Decommissioning is entering more and more into the operations of those involved in the North Sea Oil & Gas industry. With c.$102bn of decommissioning related expenditure forecast to 2040 in Western Europe, it is an opportunity for a supply chain which can adapt to the challenging physical and commercial environment in the North Sea basin.
According to a report by Westwood Energy, decommissioning is different for the field development of the E&P sector where the asset or field owners’ strategy is to minimise the costs / liability involved in removing infrastructure safely and in accordance with appropriate regulations.
In Western Europe, there are currently c.5,600 surface wells and a further c.2,600 subsea wells which require Plug and Abandonment (P&A) as part of the decommissioning process. As the volume of P&A activity gathers pace, many believe the traditional methods present opportunities for innovation. If these technologies can be delivered without the use of a dedicated rig, clear time and cost savings will be achieved for the asset owners.
Public bodies and corporates are also attempting to remove structure to follow a cost-efficient plan. The Westwood report estimated that around c.4.3mil tonnes of infrastructure will be removed until 2040 in Western Europe. This infrastructure has to be transferred onshore to be processed, but it is difficult to do all this using reverse installation techniques and heavy or single lift vessels, so innovative approaches are crucial.
However, banks, investors, accountants and the legal community must adapt as well. According to Westwood, they have to advise their clients through the challenges decommissioning presents.
“The Oil & Gas industry could not exist without the provision of capital and professional services from these communities. It is therefore crucial for all stakeholders to embrace decommissioning with an innovative approach in order to optimise the commercial outcomes,” the report concludes.
