With the Oil and Gas Authority (OGA) striving to reduce offshore decommissioning costs by at least 35% from 2017 to 2025, the sector is challenged to ensure efforts are made to meet this target.
The latest OGA report (July 2019) estimates that the total cost of decommissioning remaining in UK offshore oil and gas production, transportation and processing infrastructure has reduced by 17%, on a like-for-like basis, from 2017 – 2019, from £59.7bn to £49bn.1
A 17% reduction in just two years is good news for the industry, but there is still a way to go.
Gary Smart, CEO of Aberdeen-based Unity, discusses the future of the well decommissioning sector and how technology plays a vital role in meeting cost reduction targets.
What do you think is the biggest challenge facing the decommissioning sector?
It’s no secret that well decommissioning is an expensive process, with zero return for operators. Drilling projects, for example, have a defined journey and the operator knows the strategy from FEED through to first oil. When discussing well decommissioning however, there are numerous operational challenges, some of which remain unknown until after well re-entry and P&A operations commence.
The supply chain is undergoing a transition, with larger players emerging and smaller, more specialist suppliers drawn in to provide the most appropriate expertise for each project. This is where we are seeing efficiency gains, but often this approach is being led by the operator, rather than the supply chain proactively forming alliances. There needs to be more co-operation and a willingness to work together to help share knowledge and learnings and deliver more streamlined solutions. The supply chain, along with its clients, is still being educated so there is some way to go before it matures.
What role does new technology play in supporting decommissioning projects?
With operators such as Shell planning to spend $1.5bn on UK decommissioning by 2025,this level of expenditure demands the best practices and technology to deliver the most efficient solutions. Investing in R&D is vital to ensure appropriate technology is brought to market in time.
Two examples from Unity include their Temporary Abandonment Cap Test Tool (TACTT), used as a pressure verification technology for suspended mudline wells, and the Surface Intervention System (SIS), both industry firsts. Whilst the SIS is already well-proven, Unity is about to launch an application for wellhead decommissioning. As the only multi-functional, rigless system for shallow well intervention, with integral well barriers and rapidly interchangeable tools, it can be used as a low-cost alternative to conventional methods. The SIS can quickly inspect the well, set plugs and remove the Xmas tree in a single deployment requiring only two operators. Its innovative ‘elephant’s foot’ tree jack, combined with a powerful but finely controlled push, pull and vibrate function, safely removes end of life wellhead equipment.
While the development of new technology is important, it’s crucial that the supply chain understands the operator’s challenges and can identify solutions to improve efficiency and reduce cost. Through close collaboration we can ensure new systems are developed to tackle issues head-on.
How do you see the well decommissioning sector progressing in the next five years?
Extending the life of assets is still a major priority for operators and ourselves. With a focus on ensuring that all reserves have been recovered, I don’t foresee a sharp rise in the number of decommissioning projects right away. However, over time, the curve will rise more steeply.
We may see further government assistance for operators to meet their statutory obligations, building on recent initiatives such as the Scottish Government’s Decommissioning Challenge Fund. The programme, delivered by Scottish Enterprise and Highlands and Islands, provides funding and assistance to enhance the capability of the Scottish supply chain and has already commissioned several successful projects.
What do you think is key to delivering robust decommissioning projects?
The industry has made significant strides to become more collaborative in recent years, but I feel this is an area in which decommissioning is still lagging. There are huge benefits to be garnered by involving multiple experts, with an aligned strategy, to deliver significant cost and time efficiencies. This is particularly true when combined with new technology. By bringing such important factors together, I believe the UK will be in an extremely strong position to deliver world-class decommissioning projects for many years to come.