Decommissioning has become an integral part of the offshore industry over recent years as operators seek to reduce their asset stock and remain profitable at the same time. With the ever-increasing pressure to save money, it’s important that oil companies have a reliable and expert supply chain to rely on for guidance and support.
More than 100 platforms are forecast to be completely or partially removed over the next decade in the waters of the United Kingdom Continental Shelf (UKCS) alone. Using the UKCS as an example, this blog answers some of the hotly debated questions around decommissioning and outlines some of the challenges operators face.
1. IS THERE SCOPE FOR ASSET LIFE EXTENSION?
Factors such as the age of the platform and the legislation of the region will influence late life and decommissioning strategies. It is important to realise that measured decisions on the fate of these aged structures can also take many years of planning.
Bureau Veritas Group (BV) state the challenges that operators face today include ensuring that safety conditions must remain satisfactory and that extended use of assets are approved by the statutory authorities. This requires a rigorous assessment of the integrity of the existing assets and a detailed analysis of potential hazards that could occur when production volumes are maintained.
The range of options available to operators seeking to extend the life of their structural assets is extensive. Investing in improving structural and well conductor asset life issues can potentially increase the working life of a platform by up to 20 years. Whether you’re adding – or recovering – platform slots, replacing your aged centralizers, or adding a complete retrofit conductor guide array to significantly extend the life of your platform, squeezing more life out of assets as opposed to decommissioning can offer vast savings to operators.
Oil and Gas UK have produced further guidance on the management of aging and life extension for assets with particular focus on organisational factors, planning and implementation, and monitoring, audit and review.
2. HOW LONG DOES A DECOMMISSIONING PROJECT TAKE?
If the concept of extending your asset’s life is not an option, decommissioning must be considered. Decommissioning an asset is not without its challenges and the process to do so requires lengthy planning. Due to the amount of planning required and multiple processes involved, decommissioning projects often take more than a decade before projects even commence. Take for example Shell’s Brent Field: the decommissioning project plan was established in 2006, however, it wasn’t until last year that the work started to finally to take shape.
3. ARE THERE RULES AND REGULATIONS FOR DEVELOPING A DECOMMISSIONING PROGRAMME?
The decommissioning of offshore oil and gas installations and pipelines on the UKCS is controlled through the stringent regulatory process that is stipulated in the UK’s Petroleum Act 1998. The responsibility for ensuring that the requirements of the Petroleum Act 1998 are complied with rests with the Offshore Petroleum Regulator for Environment and Decommissioning (OPRED) which sits within the Department for Business, Energy and Industrial Strategy (BEIS). Guidelines for decommissioning of offshore installations and pipelines are available from the BEIS. Operators must submit Decommissioning Programmes to BEIS for review, which is then followed by public consultation, as part of the extensive approval process. In other regions the guidelines will also be defined by the local government regulations.
4. HOW MUCH WILL IT COST?
The cost of decommissioning just one field could run into several billion pounds. In the UKCS, the cost is shared between the operator and the UK Government, which has been giving oil companies tax relief for many years. Decom North Sea reported that plugging and abandonment is one of the highest cost areas – comprising about 60% of the total decommissioning cost, followed by topsides at 9.8%, then subsea structures at 6.2%. In June 2017 the Oil and Gas Authority (OGA) published a report which provides the latest cost estimate for offshore oil and gas decommissioning in the UKCS. With a shared objective of both industry and government to reduce decommissioning costs, the OGA has set industry a target to reduce costs by at least 35% or to less than £39 billion. This has included operators and the wider supply chain sharing knowledge and reviewing lessons learned, as well as developing innovative approaches to developing a decommissioning strategy in order to enhance capability.
5. WHAT HAPPENS TO ABANDONED MATERIALS?
The way in which rig materials are disposed of will again depend on the legislation of the region. As an example, under current rules – which include the Petroleum Act 1998 and the OSPAR convention governing the North Sea, oil and gas operators are mostly required to remove all or part of installations when they are no longer in use. North Sea legislation states that the rig’s support structure must be completely removed if it weighs less than 10,000 tonnes. However, platforms which are heavier and were built before 1999, before removal was considered part of rig designs, operators can attempt to put together what is called a ‘derogation’ case allowing them to leave much of it in place. The materials which are not left in place, usually the topsides of the rigs, are taken ashore and dismantled. Materials such as metal are recycled where possible.
Shell have publicly announced that they aim to reuse and recycle as much as possible from their Brent field. Able UK in Teesside has been awarded a contract to reuse and recycle materials from the topsides. There is a target of at least 97% reuse and recycling for all topsides material. However, a lot of the metal is unsuitable for recycling, and therefore is simply broken down and taken to a landfill along with the concrete and other elements of the rig. In few cases, creative uses for abandoned platforms have been found, including a museum and overnight accommodation for divers.
6. WHAT ARE THE ENVIRONMENTAL IMPACTS OF DECOMMISSIONING?
Not only are there cost implications with decommissioning projects, there is the environment to consider too. From the perspective of causing minimum disturbance to sea life, leaving subsea structures in place and utilizing rigs to reef is often a favoured option – as we covered in a previous Claxton blog. Artificial reefs are known to be one of the most effective means of increasing the bio-productivity of coastal waters by providing secure habitats for marine life which become more established as the years go by. They are widely and effectively used on the shelves of many countries.
Some operators have argued that removing platforms without a trace will cause more environmental damage than leaving parts behind. On the decommissioning of the Brent field, Shell has sought an exemption from OSPAR to leave the legs jutting out of the water as navigational tools for fishermen. Shell made a ‘derogation’ case, claiming that the platforms were built quickly and without considering decommissioning, therefore it would be safer to leave them in situ.
The broader environmental effects of decommissioning should also be considered. The effort of removing heavy topsides for example requires lifting equipment, tugs and barges which create a vast amount of CO2 to transport the rig to shore.
These types of environmental impacts continue to be a much-debated subject.
7. ARE THERE BENEFITS FOR OPERATORS TO BUILD STRATEGIC PARTNERSHIPS WITH THE SUPPLY CHAIN?
While the decline in the oil and gas industry has presented huge challenges, decommissioning has provided a massive economic opportunity. Operators are looking much more seriously at decommissioning plans and recognise the complexities of the process requires them to build partnerships with a supply chain who have the knowledge and experience to support their strategy.
Claxton has a long-standing record working on decommissioning projects around the world and have invested in creating a portfolio of comprehensive services. Experienced in platform, subsea, rigless and vessel-based campaigns, Claxton supports well decommissioning by providing risers, wellhead removal, conductor severance, well P&A and solutions to overcome integrity issues with platforms or ageing well infrastructure.
Our experience, coupled with extensive in-house tailored engineering capabilities and a proven record of managing successful projects, makes Claxton a confident choice for platform and subsea well abandonment for operators.
See how Claxton provided a one-stop decommissioning solutions for our clients in our decommissioning case study pack.