The plugging and abandonment (P&A) of offshore wells represents a significant cost to operating companies and national authorities. On the Norwegian Continental Shelf (NCS) alone, the cost is estimated to be US$108 billion (NOK 870 billion) during the next 40 years, reports DNV GL, the world’s largest ship and offshore classification society and one of the global top three certification bodies.
A new DNV GL guideline will introduce a risk-based approach instead of the current prescriptive practice. DNV GL estimates that, when combined with optimized project execution and new technology, the P&A cost can be reduced by 30-50%.
When the production from an oil or gas reservoir ceases or is no longer profitable, authorities require the well to be P&A’d. The purpose is to establish a permanent barrier to prevent the migration of hydrocarbons to the surface. Traditional P&A methods are time consuming, costly and have remained unchanged despite technological advances across many other aspects of the industry. About 2350 wells will require P&A on the NCS, and 3000 more wells are planned to be drilled in the future. In the UK, close to 5000 offshore wells will need P&A.
“These costs are enormous,” says Per Jahre-Nilsen, senior principal engineer for DNV GL. "With current practices, the wells on the NCS will require the deployment of 15 rigs full-time over the next 40 years. Based on the 2013 cost, this is equivalent to more than one-tenth of the current value of Norway’s sovereign wealth fund. “We believe the time has come to tackle this issue, head on, by assisting regulators and the industry to establish a new methodology for dealing with the decommissioning of wells,” he says.
The main barrier to change in this sector has been today’s prescriptive approach to the regulations, which represents a conservative interpretation of past experience. Practice also differs from country to country. In the upcoming P&A Guideline, DNV GL will use well-known and accepted risk-approach methodology in which both environmental and safety risk aspects will be key factors. DNV GL has already worked with international operators to develop an initial set of criteria. These will be further strengthened through collaboration with regulators and the oil and gas industry. The guidelines are under development and will be issued in 2H 2015.
“This means that hazardous wells will get the attention they deserve, and benign wells will avoid excessive rig-time and expenditure. We can potentially halve the costs of plugging and abandoning wells. We're looking at potential cost savings of more than $32 billion on the NCS alone, and even more globally,” Jahre-Nilsen says.
Elisabeth Tørstad, chief executive of DNV GL’s oil and gas division, says that risk-based approaches are widely used in all other offshore disciplines to ensure appropriate long-term environmental protection and to represent the most rigorous method to enhance safety. “It is time to apply these principles to P&A,” she says.
Image: Per Jahre-Nilsen / DNV GL
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