Offshore service companies are forming partnerships to take on full responsibilities for decommissioning projects. Opportunities are currently greatest in the North Sea: according to Aquaterra Energy over £15 billion ($19.53 billion) could be spent this decade on decommissioning oil and gas facilities on UK fields, including P&A of nearly 2,400 associated wells.
Recently the company signed a memorandum of understanding with Oceaneering International Services to jointly provide decommissioning/late-life solutions to the North Sea industry, focusing initially on shallow-water fields in the southern sector. The arrangement would combine Oceaneering’s tooling and experience in cutting, severance and dredging operations with Aquaterra Energy’s own equipment inventory and engineering solutions (the company’s track record includes decommissioning programs for BP, Shell, and others in the North Sea, West Africa, and Southeast Asia). The targeted key sectors are tooling and services for platform well and subsea well abandonments; topsides and jacket removals; and subsea equipment removals.
Offshore spoke to Aquaterra Energy’s Managing Director, James Larnder, about the opportunities in what is becoming an increasingly competitive market.
Offshore: How did the collaboration come about?
Larnder: Aquaterra Energy has always provided products and services for decommissioning and late life projects, but now the company is doing it in a proactive manner. Last year, we decided to offer a wider decom service to customers: we lacked the full tooling capability, so that led to a discussion with Oceaneering. It was a win-win situation, as they wanted to target more projects in the southern North Sea, but didn’t have a local presence. We could provide this through our base at Great Yarmouth, on the Norfolk coast, and our offices inland in Norwich.
In the North Sea region, most of the bigger decommissioning projects go out to formal tender. The partnership will address all types, from full-scale to partial programs. Oceaneering has a global suite of equipment and has already placed some of it in our Great Yarmouth warehouse, including subsea cutting tools. We plan to invite clients into the yard for equipment demonstrations.
We consider our main strength to be our ‘intelligent engineering’ approach - listening to clients to understand their project and challenges, including any gaps in the local supply chain. We then address those challenges with engineering-led solutions to meet those demands (and not always offering standard, off-the-shelf products). Oceaneering is a global player, and with them we can also offer flexible project management, for instance, looking at different ways of P&A’ing wells.
Offshore: There are a couple of other groups offering an above/subsurface decommissioning package for the North Sea area. What distinguishes this new partnership in its operating model, and is it solely pursuing opportunities in shallower water?
Larnder: Potentially, Aquaterra and Oceaneering could act as subcontractors to Tier 1 companies which have their own vessels and rigs: although Oceaneering has its own vessels operating primarily in Africa and GoM, it will not operate for the alliance in this region.
The focus of the collaboration will initially be on the local market in the southern sector, extending into Dutch and Norwegian waters. Oceaneering has a presence in Aberdeen and Rosyth in Scotland from which they already service the central and northern North Sea. As demand for decommissioning services grows, I can see these sites being complemented by Great Yarmouth and Oceaneering’s base in Stavanger. We’re also looking in the longer term at working together on international projects.
Offshore: What does the Great Yarmouth base offer for decommissioning and how do you plan to develop it under the new co-operation?
Larnder: Future development will be driven by uptake for our services, which Oceaneering is doing a lot to upgrade. Over time I see more equipment being based in the yard and more of our engineers located there, taking advantage of the local supply chain for our decommissioning programs.
Offshore: Are the priorities/requirements of operators in the southern North Sea still evolving? Does each operator have its own philosophy on how best to decommission their facilities?
Larnder: The oil price downturn forced the industry to consider different ways of doing things, and decommissioning is part of that. Offshore operators are looking to work more collaboratively, including finding ways of implementing best industry practice. Companies in the supply chain too are looking to work more closely together in order to offer more to the operators.
Ultimately, however, it still comes down to doing the work as safely and cost-efficiently as possible. In a downturn, there is pressure on the supply chain to cut its costs. The Oil & Gas Authority (OGA) has set a decommissioning cost reduction target for the UK industry of 35% by 2035, and for that to happen the supply chain needs to keep working together, finding more efficient ways of doing things. As an example, our partnership can examine ways of reducing vessel days associated with a decommissioning campaign.
Offshore: Will you follow the route that some others have done, inviting various operators to participate in a pooled, decommissioning service timeshare arrangement?
Lardner: We might, although it’s very much a case of reviewing each opportunity on its own merits. Oceaneering has employed this approach in its Norwegian operations. We could consider organizing P&A campaigns involving multiple operators, although that would depend on the specific requirements. A lot of it is also down to the timing for individual operators - some may have priorities in terms of timing for getting their wells decommissioned, while others may be looking to get assets off their balance sheets. Or again, it may depend on how much pressure the regulatory bodies decide to exert to force some operators to address wells that have been out of service for some time.
Offshore: What can the partnership offer that is new in terms of topsides and jacket removals and well P&A?
Larnder: We’ll use a tried-and-tested approach, although we would look to bring in greater efficiencies through working more closely with the local supply chain. We’d also seek to work with operators at a much earlier phase in their planning process to find ways of addressing their problems. In the southern North Sea, topsides removal can be handled by some of the bigger crane vessels.
Decommissioning of wells - and subsea wells in particular - play more to the partnership’s strengths. Oceaneering has an excellent severance and recovery system that can be deployed from a rig or vessel. It’s a patented tool that involves latching, severance and recovery of the wellhead/conductor in a single run. It saves an awful lot of rig/vessel and service time.
As for Aquaterra, a lot of what we would plan to do hinges on our seabed to surface capabilities. The company specializes in tying into existing wells for interventions - connecting risers to interface with subsea wells, as we did for Maersk Oil’s James/Leadon decommissioning project in the central UK North Sea. We would also look to supply our conductor retrieval system, an adaptation of our other conductor support units for tensioning purposes: this involves retrieving conductors through the platform using the vessel or platform crane.
Offshore: The southern gas basin contains some of the North Sea’s longest-serving platforms and wells. Does the partnership have special techniques to deal with the worst cases of structural/downhole degradation?
Larnder: Although the shallow-water conditions aren’t as harsh as in other parts of the North Sea, this is something that operators need to consider. That’s where our structural engineering and riser analysis capabilities come in. We have a specialist team that can assess the platform or riser structural condition. For removal operations we can propose a remedial fix or other solutions to shore up conductors or wells, while Oceaneering has clamps to aid in riser and pipeline recovery.
Offshore: Depending on the scope of the operator’s decommissioning program, would there be a need for the partnership to acquire a jackup or vessel as part of their package?
Larnder: That would be on an ad hoc basis. We would typically provide our services to a lead Tier 1 contractor that has these capabilities, or we ourselves could bring in a vessel or rig if need be. Typically, the operator would want to take care of the rig contract, unless it was looking to relieve itself of all liabilities for the asset in the final stages of its life.
Offshore: Can you provide examples of other innovative tools and techniques the two companies plan to offer?
Larnder: From Aquaterra Energy’s side, our work on our riser systems is all focused on reducing costs to clients so that they can operate more efficiently, saving rig and vessel time. One of our new designs is the Aquaterra Quick Connect (AQC) system, designed for safer riser connections. This provides a connection between the rig BOP and the riser joints, eliminating the makeup of flanged connections online.
We’d also be looking to supply our new AQC subsea riser system which allows reconnection to subsea wells from a jackup: the southern North Sea has numerous old subsea wells with an unclear fatigue life. We could undertake analysis to determine the remaining fatigue life and what equipment would need to be brought in for a safe P&A operation. You cannot always use a semisubmersible rig in this sector to put a heavy subsea BOP onto fatigued subsea wells; our riser system, however, operated from a jackup can be better used to enter these types of wells.
Oceaneering’s innovations include a chain-driven wire severance system, a new product due to be launched later this year for cutting of large OD structures such as platform legs. Another is Rig Chase, a cost-effective vessel-based wellhead removal solution that can be used to cut casings from 7 in. to 36 in., in a single deployment. This has been used to remove over 120 redundant subsea wellheads in the North Sea and over 3,000 multi-string conductors worldwide.
Offshore: Does the proposed service extend to recycling of decommissioned structures or materials?
Larnder: No. Oceaneering has a dredging system designed specifically for managing drill cuttings offshore, but there are other specialist companies set up to deal with these tasks onshore. •
