has been expanded to become the Late Life and Decommissioning Zone. This will bring together thousands of technical, business and industry professionals under one roof in Aberdeen’s new TECA facility.
Around one-third of upcoming global decommissioning activity in the next decade will be in UK waters, according to consultant Wood Mackenzie. With around 85% of overall projects yet to take place, particularly on the larger facilities, this is an interesting and exciting part of the lifecycle that can align all players.
The energy transition, together with new technological advancements is seeing the industry take huge strides to find alternative ways to not only remove but also modify and re-use redundant platforms. One such case is Repsol’s redundant Gyda platform in the Norwegian North Sea, with plans to redeploy the facility to another field. This is potentially a leap forward for the industry and could help lower the Gyda field’s decommissioning costs, presently estimated at NOK5.7 billion ($672 million), at the same time reducing what could be a multi-billion-dollar investment for its new user.
Decommissioning will usher in new opportunities to innovate, reduce costs, and develop valuable expertise and skills. The creation in the UK of a National Decommissioning Centre of Excellence – a partnership between the University of Aberdeen and the Oil & Gas Technology Centre – represents a long-term commitment for not just oil and gas, but also nuclear and renewable facility decommissioning.
There are already many exceptional performers pioneering best practice in innovative, ‘dynamic’ decommissioning. These operators are realizing the benefits of collaborating in new ways, aside from traditionally accepted practice, both with each other and the supply chain as well as regulators and technology providers. There is also real enthusiasm to investigate radical approaches to contracting strategies and delivering cost reductions at scale. In various parts of the world there are natural groupings of operators that are collaborating in ‘clubs’ rather than as individual companies.
Experience is showing that the best practice is to plan decommissioning at least six years before cessation of the project, and decommissioning strategies are now being embedded in new projects’ earliest design stages. The ‘race’ to decommission is clearly less aggressive than to first production, but there is a benefit to structuring and sequencing activity to gain optimum cost-efficiency without overheating the market.
Likewise, in the field of well P&A, which accounts for almost half the cost of decommissioning, operators, service companies, and regulators are focusing on how to better harness the game-changing potential of new developments such as, for instance, thermite technology. This will go a long way to securing the crucial 35% cost reduction that the UK industry, for one, is striving for. •