Decommissioning in the 21st Century

Wells and facilities decommissioning around the world is entering a new era. Some drivers for the changes in decommissioning are eco-awareness, a recent particularly onerous cycle of climatic events, facility design evolution, the glaring media spotlight on the Macondo disaster and the resulting regulatory reaction. As we build bigger, better, more complex production systems for the recovery of deeper and more difficult reservoirs the remediation and removals become increasingly more challenging.

Jim Macklin

Reversing the installation process is neither efficient nor cost effective. Drilling and construction assets for the wells and installation of these facilities are in demand, aged or out of service. The current downturn in the market will drive a wave of vessel decommissioning in the drilling market to eliminate old iron and nearly obsolete drilling rigs. Upgrading these rigs is not practical in light of new regulations. Addressing liabilities associated with former production properties late in their life cycle is no longer acceptable. Identifying decommissioning strategies during concept selection needs to be the new norm.

Planning a general strategy for the plugging and abandonment of wells with removal of production facilities at inception is a step in the right direction. Deciding decommissioning methodology during front-end engineering (FEED) will lead to more efficient end-of-life solutions. Can we plan into the well completion the necessary hardware to accommodate rigless intervention? When we consider a semi, TLP or SPAR solution, have we assessed the removal cost during selection of the design concept? Dismantling a SPAR on location rather than towing a semi to an onshore site for scrapping should be done in FEED.

Operating companies, with their partners, carry financial reserve estimates on their balance sheet for decommissioning. How real are those reserve numbers? Who has the responsibility to review the reserve estimate? What new regulations have been imposed? Where is the inventory of those asset liabilities? If there are no certain and reliable answers for these questions you cannot budget accurately for abandonment.

Infrastructure evolves during the life cycle of the production unit; side tracking and recompletion, deck extensions for additional equipment, partner buy-outs, acquisitions, mergers, each requires adjustments to estimated costs for the methodologies employed during decommissioning.

The main driver for oil and gas companies is profit; sadly, decommissioning is not a profit center. Oil and gas employees do not see a career path in decommissioning. Third-party engineering and consulting companies are a more likely solution. Certain engineering companies have expertise in this area. There are benefits in bringing one on board and developing cost models that can be shared among partners. These third parties can also advise companies of opportunities in the market to share mobilization and demobilization cost. This can be expanded to a campaign level for multiple regional operators. In past years these consultants have also offered brokering services for the salvaged facilities.

Repurposing facilities can further mitigate cash output. There have been successful rig-to-reef programs in the Gulf of Mexico for decades. The North Sea, West Africa, Southeast Asia and remote areas have long-leased FPSO facilities that ideally find second homes. Many floating facilities can be reused, though finding that home in late life without preplanning is seldom successful. Field development solutions with residual value as an objective have the ability to provide marginal secondary sites development opportunities. There are many marginal fields with no hungry host available that would thrive on a development solution that came at a fraction of its original cost.

Planning for decommissioning up front, recycling facilities, bringing in experienced third parties and campaigning decommissioning programs will create efficiencies and cost savings for operators and contractors alike.

Jim Macklin is vice president of Projects & Engineering at InterMoor Inc. Prior to joining InterMoor, Jim worked in subsea construction and field development for Helix ESG beginning with Cal Dive Int., Helix Subsea Construction and Energy Resource Technology where he was responsible for the Typhoon TLP remediation and re-establishment of production for the subsequent Phoenix project. He then served as Director of Special Projects to decommission the ERT UK Camelot field. Jim is on the Subsea Tieback Forum Advisory Board. Macklin attended the University of Florida and then the Commercial Dive Center (now College of Oceaneering) in 1975.