N. Sea regulator demands decommissioning costs are driven down by 35%

North Sea decommissioning is a £50 billion market
North Sea decommissioning is a £50 billion market

UK offshore oil and gas operators must be more open-minded and share campaigns and key information to make the multi-billion late-life and decommissioning programme a reality, an industry event has been told.

More cooperation to share good practice, lessons learned and campaign management in projects is needed to bring costs down by 35%.

Better contracting models also need to be developed for the industry to move forward, more than 100 delegates were told.

Decommissioning should only be the last resort – but to make the most of the last reserves of near-end-of-life wells and platforms, operators must look for synergies with other energies, like offshore wind, to share facilities for the greatest cost efficiencies.

New technologies and different working practices to make the most expensive part of decommissioning, well plug and abandonment, cheaper, were outlined at the Late Life and Decommissioning Special Interest Group event at Norwich run by the East of England Energy Group (EEEGR) and Decom North Sea.

Well-deconstruction is estimated to be between 43-to-50% of the total North Sea decommissioning costs of nearly £50 billion.

More than 1, 200 wells need to be plugged and abandoned in the UK Continental Shelf and the Aberdeen-based base Oil & Gas Authority (OGA) is demanding costs are driven down by 35%.

Later this month, it will release its first Decommissioning Delivery Programme, offering a detailed plan for the next six to nine months. It is also looking at a well P& A pilot in the SNS to start next year using new technologies.

In a line-up of industry speakers who had travelled from as far as Houston, US, the message was clear – the industry must change how it thinks and works or the programme promising decades of work for the supply chain would be delayed further.

SIG Chair Julian Manning said: “The industry is under continued and unprecedented pressure from the low oil price.

“$50-barrel of oil needs to be our new reality and we need to adapt to be profitable in that price range. A reliable schedule for decommissioning projects remains a challenge and presents uncertainty for all of those involved.”

 Karen Seath, general manager of Decom North Sea, said its new late life planning portal, L2P2 would be a tool box of information to share case studies, lessons learned, best practice and good practice to help more effective and standardised decommissioning.

“We need shared goals,” she said. “We need better contracting models, which is one of our real focus areas.”

New methods and technologies to bring costs down in late life and decommissioning were outlined by companies at the event.

George Walker, late-life and abandonment leader at Halliburton, said it had reduced the costs of well P&A by up to 40% by building a multi-skilled crew.

It had a 65-strong team of multi-skilled well P&A engineers focused on the decommissioning market, saving time, bed space and helicopter transfers, he said.

“We have a team that is highly skilled and specialist in well P&A that brings massive time and cost savings – and reduced equipment footprint.”

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