Why now is the time to invest in decommissioning

Decommissioning is one of the most challenging issues facing operators in the UK Continental Shelf (UKSC), yet it also presents vast untapped opportunities for the UK supply chain and academia in terms of expertise. The UK is the largest market for decommissioning expenditure over the next decade, representing one-third of expenditure across the top dozen oil and gas markets, so are we (as an industry) prepared to be in the vanguard of these exciting opportunities?

Decommissioning is a natural end phase of the oil and gas life cycle. It is not a discrete entity, and should never be begrudgingly arrived at with a piecemeal approach. It is notoriously costly. The high expenditure is associated with the size and complexity of an installation and its water depth. As an example, Shell spent £1bn to dismantle four rigs in its Brent North Sea field. The OGA’s revised estimate for the overall cost of decommissioning the UKCS now stands at £51 billion as opposed to the 2017 estimate of £59b. These reductions can be extrapolated from some salient figures from the Oil & Gas UK report which show that unit well decommissioning costs have fallen by an average of 26%, the average amount of days spent on plugging and abandoning some end-of-life wells has halved, and cost estimates per tonne for the removal of topsides and a substructure in the central and northern North Sea have decreased by 13% and 16%, respectively.  The OGA’s vision 2035 target to reduce decommissioning cost by 35% still stands, even as such improvements are continuously being made.  Much cost savings could be unlocked through various approaches, but the focus of this blog in on technological innovation.

As a preamble to my presentation in the OGA’s decommissioning keynote programme at Offshore Europe this week I will set out here, a brief perspective of technology as a game-changer. Most importantly, I will outline how the industry can best position itself to achieve excellence and a global commercial advantage. My take at the end of this post is going to be that in the rapidly evolving UKCS decommissioning market the industry is going to need to embrace a disruptive approach to innovation and the rapid deployment of new technology in order to reap the rewards that decommissioning can offer.

Enabling technology innovation for game-changing decom applications

Decommissioning of offshore oil and gas infrastructure is a relatively new modus operandi, with only a handful of significant installations having been decommissioned around the world to date. There is tremendous scope for technology improvement in areas such as in well plugging and abandonment, digitalisation, remote inspection applications and cutting and removal techniques, to mention a few.  The Oil & Gas Technology Centre (OGTC) is at the forefront of facilitating the development of new, innovative technologies for decommissioning. In partnership with the University of Aberdeen, the OGTC established the National Decommissioning Centre (NDC) to champion fundamental research that would underpin the best approaches to decommissioning and build the UK supply chain expertise on an evidence based, scientifically interrogated approach. A couple of the technology innovation enablers being developed through the OGTC and the NDC are here outlined below:

Well plugging and abandonment

Both the OGTC and the NDC are actively supporting developers in advancing innovative materials for plugging and abandonment, as well as on methodologies for abandonment that would minimise time spent, and cost. Currently P&A operations are conducted using older, conventional approaches which are expensive.  Working with developers, and with support from industry, the goal for innovation in platform P&A is to undertake offline operations, eliminating the use of derricks, coil tubing or pump units. For abandonment we are looking at innovations that would permit operations to be moved from the traditional semi-submersibles to smaller, cheaper light weight intervention vessels.

Whilst new technologies are emerging that have the potential to significantly reduce the cost of P&A activities, current routes to verify these technologies require access to an offshore well. This is expensive, risky and presents a significant huddle to commercialisation of new techniques. With support from the decommissioning challenge fund, the NDC is seeking to establish a barrier verification chamber for testing new P&A materials. The rig would offer an onshore test facility that would significantly reduce the cost and risks associated with testing and qualifying new P&A techniques, as well as allowing for the removal and analysis of the plugs – impossible through normal offshore testing, and thus further help validate and de-risk new techniques, and accelerate routes to commercialisation and deployment.

Simulating decommissioning scenarios

Simulation, and the ability to prototype and trial new techniques and technologies virtually, significantly de-risks the development of new ideas, accelerates deployment and when coupled with an immersive visualisation environment provides a compelling experience for stakeholders. Making the right decisions in late life and decommissioning underpins all elements including cost, schedule, safety and environmental impact. The NDC will be installing an immersive simulation suite, the first of its type in the UK, to provide a robust and scalable decision-making tool based on artificial intelligence (AI) algorithms, real experience and visualisation capabilities. The simulation suite will provide a means to trial new technologies and methods in a virtual environment.  While the technology is readily available to purchase, work will be undertaken to develop relevant models and further applications with real-time and real physics modules for the varied approaches of a decommissioning projects and new technologies. This would of course necessitate asset information, historical data and output from previous decommissioning projects that will need to be updated as the global decommissioning knowledge and experience evolves. The combination of the simulator and structural analytics capability will provide a unique facility for the trialling of new decommissioning technologies and method. The simulator could be further used to plan campaigns in a truly collaborative environment with greater certainty of actual decommissioning costs through adopting different scenario planning, learning and sharing with others, and challenging previous norms

Towards the future

Decommissioning of the UKCS is evolving at a rapid rate and costs are coming down, thanks in large parts, to technological innovation. But much remains to be achieved if we (as an industry) are to strategically position ourselves as global leaders in decommissioning. For a start, there is greater need to share meaningful data and know-how in a truly collaborative way and further still, to effectively utilise such data in a holistic, instantaneous and secure way. So far as an industry we have cooperated more than collaborated. The stakes for a strategic collaborative approach couldn’t be greater if we are serious about maximising economic recovery and reducing risks and costs. This requires a behavioural change and innovative contracting models that would unlock a robust, disruptive approach to innovation and banish the traditional race-to-the-second culture to history.

Secondly, we need to leverage the tremendous expertise that sits in our academic and research institutions. Specifically, the NDC was established to do this, following consultation and recommendation from industry. It is incumbent on industry to maximise its use of this available state of the art facility which lends itself not only as a leading hub for expertise, but also as a decommissioning signpost to the wealth of multi-disciplinary capability across our national academic and research landscape. The OGTC too, is a valuable institution already supporting over 35 projects specifically in the decommissioning space worth £7m in total (of which £2.9m is from industry), with more projects in other areas that have potential transferable application to decommissioning.

Finally, decommissioning is an inherent part of the energy transition agenda. A recent study at Edinburgh University demonstrates that the possibility to re-use and repurpose structurally sound infrastructure for carbon capture and storage would be 10 x cheaper than decommissioning. This, and other potential applications of disused oil and gas platforms will be explored in a future blog.

The UKCS is far from its end game. The opportunities to strengthen and export our expertise in technology, contracting models and thought leadership to the global market are immense, and transcend the oil and gas industry, with prospects in the energy transition agenda, offshore wind and nuclear decommissioning among others. A continuing concomitant focus and investment in technology innovation will help developers to exploit their full potential in a way that will not only support operators, but also help to anchor the Scottish supply chain while building a robust pipeline of expertise in academia. Now is surely the time to invest in a well-considered decommissioning programme.

Pamela will be presenting at SPE Offshore Europe 2019 on Wednesday 3 September 2019 at 10.00am.