Decom North Sea
Expenditure on decommissioning has averaged about £300-400 million ($482-642 million) per annum in recent years and is set pass the £1billion/yr ($1.6 billion) mark within five years. Industry analysts agree that the main decommissioning programs are no longer being deferred and that a steady increase in the number of projects can be expected in the coming years. Decom North Sea (DNS), the offshore oil and gas decommissioning forum, is stepping up its work to help the UK supply chain win significant levels of this work and is endorsing research to ensure that the appropriately skilled people are available to perform the work. There are more than 600 offshore oil and gas installations in the North Sea, including 470 in UK waters. These include subsea equipment fixed to the ocean floor as well as platforms ranging from the smaller structures in the southern North Sea to the larger and heavier concrete or steel structures in the northern North Sea. Offshore there are more than 10,000 km (6,214 mi) of pipelines, around 5,000 wells and accumulations of drill cuttings. Associated with these operations are also 15 onshore terminals. Many of these structures have been producing oil and gas for around 40 years and are now coming to the end of their lifespan for which they were designed. A growing number of redundant oil and gas installations will be taken out of service and decommissioned over the next couple of decades. Decommissioning expenditure varies considerably by region. The central and northern North Sea have considerably higher costs per installation due to the number of large platforms with substantial sub-structures compared to the southern North Sea, which has shallow water and milder conditions. No two platforms are the same, and all were designed for specific tasks so there is no “one size fits all” approach to decommissioning. Identifying major platform components for possible reuse on other platforms is a challenge, since much of this equipment was designed decades ago and the specifications and performance will often be deemed inappropriate for modern installations. However, some research is underway to review alternative uses of smaller jacket structures as possible barriers intended to reduce coastal erosion. Alternatively, one or two platforms could conceivably be reused as electricity substations or for carbon capture and storage. Overall, the re-use of equipment or whole/partial installations are expected to be the exceptions rather than the rule.
Perenco UK executes the heavy lift removal of the Welland gas production platform in the southern North Sea.
DNS has grown in a little more than a year to have more than 140 members from operators, major contractors, service specialists and technology developers. The forum was set up to tackle the main areas of weakness and the bottlenecks which are inhibiting UK decommissioning supply-chain capability. The demand for a dedicated decommissioning forum to enhance knowledge transfer and facilitate collaborative activities was confirmed by a major industry consultation exercise undertaken by the Scottish Enterprise, Highlands & Islands Enterprise and the Department of Energy & Climate Change (DECC) during 2008 and early 2009.
The body seeks to ensure that the industry is prepared for the level of decommissioning activity ahead. This is expected to include developing solutions that account for the impact on the environment, health and safety of workers involved, costs, and technology required.
Earlier this year, an in-depth consultation was carried out with the DNS board, members, partner organizations and industry representatives to identify priorities and set a course of strategic direction toward addressing these requirements.
Among the list of initiatives, a strong emphasis was put on the need to research and understand capabilities and skills gaps in the decommissioning market relating to people, processes and technologies, and then put in place mechanisms to address the issues and opportunities.
Overall, the outlook for the UK oil and gas decommissioning supply chain is indeed promising. Over the coming decade, industry forecasts suggest that the level of activity in the North Sea will lead to capacity restraints in all areas. Many
North Sea supply chain companies could therefore find themselves with a choice of business opportunities, ranging from support for ongoing oil and gas development and production; to the growing program of decommissioning activities; and emerging offshore wind developments. These are exciting times for supply chain companies with the ability to adapt and innovate.
This in turn has created serious and exciting career opportunities for those with the right skills. DNS is working with its members to develop an assessment of the quality and quantity of skills that will be needed, from technicians to engineers and project managers, and look at that against the bigger picture of how the needs of decommissioning will fit with other offshore work and the renewables sectors as these industries grow.
DNS will interview members and companies about what skills they believe will be required to propel the decommissioning program. This research information will then be supplied to educational institutes, training providers and so on as they plan for the future needs of the workforce in the decommissioning market.
The organization has also endorsed a PhD student at Aberdeen University to compile a research project into the number of skilled people needed for the level of decommissioning work forecasted.
In addition, the body will shortly make available to its member companies results of market research and analysis by Professor Alex Kemp at the University of Aberdeen. The report will confirm that in the coming years the Southern North Sea (SNS) will witness the greatest number of decommissioning projects in the North Sea – some 10 to 15 fields per annum through to 2020.
The report will highlight the significant cost of decommissioning and the need for the industry to cooperate and possibly collaborate in order to improve efficiency, encourage innovation and contain costs. DNS is facilitating the transfer of knowledge and learning from other regions and other industries.
A recent consultation showed compelling support for DNS to look at increasing current activities, namely networking events which provide value to its members; regional and topical focus groups; industry communication and knowledge sharing; mapping the supply chain strengths and capabilities; further development of appropriate contracting models; and facilitating introductions across the industry.
In addition, a range of more strategic initiatives and opportunities have been identified and prioritized including:
• Provision of detailed and reliable market intelligence drawn from existing industry sources and filtered to be easily accessible by members
• Facilitate groups of members to share information, form alliances, and address technologies
• Research decommissioning in other sectors including nuclear and salvage, to study how these industries deal with timing uncertainty; and identify areas for transfer of experience and cross-business opportunities
• Be active with governments, regulators and operators on behalf of its membership
• Understand capabilities and gaps relating to people, processes and technologies, and then put in place mechanisms to address the issues and opportunities
• Promote existing capability, new capacity, case studies
• Engage with the financial investment community to understand their drivers – promote awareness of members’ capabilities and needs, facilitate introductions
• Look overseas to identify market opportunities and to promote member capabilities.
These initiatives are listed in line with the priorities established recently by board members. The next step is for Decom North Sea to scope out and assess the level and type of resource that will be required to progress and deliver them.
In accordance with the priorities identified, Decom North Sea has organized a program of events, seminars and share fairs in collaboration with other energy development organizations and government agencies, with activity covering the northeast, Highlands and Central Belt in Scotland and the northeast and southeast in England, where most of the potential supply chain for the decommissioning market is based.
Editor’s note: information on projected Gulf of Mexico decommissioning activity can be found here.
