A growing belief that the ‘bow wave' of the long-awaited North Sea decommissioning market has now reached the industry was evident at last month's sell-out Offshore Decommissioning Conference† in Dunblane, Scotland. Meg Chesshyre reports.
A plea, in the heightened awareness post-Macondo, to deal with the significant number of suspended wells on the UKCS was made by Oil & Gas UK chief executive Malcolm Webb in his opening address. ‘Whilst I'm sure they have been left in a fully safe condition, I also fear that their existence invites Murphy's Law to be applied with potentially serious consequences for all of us,' he said. ‘May I ask you to consider ways in which that challenge can be effectively and efficiently overcome and if possible come up with a plan which I might put to the board of Oil & Gas UK and thence to the industry.'
The size of the decommissioning prize was outlined in the latest update of the UKCS Decommissioning Market Report compiled by Oil & Gas UK, representing the views of 54 different operators, and presented by analysts Alison Booth and Ronan Ferguson. To add granularity, this was backed up by a direct survey of 12 operators looking at their 2012-16 spending plans, covering over 90% of the market for the period.
The overall cost of UKCS decommissioning to 2050 is now estimated at £30.4 billion, of which £4.2 billion is forecast to be spent over the next five years. This in addition to a £37 billion investment in new and existing development projects in the same period, of which drilling represents £17 billion. Over £250 million of the 2012-16 decommissioning spend will be in the southern North Sea, and more than £2 billion in the central and northern North Sea, mostly dominated by large integrated facilities. Well P&A is a large part of the near-term decommissioning market, with over £ 1.6 billion to be spent by 2016.
Richard Heard, project manager for the North Sea Decommissioning Baseline Study, gave an update on the study established in September 2010 by Oil & Gas UK as a joint industry project supported to the tune of nearly £1 million by UKCS operators Apache, BP, Centrica, CNR, ConocoPhillips, Dong, ExxonMobil, Fairfield Energy, Marathon Oil, Shell, Statoil and Talisman. As well as these oil companies, the JIP also fostered links with Norway's OLF, Holland's Nogepa, and the Danish Operators' Association. An independent scientific view was provided by a scientific advisory board chaired by Professor Ian Boyd of the University of St Andrews.
Heard said that significant experience had been gained since 1999, when the OSPAR Decision 98/3 came into force governing the decommissioning of offshore structures, including major decommissioning projects such as Frigg, North West Hutton and Ekofisk and ongoing projects such as Miller, Dunlin, Brent and Murchison.
On the infrastructure side the study established that there are 512 remaining steel piled jackets across the whole of the North Sea; 50 others have been decommissioned. Some 83% (456) of the steel jackets weigh under 5000t; 8% (43 in total) are more than 10,000t, and therefore potential candidates for derogation. There are 20 operational gravity base concrete structures; six have been decommissioned. There is scope for development in all technology areas – cutting, lifting and transportation. There is less industry experience in pipeline decommissioning (compared with platforms). Long-term degradation of pipelines also requires further research. Facilities re-use in the North Sea has been limited so far to gas production topsides in the southern basin.
‘The study has been a fantastic piece of work in terms of gathering the data,' enthused Heard. The JIP had identified a number of gaps, across the areas covered by the study – stakeholders, infrastructure and the environment. It was the industry's intention to close the gaps and build on the momentum provided by the JIP.
Dick Lagerweij, general manager commercial for Smit Marine Projects, told delegates that his company already has a track record in decommissioning on the Dutch Shelf. It has removed the P14A and K10V platforms for Wintershall, and this summer removed an L13 subsea structure for NAM. The P14 removal in 2008 saw the first commercial deployment of the Ampelmann heave-compensated crew transfer system, a Delft University technology spinout, requiring a lengthy approval process from the Dutch authorities.
Lagerweij made a plea for early contractor involvement in decommissioning projects. ‘We would ask operators for a large execution window, to plan and to allow for other works in between, enabling a very high utilisation of our assets that in turn has a beneficial effect on prices.' He also asked for better information from the operators on the state of walkways and scaffolding etc, to make it easier to give lump sum estimates. Another problem was how to organise cross-border waste.
It was currently quite complicated to do a lift in the UK and then bring it to say Flushing or Ijmuiden. He also noted that the increasing number of certified waste demolition sites was of great benefit in that it minimised transit time at sea.
Charging regime
Richard Brooks, head of offshore decommissioning at the UK Department of Energy & Climate Change startled delegates by outlining the charging regime that DECC intends to introduce to cover the cost of its growing decommissioning workload, although no specific figures were mentioned. He pointed out that DECC was now dealing with 18 active decommissioning programmes, all at different stages of progression, costing around £6 billon (a slightly higher figure than the Oil & Gas UK one, because some of the programmes went beyond 2016), and that there are another 20 programmes on the horizon.
According to Brooks, the charging regime would be simple, fit for purpose and fair to both the taxpayer and the industry. It was necessary to balance resources against the Department's increasing workload, and would be an efficient value adding service to the industry. The charging regime was announced in the UK government's spending review, and there had been a 12-week consultation completed this summer. The industry would rather not have it, but understood the rationale. The statutory instrument was ready to go and final discussions were under way with the Treasury.
Having been in post 12 months he said: ‘I do think I am seeing an awful lot more interaction between our unit and the industry already. I think we are all trying very hard to build strong relationships with each other.' An example was the secondment scheme for personnel from DECC to work with the operators, which kicked off in October with a secondment to Fairfield Energy, closely followed by Shell, then Marathon. A number of other operators had already agreed that they wanted to participate as well, and there might be some secondments in the other direction in the future.
The need for co-operation was also stressed by Bill Cattanach, who heads up the Pilot Secretariat in the DECC's industry & technology unit. ‘If we keep on doing the things the way we have done before, there is only one way the costs will go and that is up. If we can bring together two or three big projects and have a single contract across a number of operators, that could be the way forward,' he stressed. DECC would not bring forward COP [cessation of production] dates, but where it occurred naturally would actively encourage collaborative campaigns. He stressed the uncertainty over COP dates. DECC had received COP figures for 15 fields in 2010 and 22 this year. The reality had been two or three last year, with another four or five expected this year.
Cattanach said that DECC was in the process of writing to everybody who had a suspended well to find out what potential there was in these wells, more than half of which had been suspended for more than five years now. Once this information had been gathered, the next step would probably be to work through Pilot to set up a campaign collaboratively to P&A these wells. DECC's current estimate was 233, but that was probably on the low side. The actual figure was probably more like 300.
Perenco UK decommissioning manager Keith Tucker outlined his company's progress to date with the reuse of the Welland 53/4a topsides, now part of the Sanaga 1 structure and en route to a project in West Africa. Welland field decommissioning is 90% complete. The wells and pipelines were decommissioned in 2Q and 3Q 2010. The topsides and jacket were both removed in January this year and transferred to shore (OE April). Initial ideas included shortening the jacket and re-attaching the mud mats to match the shallower water depth in West Africa, but the economics of heavylift vessel availability in the region precluded traditional jacket design. The concept evolved to mount the topsides on a self-installing jackup barge.
He asked whether the reuse of redundant installations represented an opportunity and answered that it probably did. As pure guesswork, it might be feasible to reuse 10% of southern North Sea installations, which would be over 20 reasonable sized projects for North Sea yards to tender for. He also showed projections from Offshore Decomm Forum Operators South (ODFOS) estimating projected SNS activity until 2016 – one multi-jacket compression station, three multi-jacket facilities, 17 single jackets, 120 platform wells, 16 subsea wells and 16 subsea structures. The membership of ODFOS, an informal forum for discussion and sharing ideas and experience focused on southern North Sea issues, comprises Shell, BP, Perenco, ConocoPhillips and Centrica.
Decom details
Caroline White, HSSE manager in BP's North Sea regions projects team, gave an overview of the decommissioning of NW Hutton, the largest platform to be decommissioned so far in the UK. The topsides weighed 20,000t, the jacket a total of 17,500t (the footings remain) and the drill cuttings 40,000t, which also remain. ‘A commitment was made to the regulator to recycle 97% of the structure, in fact a figure of 98.3% reuse and recycle was achieved with only 1.7% landfilled,' White explained. She noted that 7029t of the platform was selected for reuse (the accommodation, module support frame, helideck etc), 20,925t for recycling and 473t for landfill.
The difference between the total waste estimated and the actual weight as measured onshore was 2.8% (around 800t). There was an overestimation of marine growth on the jacket due to little documented experience on marine growth calculation for decommissioning. The weight calculation from ROV surveys estimated around 436t net weight, while the dry weight removed and recycled was 40t. The project did benefit, however, from a period of fine weather during the removal process, which dried out the marine growth. An item not identified during the preparatory surveys was 44t of cement filled pipework.
Shell UK's Brent decommissioning manager Mike Smith outlined the scale of the Brent decommissioning project and progress so far. The Brent complex comprises 160 wells, a number of which have side-tracks adding up to some 320 penetrations into the reservoir, which will result in a complex P&A campaign. There are four topsides, one steel jacket, three gravity based structures weighing between 290,000t and 331,000t, 24 pipelines and two subsea locations. Delta sits on its own as a relatively stand-alone platform. The other three have all sorts of interconnections and interdependencies. Potential removal options for the three gravity base structures (Bravo, Delta and Charlie) have been the subject of a lengthy review process. ‘Shell's recommendation at this point in time is that it will not remove the platforms, although it is still looking at an option of removing the legs, because of issues of long-term liability,' said Smith.
There is uncertainty about the contents of the cells on the three GBS platforms, and an attempt will be made to enter one or more cells on Brent Delta this month. An allocation of 30 days of ROV support has been made to attempt this cell survey project. If entry is successful, the aim is to achieve a better understanding of the amounts and distribution of contents, to obtain one (or more) sediment samples. If possible, more than one cell will be surveyed.
‘Should a sample be obtained, it will give an indication that Shell is in the range of assumptions being used for the Environmental Impact Assessment and the exposure scenario modelling,' Smith noted, adding that intense project planning begun last year is continuing. The design, procurement and manufacture of specialised equipment is under way.
Differing dynamics
The dynamics between the decommissioning and the construction markets are different, noted Acteon Group vice president Neill Kelly in a speech at the conference dinner. ‘It is important that the decommissioning market is competitive as a place to do business compared with the construction market and other sectors competing for resources,' he said. ‘I think this a jigsaw puzzle. The supply chain needs to put all the pieces together to meet the market needs.
‘At Acteon we are looking to add more pieces to our jigsaw, both internally and by working selectively with supply chain partners. Given the broad and varied needs of the decommissioning market, we believe that the traditional lines between friend and foe, partners and competitors, are quite blurred. OE
Held on 4-6 October, the Offshore Decommissioning Conference was organised by Oil & Gas UK and Decom North Sea. Sponsored this time by Aker Solutions and Wood Group PSN, the event attracted more than 240 delegates, a 40% increase on the previous year. It was the fourth such conference organised by Oil & Gas UK, and the second with Decom North Sea.
The general conference consensus appeared to be that the UK decommissioning market was at long last becoming a reality, with a number of firm cessation of production (COP) dates from 2012. Estimates of the scale of this market varied from £30-35 billion on the UKCS and $100 billion pan-North Sea, and bringing down the costs of suspended well P&A was seen as a key priority.
A number of workshop sessions looked at perceived technology gaps in the decommissioning sector, and focused on potential ways to plug such gaps through adopting collaborative strategies and learning lessons from other industries such as nuclear and salvage.
Refurbished by Hoondert in the Netherlands, the topsides of Perenco's former southern North Sea Welland 53/4a platform (inset) are now mounted on this Overdick-designed self-installing jackup barge, Sanaga 1, pictured under tow to West Africa.
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