A new report shines a spotlight on the UK’s decommissioning supply-chain’s future needs.
The latest estimate of future spending on decommissioning in the UK Continental Shelf (UKCS) is approximately £35billion by 2040.
To date, fewer than 60 structures have been either decommissioned or are in the process of being decommissioned.
High oil and gas prices, improved recovery technologies and fiscal uncertainty has seen the deferral of decommissioning projects, making the UK Continental Shelf’s decommissioning sector somewhat embryonic.
However, installations will at some point reach the end of their economic lives and with tax relief deeds recently introduced in the UK sector, allowing greater clarity on tax relief for operators when making decommissioning decisions, a maturing of the UK sector is expected by the industry.
Against this backdrop, decommissioning industry forum Decom North Sea (DNS) worked with government agency Scottish Enterprise and consultants Accenture to produce a detailed assessment of the current state of the sector—a first of its kind.
The research, outlined in a report, Decommissioning in the UKCS, suggests there is an average gap of 35% between actual and desired capability across the supply chain.
Areas showing a greater deviation between supplier capability and industry-desired capability were found to be well abandonment (see panel), infrastructure removal and continuing liability—ongoing monitoring activities required to ensure a decommissioned field is safe and compliant to regulations.
Areas with the least deviation were cleaning and decommissioning (the removal of hydrocarbons and hazardous materials from infrastructure) and disconnection and disposal (cutting and separating elements of an asset in preparation for its removal and transfer to shore and options once onshore).
Others areas where capability is likely to be particularly stretched are highlighted as access to engineering staff, drilling rigs for well plugging and abandonment, and vessels, including heavy lift vessels.
“A major cause for concern is the demand on people resources,” says Brian Nixon, chief executive of DNS. “The North Sea supply chain is welcoming huge new development projects, such as Clair Ridge and Mariner, as well as major investments in offshore renewables, sustained levels of operational expenditure and opportunities in other countries, such as Norway, which are facing similar pressures.
“Against this backdrop, decommissioning must be regarded as an attractive opportunity if we are going to build the capability, capacity and efficiency required for this major program of activity.”
Nixon suggests better training and transferal of skills and capabilities from other sectors, such as nuclear decommissioning, the military and marine and salvage industries.
He also suggests collaboration across different skills pools, to create catalysts for innovation, and for suppliers to share techniques, processes and learnings.
Encouraging innovation and improving interface management would also help improve operators’ confidence in their decommissioning projects, he says.
Among its recommendations, the report suggests bundling different services and forming alliances between niche suppliers could help to share risks and reduce costs, through synergies in areas such as project management and logistics and HSSE management.
DNS represents more than 220 companies and organizations active in the North Sea’s oil and gas decommissioning industry.
It has a number of initiatives to support the industry, including a streamlined template for the submission of decommissioning programs. Its annual conference will be held on 1-3 October—in partnership with Oil & Gas UK—in St Andrews, Scotland. OE