DECOMMISSIONING INSIGHT 2014 - Oil & Gas UKoilandgasuk.co.uk/wp-content/uploads/2015/05/OP098.pdf · The survey is based on the components of the decommissioning Work Breakdown Structure

DECOM

MISSIO

NIN

G IN

SIGHT 2014

OIL &

GAS U

K

DECOMMISSIONING INSIGHT 2014


2

3

Contents

1. Foreword 4

2. Key Findings 6

3. Introduction 9

3.1 Survey Development and Methodology 9

3.2ClassificationofExpenditure 10

4. Results of the 2014 Decommissioning Survey 11

4.1HistoricalComparisonofForecastExpenditure 12

4.1 Regional Analysis 13

4.3ForecastExpenditurebyDecommissioningComponent 13

5. Decommissioning Activity in 2013 17

6. Forecast Decommissioning Activity from 2014 to 2023 18

6.1WellPluggingandAbandonment 18

6.2FacilitiesMakingSafeandTopsidePreparation 23

6.3 Removal 26

6.4PipelineDecommissioning 33

6.5OnshoreRecyclingandDisposal 36

6.6SiteRemediationandMonitoring 39

7. Appendices 40

a.WorkBreakDownStructureDefinitions 40

b.AssociationfortheAdvancementof CostEngineeringClassifications 41



4

1. Foreword

Oil & Gas UK’s Decommissioning Insight istheleadingindustryforecastfordecommissioningactivityandexpenditureontheUKContinentalShelf(UKCS).Producedannually,thepublicationprovidesaten-yearforecastbyregion,enablingtheindustrytodevelopitscapabilitiesaccordingly.Thisyearthereportfocusesontheactivitiesof28operatorsontheUKCS.

Theoffshoreoil andgas industry is theUK’s largest industrial investor,andOil&GasUK’sEconomic Report 20141 indicatesapotentiallystrongfuturefordomesticoilandgasproduction.TheWoodReviewhighlightstheneedforindustrytofocusonmaximisingeconomicrecoveryfromtheUKCSwithanewspiritofcooperationtoreducecostsandincreaseefficiency2.Thereviewalsorecommendsadedicateddecommissioningstrategy,arguingthatwithsufficientearlyplanningandcoordination,theUKsupplychainshouldbeabletobuildacompetitiveadvantagetomeettheneedsofmaturingoilprovincesathomeandabroad.Oil&GasUK’s2014 Decommissioning Insightaimstofacilitatethisgoal.

Thereportindicatesthatahandfuloflargedecommissioningprojectsarewellunderwayandwillbedeliveredinthenextfivetosevenyears.ProjectslistedontheDepartmentofEnergy&ClimateChange’spathfinderwebsiteincludeBrent,Miller,Murchison,andThames3.Theseflagshipprojectswillprovidevaluableinsightfortheindustryasitlearnshowtodecommissionfieldsinacosteffectiveandefficientmanner,therebyintroducingnewtechnologiesandprocesseswhich,inturn,increasetheUK’scompetitivecapability.

Industry’s sharedaim is toundertakedecommissioning ina costeffective,environmentally soundmanner.However,successwillalsoseedecommissioningdatesmovedbackifwecanattractfurtherinvestmentintothemanymaturefieldsacrosstheUKCS.Overthelastthreemonths,HMTreasuryhasledaconsultationintothefutureofthefiscalregimefortheUKCS.Industryhasengagedconstructivelywiththeobjectiveofdeliveringasimple,morecompetitiveregimewhichencourageslate-lifeinvestmentandfostersnewbusinessmodelsfordecommissioning–innovationandinvestmentwillbothbeessentialifwearetosucceedinthistask.

TheDecommissioningReliefDeed(DRD),acontractbetweengovernmentandindustrythatguaranteescertaintyoffuturetaxreliefondecommissioningcosts,hasbeensuchaninnovationandhasalreadyextendedtheproductivelifeofanumberoffields.TheDRDenablescompaniestomovetheirdecommissioningliabilitiestoapost-taxbasis,releasingadditionalfunds,whichwouldotherwisebetied-upinsecuritiesforfurtherinvestmentinoilandgasproduction.Todate,61DRDshavebeenexecuted,freeingupatleast£2.2billionforfurtherinvestmentinoilandgasproduction4.

1 Oil & Gas UK’s Economic Report 2014isavailabletodownloadatwww.oilandgasuk.co.uk/economicreport2TheWoodReport–UKCS Maximising Economic Recovery Review: Final Report–isavailabletodownloadat www.woodreview.co.uk

3 TheDepartmentofEnergy&ClimateChangePathfinderwebsitecanbeviewedat www.og.decc.gov.uk/pathfinder/decommissioningindex.html

4Asof21July2014.

5

1

2

3

4

5

6

7

Totaldecommissioningexpenditureonoffshoreassetsoverthenextdecadeisforecasttobe£14.6billion,orjustunder£1.5billionperannum.Whilstthisisasignificantsum,itshouldbeputintocontextagainsttotalcapitalexpenditureof £14.4billion5 lastyear.Thechallengeistoseeathrivingdecommissioningmarketemergeaspartofacontinuedandsustainedcapitalinvestmentprogramme;bothwillrelyonarelentlessfocusoncostefficiencyandadesiretoachieveyetmoreeffectivewaysofworking.

This document couldonlyhavebeenproduced through support of theoperatorswhoprovideddata to the survey. Wewouldliketothankthesecompaniesfortheircontinuedsupport.

WetrustyoufindthisdocumentaninformativeandusefulguidetodecommissioningactivityontheUKCS.

Oonagh Werngren Operations Director Oil & Gas UK

5 Oil & Gas UK’s Activity Survey 2014isavailabletodownloadatwww.oilandgasuk.co.uk/forecasts.cfm


6

2. Key Findings •In2013,£470millionwasspentondecommissioning.

•Totalforecastexpenditureondecommissioningfrom2014to2023is£14.6billion6.

•Totalforecastexpenditurehasincreasedsince2013duetothefollowingfactors;£3billionisattributedtonewrespondentstothesurveyand£1.2billionisattributedtohigherforecastsfromexistingprojects.

•Twenty-eightoperatorsrespondedtothecallfordata,whichisanincreaseonpreviousyears.

•Forty-threepercentoftotalforecastexpenditurewillbeconcentratedinthecentralNorthSea(£6.3billion).Manyoftheprojectsincludedinthe2014surveyforthefirsttimeareinthisregion.

•Relativetothe2013 Decommissioning Insightreport,sixprojectshavebeendeferredwiththeirexpenditurenowoccurringpartiallyoutsideofthesurveytimeframe.

•Mostofthedecommissioningprogrammescaptured inthissurveyareconsideredtobe intheearlyscopingstages.Forecastsarethereforesubjecttochangeasprojectsbecomemoredefined.

•Thelargestcategoryofexpenditureiswellpluggingandabandonment(P&A)at44percentofthetotalforecast(£6.4billion).

•Operatorsforecastthatdecommissioningexpenditurein2014willreach£1billionforthefirsttimeinasingleyearandwillaverage£1.5billioneachyearoverthetenyears(2014to2023).

6Thisfigureexcludes£520millionofexpendituredataprovidedaslumpsumsandfordecommissioningonshoreterminals.

7

Forecast Activity 2014 to 2023

Central and Northern North Sea

Southern North Sea and Irish Sea

Total UK Continental

Shelf

NumberofwellsforP&A 510 417 927

Platformwellsproportionof regional total

58% 80% -

Topsidemodulestoberemoved 146 100 246

Topsideweighttoberemoved 159,600tonnes 122,000tonnes281,600tonnes

Numberofplatforms 13 91 104

Substructureweighttoberemoved 65,000tonnes 69,000tonnes134,000tonnes

Numberofmattressestoberemoved 2,800 2,600 5,400

Subseainfrastructuretoberemoved 54,100tonnes 1,500tonnes55,600tonnes

Pipelinestobedecommissioned 807kilometres 2,470kilometres3,277

kilometres

Totaltonnagecomingonshore 288,800 192,600 481,400

Average Forecast Costs for 2014 to 2023 in the Central and Northern North Sea

2013 Survey 2014 Survey

PlatformwellP&A £4.8million £4.8million

SubseaexplorationandappraisalwellP&A £8million £17.4million

SubseadevelopmentwellP&A £10.1million £11.6million

Topsideremovalcostpertonne £4,100 £2,900

Substructureremovalcostpertonne £4,300 £4,300

1

2

3

4

5

6

7


8

Average Forecast Costs for 2014 to 2023 in the Southern North Sea and Irish Sea

2013 Survey 2014 Survey

PlatformwellP&A £3.5million £2.7million

SubseaexplorationandappraisalwellP&A £4.8million £5million

SubseadevelopmentwellP&A £6.9million £7.6million

Topsideremovalcostpertonne £3,600 £4,000

Substructureremovalcostpertonne £5,700 £4,500

9

3. Introduction

3.1 Survey Development and Methodology

TheDecommissioning Insight 2014buildsontheworkofpreviousreports,incorporatingrequestsfromthesupplychainandtheOil&GasUKDecommissioningMarketInsightWorkGroup.Itiscompiledfromoperators’responsestoanOil&GasUK survey carriedoutbetween JuneandAugust2014on theirdecommissioningactivityandexpenditurein2013andrespectiveforecastsfor2014to2023.

ThesurveyisbasedonthecomponentsofthedecommissioningWorkBreakdownStructure(WBS)outlinedin Oil & Gas UK’s Decommissioning Cost Estimating Guidelines7 (seeAppendix).Operatorswereaskedtoquantifyphysical decommissioning activity for 20 different categories in theWBS, such as the tonnes of substructure(jacket)toberemovedorthelengthofpipelinetobemadesafe.

Operatorswerealsoaskedtoprovideexpenditureforecastsforthesecategoriesofactivity,brokendownbyyear.Thecategoriesalignwiththoseusedinthe2013surveyandalloweasymappingofthedatatotheWBS.

Althoughitispossibletocomparedataacrossthe2011to2014 Decommissioning Insightreports,itisimportanttonotethatthe2013and2014surveysaremodelledonthenewWBS,whileprevioussurveyswerebasedontheformerWBS.AnyhistoricalanalysisthatOil&GasUKhascarriedoutforthepurposesofthisreporthasbeenconductedoncomparablecategoriesoftheWBS.

The information presented in the following sections is solely based on the data as submitted at the time ofthesurveyandispresentedinanon-attributable,aggregatebasis.Oil&GasUKhasnotappliedanyadditionaltreatmenttothefigures.Analysishasbeencarriedoutonaregionalbasisandsplitintotwogroups:thecentralandnorthernNorthSeaandthesouthernNorthSeaandIrishSea.

The2014reporthasbeenexpandedtoinclude:

•Ananalysisofhowwellpluggingandabandonment(P&A)costforecastshavevariedhistoricallyusingdatafromthe2011to2014reports

•AregionalanalysisoftherigtypethatwillbeusedforwellP&A

•Ananalysisofhowtheforecastcostpertonnefortopsideandsubstructureremovalhasvariedhistoricallyusingdatafromthe2011to2014reports

•Thenumberoftopsidemodulestobemadesafeeachyear

•Analysesoftheactualspendandactivitycarriedoutin2013comparedwiththeforecast

1

2

3

4

5

6

7

7TheDecommissioning Cost Estimating Guidelinesareavailabletodownloadat www.oilandgasuk.co.uk/publications/publications.cfm


10

Decommissioning Forecasts 2014 to 2023

Forecastingdecommissioningexpenditureattheoutsetofaprojectischallengingduetothemanyuncertaintiesand factors influencing expenditure, such as the duration of well P&A or the quantities of hazardous wastematerials.Asdecommissioningprojectsarenot subject to the sametimepressuresasdevelopmentprojects,thereismoreflexibilityinthetimingofexecution,withinintegrityandsafetyconstraints.Therefore,Oil&GasUKexpectsforecastspresentedinthisreporttobesubjecttochange,particularlythosepost-2020.

Oil & Gas UK’s Activity Survey 2014,whichaggregatesdataovera longertimespan than this report, forecaststhat£37billionwillbespentondecommissioningexistingassetsfrom2014throughto2040.Newinvestmentinprobabledevelopmentswouldadd£3.6billiontothistotal,althoughmuchofthiswillbeincurredafter20408.

3.2ClassificationofExpenditure

TheAssociationfortheAdvancementofCostEngineering(AACE)hasdevelopedasetofguidelines9 to apply an estimateclassificationtoprojectedcosts.Operatorswereaskedtousetheseguidelinestoprovideanestimateclass for all projects, determined by the level of ‘project definition’with consideration to a set of secondarycharacteristics.ThefiveestimateclassesintheCostEstimateClassificationMatrixareshowninAppendixb.

Eighty-five per cent of the survey respondents classified their expenditure using the AACE Cost EstimationClassificationMatrix.Forty-eightpercentofprojectswerereportedasclass4,withafurther44percentreportedasclass5.Thisshowsthatthemajority(92percent)ofprojectsareintheearlyplanningstagesofoutliningthescopeandcarryingoutfeasibilitystudies.Thesewillhavealevelofprojectdefinitionfrom0to15percent(where100percentrepresentscompleteprojectdefinition).

Onlyfivepercentofprojectswerereportedasclass1or2,wherethelevelofprojectdefinitionisbetween30and100percentandprojectsareeitheratthecontractingstageoralreadyinexecution.

8Allreferencesin2013money,Oil&GasUK’sActivity Survey 2014isavailabletodownloadat www.oilandgasuk.co.uk/forecasts.cfm

9FurtherinformationontheAssociationfortheAdvancementofCostEngineering(AACE)classificationschemeisavailableatwww.costengineering.eu/Downloads/articles/AACE+CLASSIFICATION_SYSTEM.pdf

11

4. Results of the 2014 Decommissioning Survey

Thefollowingresultsrepresentoperators’expenditureandactivityforecastsfordecommissioningUKContinentalShelf(UKCS)assetseachyearfrom2014to2023.Theanalysisdoesnotincludetheexpenditureprovidedaslumpsumsorassociatedwithdecommissioningonshoreterminals10.

Toputdecommissioningactivityintocontextwiththeoverall industry,thetotaldecommissioningexpenditureforecast over the ten-year period 2014 to 2023 is £14.6 billion, whereas the total capital expenditure ondevelopmentprojectsin2013alonewas£14.4billion11.

The total expenditure forecast captured in the reporthas increasedon last year. Threebillionpoundsof thisincreaseisattributedtoprojectsinthecentralNorthSea(CNS)andsouthernNorthSea(SNS)includedforthefirsttimefromnewsurveyrespondants.Afurther£1.2billionisattributedtohigherexpenditureestimatesfromthemajorityofprojectsincludedinthe2013and2014surveys.Thisisareflectionoftheseprojectsbecoming moredefined.

Planningfordecommissioningcanbealongandchallengingprocesswhichoperatorsstartfaraheadofcessationofproduction(COP).Thescopeofeachdecommissioningprojectisrefinedovertimeandestimatesarethereforesubjecttochangeduringthisprocess.AsthefieldnearsCOPandtheprojectscopebecomesmorefullydefined,expenditureforecastsbecomemoreprecise.

Withthefocusacrossindustryonmaximisingeconomicrecovery(MERUK12)andextendingthelifeoffieldsinthebasin,sixprojectshavebeendeferredsincethe2013reportwaspublished,withagreaterproportionoftheirdecommissioningexpenditurenowfallingoutsidetheten-yearsurveytimeframe.AnexampleofthisistheBraefield–decommissioningwaspostponedtoalignthetimingofBraeAlpha,BravoandEastBrae13.

Theforecastexpendituretodecommissionfieldsservicedbyfloating,production,storageandoffloading(FPSO)vesselsis£1.6billion,allofwhichwillbespentintheCNSandnorthernNorthSea(NNS)areas.Themajorityofdecommissioningactivityforthesefieldsissubsea,althoughsomeexpenditureisassociatedwithdisconnectingtheFPSO.FPSOweightshavenotbeenincludedintheremovalssectionasthesearetypicallyrelocatedorsoldforreuse.

1

2

3

4

5

6

7

10£500millionwasprovidedaslumpsumswithnoyearlybreakdownofexpenditure.11 Oil & Gas UK’s Activity Survey 2014isavailabletodownloadatwww.oilandgasuk.co.uk/forecasts.cfm12TheWoodReport–UKCS Maximising Economic Recovery Review: Final Report–isavailabletodownloadatwww.woodreview.co.uk

13Thepresentationon‘DecommissioningPlanB:ThinkingDifferently’isavailabletodownloadat www.bit.ly/decomplanb


12

4.1HistoricalComparisonofForecastExpenditure

Acomparisonof forecastexpenditurehasbeencarriedoutusingdatafrompreviousDecommissioning Insight reports(2011to2014)14.SeeFigure1below.

Thepatternofforecastexpenditureinthisreportisinlinewithlastyear;however,theaverageyearlyforecastexpenditurehasincreasedto£1.5billion,comparedwith£1billioninthe2013report,representingaclearmarketopportunityforthesupplychain.For2014specifically,operatorsforecastthatexpenditurewillreach£1billionforthefirsttime.

In2013,£470millionwasspentondecommissioning,representing81percentofthe£580millionforecasted.ThedifferencebetweenthesefiguresisduetothetimescalesofsomewellP&Asbeingextended.Theassociatedexpenditurehasspreadinto2014.

Figure 1: Comparison of the Annual Forecast Decommissioning Expenditure on the UK Conti nental Shelf (2011 to 2014 surveys)

0

500

1,000

1,500

2,000

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Fore

cast

Exp

endi

ture

(£ M

illio

n)

2011 2012 2013 2014

Increased Uncertainty in Forecasts

Source: Oil & Gas UK

14Allexpenditurein2014moneyat01.08.2014.

13

4.2 Regional Analysis

Figure2showsthatofthe£14.6billionforecastdecommissioningexpenditurefrom2014to2023,43percent(£6.3billion)willbeconcentratedintheCNS,33percent(£4.8billion)intheNNS,and24percent(£3.5billion)intheSNSandIrishSea(IS).ThehigherproportionofexpenditureintheCNSandNNSreflectsthesizeanddegreeofcomplexityofprojectsintheseregions.

Figure 2: Total Forecast Decommissioning Expenditure on the UK Conti nental Shelf by Year and Region from 2014 to 2023

0

500

1,000

1,500

2,000

2,500

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Fore

cast

Exp

endi

ture

(£ M

illio

n)

Northern North Sea Central North Sea Southern North Sea Irish Sea



ThemajorityofnewprojectscapturedinthesurveyareintheCNSarea,wheretheexpenditurehasconsequentlyalmostdoubledonlastyear’sforecast(£3.3billionin2013).MostofthesearesubseaprojectswithafocusonwellP&A,althoughseveralplatformremovalshavealsobeenincludedforthefirsttime.

4.3ForecastExpenditurebyDecommissioningComponent

TheWBS components that incur expenditure during decommissioning are determined by the nature of theproject.Whileasmallsubseatie-backmayonlyinvolvetheP&Aofasinglewell,decommissioninglargecomplexprojectscanincurexpenditureinallWBScomponents.Theselargerprogrammesrequiresignificantoverheadsfor project management and operational costs, in addition to substantial engineering expertise, equipmentand personnel.

Operatorprojectmanagementcostsspantheentiredecommissioningprocessandinclude:projectmanagement;preparation of decommissioning programmes, studies and reports; and all related consultation andstakeholderengagement.

1

2

3

4

5

6

7


14

Facility running and owners’ costs are the expenses incurred to operate the decommissioning programmepost-COPthroughtocompletion.Thisinvolvesmanagingthefacility,bothasapre-normallyunmannedinstallation(Pre-NUI) and normally unmanned installation (NUI), with expenditure on logistics, a decommissioning team,thedeck crew,powergeneration,platformservices, integritymanagement (inspectionandmaintenance) andspecialistservices.

Figure3breaksdownthetotalyearlyexpenditureintothreecategories:operatorprojectmanagement/facilityrunning costs; well P&A; and removal and other associated activity. The latter includes expenditure on thefollowing:makingsafe;topsidepreparation;removaloftopsides,substructuresandsubseainfrastructure;pipelinedecommissioning;anddisposal,recycling,siteremediationandmonitoring.

Operatorprojectmanagement/facilityrunningcostsareforecasttoremainrelativelystable,peakingin2015asanumberofprojectsgearupfordecommissioning.WellP&Aishighestin2017,andremovalexpenditureisforecasttobelowinthenearterm,butrelativelystableacrosstherestofthedecade.TheactivityrelatedtoeachoftheseWBScomponentsisdiscussedinsection6.

Figure 3: Total Forecast Decommissioning Expenditure on the UK Conti nental Shelf by Work Breakdown Structure Category from 2014 to 2023

0

500

1,000

1,500

2,000

2,500

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Fore

cast

Exp

endi

ture

(£ M

illio

n)

Operator Project Management/Facility Running Costs Well P&A Removal and Other Associated Activity



Expenditure 2014 to 2023Operatorprojectmanagement/facilityrunningcosts £3.1billionWell P&A £6.4billionRemovalandotherassociatedactivity £5.1billion

15

Figure 4 overleaf breaks down the total forecast expenditure by proportion ofWBS component for all UKCSprojects,subseaprojects(includingFPSOs),facilityremovalprojectsintheCNSandNNSareas,andfacilityremovalprojectsintheSNSandISareas.

WellP&Aisthelargestcategoryofexpenditure,accountingfor44percent(£6.4billion)ofthetotalforecastontheUKCS,inlinewithpreviousreports.Theproportionofexpenditureonwellsincreasessignificantlyforsubseaprojectsto67percent(£1.7billion).

Across the UKCS, 94 per cent (£2.9 billion) of all owners’ costs (including all facility running and operatorprojectmanagementcosts)areintheCNSandNNSareas.Thisisduetothesizeandcomplexityofprojectsintheseregionsand the fact thatplatformsare typicallymanned installations.Owners’costs, in turn, represent 34percent(£2.7billion)offacilityremovalprojectsintheCNSandNNSareas,comparedwithonlyfourpercent (£145million)intheSNSandISareas.

Asaproportion,expenditureon topside, substructureandsubseastructure removals in theSNSand ISareasis higher than in the CNS andNNS, despite the greater complexity of projects in the latter regions. This is aconsequenceofthelowerproportionofexpenditureonowners’costsintheSNSandISareas.

Oil&GasUKandindustryarecurrentlyworkingondevelopingabetterunderstandingofthekeydecommissioningcostdriversandhowthesecanbereduced.WellP&Aduration,removalduration,andvesselrateshavebeenidentifiedasthekeycostdriversand,assuch,arethefocusofthiswork.

1

2

3

4

5

6

7


16

Figure 4: Forecast of Total Decommissioning Expenditure on the UK Continental Shelf by Work Breakdown Structure Component and Project Type from 2014 to 2023

16%

26%

18%

10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Prop

ortio

n of

Tota

l Exp

endi

ture

for E

ach

Wor

k Br

eakd

own

Stru

ctur

e Co

mpo

nent

Owners' Costs: 21%

Well P&A: 44%

7%

Removals: 19%*

67%

8%

11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Prop

ortio

n of

Tota

l Exp

endi

ture

For

Eac

h W

ork

Brea

kdow

n St

ruct

ure

Com

pone

nt

Owners' Costs: 9%

Well P&A: 67%

Removals:8%*

26%

33%

12%

7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Prop

ortio

n of

Tota

l Exp

endi

ture

for E

ach

Wor

k Br

eakd

own

Stru

ctur

e Co

mpo

nent

Owners' Costs: 34%

Well P&A: 33%

Removals: 20%*

31%

18%

9%

13%

9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Prop

ortio

n of

Tota

l Exp

endi

ture

For

Eac

h W

ork

Brea

kdow

n St

ruct

ure

Com

pone

nt

Well P&A: 49%

Removals:27*%


Operator Project Management Facility Running/Owner costsWells (Platform and Subsea) Platform WellsSubsea Wells Facility/Pipeline Making SafeTopsides Preparation Topside RemovalSubstructure Removal Subsea Infrastructure RemovalPipelines Topsides and Substructure Onshore RecyclingSite Remediation Monitoring

* Indicates expenditure clearly identified as removal

ALL UKCS Projects Subsea Projects

CNS and NNS Facilities Removal Projects SNS and IS Facilities Removal Projects

17

5.DecommissioningActivityin2013

Analysis has been carried out to assess the level of activity forecasted for 2013 in comparison to what hasactuallybeenexecuted.Operators forecastedactivity inwellP&A,subsea infrastructureremovalandpipelinedecommissioning,themajorityofwhichwasaccomplishedasplanned.

Decommissioning Activity Forecast for Activity in 2013 2013 Actual Activity

Subseaexplorationandappraisal wellP&A

11 8

PlatformwellP&A 13 Allactivitycarriedout

SubseadevelopmentwellP&A 2 Allactivitycarriedout

Mattresses 12 Allactivitycarriedout

Subseainfrastructure 1,600tonnes Allactivitycarriedout

Pipelines 22kilometres Allactivitycarriedout

Alltheplatformwellsweresafelypluggedandabandonedin2013usingan integralrig.ThesubseawellP&Ascarriedoutin2013variedindegreeofcomplexity.Thesubseaexplorationandappraisal(E&A)wellP&Asthatwerenotcarriedoutin2013arescheduledtobefinishedin2014followinglongerP&Adurationsonsomewells.

1

2

3

4

5

6

7


18

6. Forecast Decommissioning Acti vity from 2014 to 2023

ThefollowingsectionsofthisreportfocusonthespecificareasofforecastactivityoutlinedintheWBS.

6.1WellPluggingandAbandonment

WellP&AontheUKCSiscarriedout inaccordancewith industryguidelines15.TheprocessofwellP&Acanbechallengingandmayinvolveintervention,theremovalofdownholeequipment(suchasproductiontubingandcasing),andwell-scaledecontaminationtreatment.Italsorequiresremovingthewellheadandconductortothreemetresbelowtheseabed.

Ofthecurrentinventoryofaround5,000wellsthatwilleventuallyrequireP&AontheUKCS16,closeto930arescheduledfordecommissioningoverthenextdecadeatacostof£6.4billion.Thisrepresentsnearly19percentofthetotalwellstock.

The Central and Northern North Sea

ThenumberofwellsforecastforP&AintheCNSandNNSisshowninFigure5.Activityvarieseachyear,withhigheractivity in2017,2019and2022.Thisvariationissimilartothatshowninthe2013report,althoughthepeakshavesmoothedoutandoccurlater.

Figure 5: Number of Wells Forecast to be Plugged and Abandoned by Type and Total Annual Expenditure in the Central and Northern North Sea from 2014 to 2023

0

100

200

300

400

500

600

700

800

900

0

10

20

30

40

50

60

70

80

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Fore

cast

Exp

endi

ture

(£ M

illio

n)

Num

ber o

f Wel

ls

Platform Subsea Development Subsea E&A Total Well P&A Expenditure



Number of Wells 2014 to 2023 Total Expenditure 2014 to 2023 Proporti on of Platf orm Wells510 £4.7billion 58%

15TheGuidelines for the Suspension and Abandonment of Wells areavailabletodownloadatwww.oilandgasuk.co.uk/publications/viewpub.cfm?frmPubID=447

16 SeeCommonDataAccessLimited’sdatastoreatwww.ukoilandgasdata.com

19

TheyearsofhighactivityareduetoanumberofprojectsforecastingtocarryoutwellP&Ainthesameyear. In2017,2019,and2022,wellP&Asarescheduledonten,thirteen,andsevenfields,respectively.Oil&GasUKexpectsthatasforecastsarerevisited,activitywillsmoothoutinlinewiththenear-termforecastsof2014and2015,whichshowamuchsmallervariation.

AnumberofoperatorsplantocarryoutwellP&Ainseveralphases,witheachphaseactingasaseparatecampaign.Phaseonetypicallyusesalowercostmethodsuchaswireline,coiltubingandahydraulicworkoverunitorlightwell intervention(LWI)vessel,whilephasestwoandthreeusearig.Wherethis is thecase,Oil&GasUKhascountedwellsatthestartofthecampaigntoavoidduplication.

ThetotalexpenditureonwellP&AintheCNSandNNShasincreasedby52percent(£4.7billion)comparedtolastyear’sforecast(£3.1billion),whilethetotalnumberofwellshasonlyincreasedbysixpercent(30wells).

Historical variation in Well Plugging and Abandonment Cost Forecasts in the Central and Northern North Sea

The large range in forecasts for subseawells,as shown inFigure6overleaf, reflects thewidevariation in thetypeofwelltobepluggedandabandoned.Simplerig-lessP&Asusingwireline,pumpingorcranejacksaccountforthelowendofthecostrange,whilewellsatthetop-of-the-rangearetypicallycomplex,rig-basedP&Aswithchallengingaccessandcementing.Theyalsorequireretrievaloftubingandcasing,milling,andcementrepairs.Olderwells have the additional challengeof limiteddocumentationofwell design andmaterial construction,particularlywherewellownershiphaschanged.

While the range in forecasts for subsea developmentwells has been consistently large, forecasts for subseaE&Awellshaveincreasedsignificantlysince2012.Severaloperatorshavereportedthatbenchmarkingexerciseshave influenced their cost estimates and that forecasts for complexwells have been revised up as they gain moreexperience.

Platformwellsshowthesmallestvariationincostforecasts,astheytypicallyhaveallofthenecessarytoolsandmaterialsto-handandarenotsubjecttothesameweatherconstraintsorrigrequirements.Thesewellsarealsotypicallycarriedoutinbatchesorcampaigns,enablingmobilisationcoststobemoreeasilysharedacrossanumberofwells.

1

2

3

4

5

6

7


20

Figure 6: Historical Variation in Well Plugging and Abandonment Cost Forecasts in the Central and Northern North Sea (2011 to 2014 Surveys)

0

5

10

15

20

25

30

35

40

2011 2012 2013 2014 2011 2012 2013 2014 2011 2012 2013 2014

Platform E&A Subsea Development

Estim

ated

Cos

t (£

Mill

ion)

Average Forecast Cost Platform Well Average Forecast Cost Suspended E&A Well

Average Forecast Cost Subsea Development WellRange in Cost Forecasts


Well P&A 2013 Average 2014 Average Platformwells £4.8million £4.8millionSubseaE&Awells £8million £17.4millionSubseadevelopmentwells £10.1million £11.6million

21

The Southern North Sea and Irish Sea

ThenumberofwellsscheduledforP&AintheSNSandISareashasincreasedbyalmost90comparedtothe2013report.Thisincreaseisspreadacrossthedecade,although60morewellsareforecastbetween2015and2019.Theriseisduetotheinclusionofadditionaloilandgasprojectsandhigherforecastsfromexistingprojects.

ThelargenumberofwellsforecasttoundergoP&Ain2020and2021isduetoeightprojectsschedulingP&Aatthesametime,anditisexpectedthatthisactivitywillsmoothoutwhenforecastsarerevisited.Activityin2014islowerthantheforecastmadefortheyearinthe2013reportasanumberofprojectshavespreadouttheiractivity.

WellP&Aexpenditureincreasesinlinewithactivityinthenearterm,tailingofftowardstheendofthedecade.Thehigherexpenditurebetween2015and2018isduetothegreaternumberofsubseawells.Thepeakinwellsseenin2020and2021isduetoanincreaseinplatformwells,whicharelessexpensive.

Figure 7: Number of Wells Forecast to be Plugged and Abandoned by Type and Total Annual Expenditure in the Southern North Sea and Irish Sea from 2014 to 2023

0

100

200

300

400

500

600

700

800

0

10

20

30

40

50

60

70

80

90

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Fore

cast

Exp

endi

ture

(£ M

illio

n)

Num

ber o

f Wel

ls

Platform Subsea Development Subsea E&A Total Well P&A Expenditure



Number of Wells 2014 to 2023 Total Expenditure 2014 to 2023 Proporti on of Platf orm Wells417 £1.7billion 80%

1

2

3

4

5

6

7


22

Historical Variation in Well Plugging and Abandonment Cost Forecasts in the Southern North Sea and Irish Sea

ThecostofwellP&AissignificantlylowerintheSNSandISthanintheCNSandNNSareas.ThisisduetothefactthatwellP&Acompletionsareoftensimplerasthemorebenignfluidsintheseregionscausefewerproblemsofcorrosion.AsseeninFigure8,platformwellP&AintheSNSandISischeapertoperformandshowsthesmallestvariationincostestimates.

Figure 8: Historical Variation in Well Plugging and Abandonment Cost Forecasts in the Southern North Sea and Irish Sea (2011 to 2014 Surveys)

0

2

4

6

8

10

12

14

16

2011 2012 2013 2014 2011 2012 2013 2014 2011 2012 2013 2014

Platform E&A Subsea Development

Estim

ated

Cos

t (£

Mill

ion)

Average Forecast Cost Platform Well Average Forecast Cost Suspended E&A Well

Average Forecast Cost Subsea Development Well Range in Cost Forecasts


Well P&A 2013 Average 2014 Average Platformwells £3.5million £2.7millionSubseaE&Awells £4.8million £5millionSubseadevelopmentwells £6.9million £7.6million

TheaverageandrangeinsubseawellP&Aforecastshaveincreasedslightlysincethe2013survey,althoughtheoverallvariationincostismuchlessthanthatintheCNSandNNS.Whilethehigherendoftherangeincostsareonlyreportedbyasmallnumberofwells,thesehighercostforecastsarereportedbymorethanoneoperator.

23


Rig Type for Well Plugging and Abandonment

ThereareanumberofmethodsthatcanbeusedforplatformwellP&A(seeFigure9).IntheCNSandNNSareas,closeto15percentofwellswillbepluggedandabandonedinphases.Thefirstphaseistypicallyrig-lessanduseslowercostmethodssuchaswireline,coiltubing,andahydraulicworkoverunitorLWIvessel,whilethesecondandthirdphaseswillnormallyusearig.Thetypeofvesselwilldependonwhethertheoriginalderrickisstillinplaceandthewaterdepthwheretheplatformislocated.Theremaining85percentofwellsintheCNSandNNSwillbepluggedandabandonedina single phase.

DuetoshallowerwatersintheSNSandIS,allsubseawellsintheseareasplantouseajack-uprigforP&A.Thishasimplicationsoncostasthesemi-submersiblerigsrequiredintheCNSandNNSaremoreexpensive.

Figure 9: Forecast Rig Type for Platform Well Plugging and Abandonment on the UK Continental Shelf from 2014 to 2023

Central and Northern North SeaSouthern North Sea and Irish Sea

Platform well P&AIntegral rig 54% 1%Modular rig 9% -Jack-uprig 9% 57%Rig-lessintervention 16% 26%Notyetknown 12% 16%Subsea well P&AJack-uprig 25% 100%Semi-submersiblerig 75% -

6.2FacilitiesMakingSafeandTopsidePreparation

Priortoremoval,facilitiesmustfirstbemadesafeandpreparedforremovalinlinewithenvironmentalandsafetyconsiderations.The‘makingsafe’offacilitiesincludescleaning,freeingequipmentofhydrocarbons,disconnectionandphysicalisolation,andwastemanagement.

Followingthis,thetopsidesandprocessandutilitiesmodulesareseparatedandappropriateengineering,suchastheinstallationofliftpoints,cantakeplacetoenableremoval.Thetopsidepreparationrequiredwilldependonthe removal method used.

1

2

3

4

5

6

7

Stand-aloneJack-up

Integral Rig

Modular Rig

Other rigless

Rig Type notyet known

CNS and NNS SNS and IS

Source:Oil&GasUK


24

Over the next decade around 300 topside modules on 86 platforms are scheduled to be made safe andpreparedforremovalontheUKCS,atatotalcostof£560million.The‘makingsafe’ofpipelinesisdiscussedfullyinsection6.4.

Central and Northern North Sea

IntheCNSandNNSareas‘makingsafe’istypicallycarriedouttwoyearspriortoremoval,andtopsidepreparationintheyearpriortoremoval.Itisalsopossibletocarryout‘makingsafe’severalyearsahead,thusthetwoactivitiesarenotcompletelyalignedinFigure10.

Thereareseveralyearsofhigheractivitylevelsasanumberoflargeprojectsgearupforremoval.For‘makingsafe’thesearein2014,2015and2018andfortopsidepreparationthesearein2015,2016and2019.Activitylevelsforbothincreasein2023suggestingfurtherremovalactivityoutsidethesurveytimeframe.

Figure 10: Forecast Number of Topside Modules for ‘Making Safe’ and Topside Preparati on in the Central and Northern North Sea from 2014 to 2023

0

10

20

30

40

50

60

70

80

90

100

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Num

ber o

f Top

side

Mod

ules

Facilities Making Safe Topside Preparation Source: Oil & Gas UK


Number 2014 to 2023 Total Expenditure 2014 to 2023

Faciliti es making safe and topside preparati on

12platforms £420million

Number of topside modules – faciliti es making safe

201

Number of topside modules– topside preparati on

214

25

Southern North Sea and Irish Sea

ThenumberoftopsidemodulesperfacilityissignificantlylowerintheSNSandISareasthantheCNSandNNSduetothelargeproportionofsmallsatelliteinstallationsandNUIs.Theirsmallersizemeansthatboth‘makingsafe’andtopsidepreparationcanbecarriedoutinasingleyear.ThisisreflectedinFigure11wherethetwoactivitiesarecloselyaligned.

Activityisforecasttopeakin2019at24topsidemoduleson12installations.Thepeakinactivityoccursoneyearpriortothepeakinremovalactivitydiscussedinsection6.3.

Figure 11: Forecast Number of Topside Modules for ‘Making Safe’ and Topside Preparati on in the Southern North Sea and Irish Sea from 2014 to 2023

0

5

10

15

20

25

30

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Num

ber o

f Top

side

Mod

ules

Facilities Making Safe Topside Preparation



Number 2014 to 2023 Total Expenditure 2014 to 2023Faciliti es making safe and topside preparati on

94 topside modules on20platformsand54NUIs

£140million

1

2

3

4

5

6

7


26

6.3 Removal

Theremovalofsubstructures,topsidesandsubseainfrastructureaccountsfor19percent(£2.8billion)ofthetotaldecommissioningexpenditureontheUKCS from2014to2023.Pipelinedecommissioninghasbeenaddressedseparatelyinsection6.4.

Topsideremovalismostcommonlyachievedusingpiece-small,reverse-installationorsingle-liftmethodswhichcaninvolvere-engineeringandcuttingtopsidemodules.LargerstructuresseenintheCNSandNNSareasoftenrequiresectioningintomanageablepiecesandinvolvemultipleremovallifts.Conversely,smallersubstructures,suchasthosecommonintheSNScanberemovedinasingleliftandtransportedonshoreviabargeorliftvessel.

Todate,thelargestsingleliftachievedontheUKCSusingaheavyliftvesselduringdecommissioningwasin2009fortheremovaloftheFriggTCP2modulesupportframeat8,500tonnes.However,constructionofthePieterSchelteheavyliftvesselwillallowsingle liftremovaloftheheavierBrentAlpha,BravoandDeltatopsidesandtheBrentAlphasubstructure.Thetopsidesweighbetween18,900and29,600tonnes17each.TheBrentAlphasubstructure,weighing14,200tonnes,willbethefirstself-floatersubstructureremovedfromtheUKCS18.

Topside Removal in the Central and Northern North Sea

Thepictureforremovalshaschangedsignificantlyinrecentyearsasanumberofprojectshavebeendeferredtoextendfieldlife.DecommissioningofNinianNorth,forexample,hasbeenpostponedfollowingreceiptoftheBrownFieldAllowance19,whilstGoldeneye’sdecommissioningprogrammehasbeenputonholdfollowingthedecisiontousethefacilityforacarboncaptureandstorageproject20.

Inthenextdecade,80percent(116modules)oftopsidemoduleremovalactivityintheseareasisconcentratedintheNNS.Almostalltopsideremovalisforecastbetween2016and2020,althoughitislikelythatactivitywilllevelduetotheflexibilityinremovaltimelines.Asmallnumberoftopsidemodulesareforecasttoberemovedbetween2021and2023,coincidingwiththespikeintopside‘makingsafe’andpreparationactivitydiscussedinsection6.2.Thisreflectsthestartofremovalactivityforprojectslargelyoutsidethesurveytimeframe.

17 SeeBrentE-Newsathttp://s04.static-shell.com/content/dam/shell-new/local/country/gbr/downloads/pdf/upstream/brent-enews-november-2013.pdf

18Oil&GasUK’spublicationonThe Decommissioning of Steel Piled Jackets in the North Sea Region (October 2012) isavailabletodownloadatwww.oilandgasuk.co.uk/cmsfiles/modules/publications/pdfs/OP074.pdf

19Seewww.cnri-northsea-decom.com/News&current-Status.htm20Seehttp://s06.static-shell.com/content/dam/shell-new/local/country/gbr/downloads/pdf/peterhead-ccs-brochure.pdf

27

Figure 12: Forecast Number of Topside Modules to be Removedin the Central and Northern North Sea from 2014 to 2023

0

10

20

30

40

50

60

70

80

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Num

ber o

f Top

side

Mod

ules



Weight (tonnes) 2014 to 2023

Number 2014 to 2023

Total Expenditure 2014 to 2023

Topsideremoval 159,600 146 modules on13platforms

£1billion

Platf orm types

Integratedplatforms 130,000Platforms 27,000

NUIs 2,600

1

2

3

4

5

6

7


28

Topside Removal in the Southern North Sea and Irish Sea

Ninety-fourpercent(94modules)oftopsidemodulesforecasttoberemovedintheseareasareintheSNS.Whilethepatternofactivityisconsistentwiththeforecastinthe2013report,anumberofprojectshavebeenincludedinthe2014reportforthefirsttime,increasingtheforecastsignificantly.

Activityisforecasttobelargelystableacrossthedecadeatanaverageremovalweightof12,000tonnesperyear,peakingatfiveplatformsand17NUIsin2020.

FiftypercentofthetopsidestoberemovedareNUIs,withanaverageweightofaround900tonnes.Whileheavyliftvesselscanbeusedforremoval,smallerbargesarealsocapableofsingleliftsofthisweight.

Figure 13: Forecast Number of Topside Modules and Topside Weight to be Removed in the Southern North Sea and Irish Sea by Facility Type from 2014 to 2023

0

5

10

15

20

25

30

35

40

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Num

ber o

f Top

side

Mod

ules

Tonn

es to

be

Rem

oved

Platform NUIIntegrated Platform Unspecified (Two or More Categories Combined)



Weight (tonnes) 2014 to 2023

Number 2014 to 2023


Topsideremoval 122,000 100moduleson91platforms

£450million

Platf orm types Integratedplatforms 12,400Platforms 36,300NUIs 60,000Unspecified 13,300

29

Substructure Removal on the UK Conti nental Shelf

SubstructureremovalactivityintheCNSandNNSareasisconcentratedbetween2017and2021,largelymirroringthepeakactivityyears for topside removals (seeFigure12).Activity in theSNSand ISareas is spreadacross theten-yearperiod.

Figure 14: Forecast of Substructure (Jacket) Weight to be Removed from the UK Conti nental Shelf from 2014 to 2023

0

5,000

10,000

15,000

20,000

25,000

30,000

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Tonn

es to

be

Rem

oved

Central and Northern North Sea (Lift-Installed, Barge-Launched, and Self-Floater)Southern North Sea and Irish Sea (Shallow Water)



Substructure Removal Weight (tonnes) 2014 to 2023


CentralandnorthernNorthSea 65,000 £590millionSouthernNorthSeaandIrishSea 69,000 £320million

The substructures for removal in the SNS and IS areas are shallowwater jackets,which usuallyweigh less than2,000tonnesandaretypicallydeployedinwaterdepthsof55metresor less. IntheCNSandNNSacombinationoflift-installedjacketsweighinglessthan10,000tonnes;self-floaters,whichweighinexcessof12,000tonnes;andbarge-launchedsubstructures,whichweighbetween5,000and25,000tonnes,areforecasttoberemovedoverthenexttenyears.

Thehigherproportionofexpenditure in theCNSandNNS (£590million) isdue to the sizeandcomplexityoftheseprojects.

1

2

3

4

5

6

7


30

Historical Variation in the Removal Cost per Tonne Forecasts on the UK Continental Shelf

Theaverage forecast costper tonne forboth topsidesand substructureshas seena relatively small variationacrossthelastfoursurveysintheCNSandNNSareas(Decommissioning InsightReports2011to2014).

Figure 15: Historical Variation in the Removal Cost per Tonne Forecasts for Topsides and Substructures in the Central and Northern North Sea (2011 to 2014 Surveys)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2011 2012 2013 2014 2011 2012 2013 2014

Topside Substructure

Estim

ated

Cos

t per

Tonn

e (£

)

Average Forecast Topside Removal Cost Per Tonne

Average Forecast Substructure Removal Cost Per Tonne

Range in Cost Forecasts Source: Oil & Gas UK

Removal Cost per Tonne 2013 Average 2014 Average Topsides £4,100 £2,900Substructures £4,300 £4,300

31

Thereisahigherforecastcostpertonnefortopsideandsubstructureremoval inthesouthernNorthSeaandIrishSea(seeFigure16).Thiscouldbeattributedtothefactthatavesselwillhavethesamemobilisationcostsforremovingasmall500-tonneNUIoralargerstructure,aswellasduetothelongerdurationofremovalsintheCNSandNNSareaswhich,inturn,reducethecostpertonne.AlthoughthecostpertonneishigherintheSNSandIS,thevariationacrosstheUKCSisrelativelysmall.

Figure 16: Historical Variation in the Removal Cost per Tonne Forecasts for Topsides and Substructures in the Southern North Sea and Irish Sea (2011 to 2014 Surveys)

0

2,000

4,000

6,000

8,000

10,000

2011 2012 2013 2014 2012 2013 2014

Topside & Substructure Topside Substructure

Estim

ated

Cos

t per

Tonn

e (£

)

Average Forecast Topside Removal Cost Per TonneAverage Forecast Substructure Removal Cost Per TonneAverage Forecast Topside & Substructure Removal Cost Per Tonne

Range in Cost Forecasts


Removal Cost per Tonne 2013 Average 2014 Average Topsides £3,600 £4,000Substructures £5,700 £4,500

1

2

3

4

5

6

7


32

Subsea Infrastructure Decommissioning on the UK Conti nental Shelf

TheyearsofhighsubseainfrastructuredecommissioningactivityintheCNSandNNSareasarefrom2019to2022,whileintheSNSandIStheyarefrom2016to2020.Thedecommissioningofmattressesandremovalofothersubseainfrastructuretypicallyoccurinthesameyear(seefigure17and18).Mattressesareusuallyremovedfromtheseabedatdecommissioningalthoughtheycanbedecommissionedin situifbadlydegradedandapprovalhasbeenobtainedfromtheDepartmentofEnergy&ClimateChange(DECC).Othersubseainfrastructureincludesmanifolds, christmas trees, risers, spools, jumpers, anchors and subsea isolation valves (SSIVs). Pipelines arediscussedinsection6.4.

DuetotheinclusionofadditionalsubseaprojectsintheCNSandNNSareasinthe2014survey,thenumberofmattressesandweightofsubseainfrastructurehavemorethantrebledtheforecastinthe2013report.

Figure 17: Forecast of Matt ress and other Subsea Infrastructure Decommissioning in the Central and Northern North Sea from 2014 to 2023

0

200

400

600

800

1,000

1,200

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Num

ber o

f Mat

tres

ses


Number/Weight 2014 to 2023 Total Expenditure 2014 to 2023Mattressesandsubseainfrastructure

- £330million

Mattresses 2,800 -Subseainfrastructure 54,100tonnes -

0

5,000

10,000

15,000

20,000

25,000

30,000

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Tonn

age

of S

ubse

a In

fras

truc

ture

to b

e Re

mov

ed



33

Figure 18: Forecast of Matt ress and other Subsea Infrastructure Decommissioning in the Southern North Sea and Irish Sea from 2014 to 2023

0

100

200

300

400

500

600

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Num

ber o

f Mat

tres

ses


Number/Weight 2014 to 2023 Total Expenditure 2014 to 2023Mattressesandsubseainfrastructure

- £165million

Mattresses 2,600 -Subseainfrastructure 1,500tonnes -

6.4PipelineDecommissioning

PipelinesareintegraltofieldlifeextensionandfuturedevelopmentopportunitiesanditisthereforeofbenefittotheUKCSthatmajorpipelinesarenotdecommissionedprematurely.ThepipelinenetworkscurrentlyinstalledintheNorthSeacollectivelyprovidethetransportationinfrastructurefortheregion’soilandgasproductiontobedeliveredtohostplatformsandtoshore.Inmanycases,theexistenceofnearbypipelineinfrastructurehasleddirectlytotheeconomicexploitationofmarginalfields,whichwouldotherwisebeconsidereduneconomic.

Duetotheimportanceofcertainpipelines,thedeferralofpipelinedecommissioningtotheendofthefieldlifeorforpossiblereuseissometimescarriedoutundertheInterimPipelineRegime(IPR),wherefuturereuseofthepipelineisconsideredviable. Inthesecircumstances,DECCmayrequestthatthepipelineownercarryoutpipeline‘makingsafe’activitiesandmaintaintheconditionofthepipelineforpossiblefuturereuse.

The‘makingsafe’ofpipelinesinvolvescleaningactivitiessuchasflushingthepipelinesofhydrocarbons,purging,andremovalandmanagementofhazardouswaste.ThepipelinescanthenbedecommissionedinaccordancewithDECC’sGuidanceNotes21 or maintained under the IPR.

Thedecommissioningofpipelinescaninvolveeitherremovaltoshore,throughreversereelingorcutandlift,orwherepipelineshaveobtainedapprovalfromDECCtobeleftin situtheycanbetrenchedandburied.TheMurchisonexportline,forexample,willbedecommissionedandleftin situ,withremedialrockplacedovertheexposedsections.Themainpipelinetie-inspoolsateitherendwillberemovedandreturnedtoshoreforrecyclingordisposal22.

0

100

200

300

400

500

600

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Tonn

age

of S

ubse

a In

fras

truc

ture

to b

e Re

mov

ed



1

2

3

4

5

6

7

21DECC’sGuidanceNotesonDecommissioningProgrammesareavailabletodownloadathttp://www.og.decc.gov.uk/regulation/guidance/decomm_guide_v6.pdf

22Seewww.cnri-northsea-decom.com/Decommissioning-Programme.htm


34

Pipeline Making Safe and Decommissioning in the Central and Northern North Sea

Fewerpipelinesarescheduledtobedecommissionedover thenext tenyears in theCNSandNNSareas thanforecastinthe2013report,duetothedeferralofsomeprojectstooutsidethesurveytimeframe.

‘Makingsafe’ofpipelinesinthisareatypicallyoccursoneyearbeforepipelinesaredecommissioned,butitcanalsobecarriedoutseveralyearsahead.Themajorityof‘makingsafe’activityisforecastpost-2017withanaverageof185kilometres(km)ofpipelineperyearovertheperiod2017to2023.

Figure 19: Forecast of Making Safe and Pipeline Decommissioning Acti vity in the Central and Northern North Sea from 2014 to 2023

0

50

100

150

200

250

300

350

400

450

500

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Tota

l Len

gth

(km

)

Pipelines Making Safe UmbilicalsOther Pipelines (Width <16") Trunklines (Width >16")



Number 2014 to 2023

Length (km) 2014 to 2023


Making safe - 1,300 £125millionPipeline decommissioning

807 £490million

Umbilicals 73 180Trunklines 18 259 Other pipelines 215 368Peak year of ‘making safe’ acti vity 2023 - 448Peak years of pipeline decommissioning acti vity2019 45 1702020 47 2502021 153 260

35

Pipelinedecommissioningactivityishigherbetween2019and2021,correlatingwiththepeakyearsofactivityinpipeline‘makingsafe’.Thespikein‘makingsafe’in2023coincideswiththatoffacilities‘makingsafe’,suggestingfurtherremovalactivityoutsidethesurveytimeframe.However,activitytowardstheendofthetimeframecanbeexpectedtoleveloutwhenforecastsarerevisited.Allofthepipelinestobedecommissionedareinter-fieldconnectors,andnoneareconsideredtobecriticalforthirdpartyaccess.

Pipeline Making Safe and Decommissioning in the Southern North Sea and Irish Sea

TheforecastforpipelinedecommissioningintheSNSandISareashasincreasedsignificantlysincethe2013report.Thisisduetoincreasedactivityforecastsfromexistingprojectsaswellastheadditionofnewprojectstothesurvey.

Figure 20: Forecast of Making Safe and Pipeline Decommissioning Acti vity in the Southern North Sea and Irish Sea from 2014 to 2023

0

100

200

300

400

500

600

700

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Tota

l Len

gth

(km

)

Pipelines Making Safe Umbilicals Other Pipelines (Width <16'') Trunklines (Width >16'')Source: Oil & Gas UK


Number 2014 to 2023

Length (km) 2014 to 2023


Making safe - 2,200 £285millionPipeline decommissioning 2,470 £150millionUmbilicals 32 220Trunklines 37 1,350Other pipelines 111 900Peak year of ‘making safe’ acti vity2020 - 650Peak years of pipeline decommissioning acti vity2016 37 6402020 15 660

1

2

3

4

5

6

7


36

IncontrasttotheCNSandNNS,severaloperatorsintheSNSandISareasforecasttocarryoutpipeline‘makingsafe’anddecommissioninginthesameyear,although‘makingsafe’canalsooccurearlier.

The peaks in 2016 and 2020 reflect operators’ current best estimates and not sanctioned decommissioningprogrammes,acompletelistofwhichcanbefoundonDECC’sProjectPathfinderwebsite23.

InordertomeetgovernmentandindustryobjectivesofmaximisingeconomicrecoveryfromtheUKCS,aSouthernNorthSeaPILOTRejuvenationWorkGrouphasbeenestablishedtocarryoutajointindustryprojectfocusedonunderstandingtheremainingreservesandresourcebaseinthisregionandtoidentifytherequirementstoprotectreservesandenablematurationintodevelopmentopportunities.Theworkgroupaimstocreateablueprintofwhattheareawilllooklikeintenyears’timeandassesswhetherfiscalincentivesarerequiredtoextendtheregion’slife.

6.5OnshoreRecyclingandDisposal

Topsideandsubstructurerecyclingincludesactivityandexpenditurerelatedtoonshorecleaningandhandlingofhazardouswaste,deconstruction,reuse,recycle,disposalandwastemanagementaccounting.

Thepreferredoptionstodealwithdisusedoffshorestructuresfollowthewastehierarchyofreuse;recycling;andonshoredisposal.Oncethestructuresarebroughtonshore,dismantlingandprocessingishandledbyspecialistlicensedsites.

Reuseisdefinedasanyactivitythatlengthensthelifeofanitemwhilestillbeingusedforitsoriginalpurpose.Thiscanoftenbeconfusedwithrecycling,whichisthereprocessingofanitemintoanewrawmaterial.Althoughmorechallenging,reuseoftenprovestobeparticularlycostefficientandcanhelptoaddressthechallengeofwastedisposal.Thedecisiontoreuse,recycleordisposetolandfillcanoftenbedrivenbyanumberofcommonfactorsincludingtheamountofmaintenancerequired,orprevalenceofobsoletetechnologyandtheamountofhazardousmaterialonanasset.

Topsidesaremadefromavarietyofmaterialsandsafedismantlingandwastemanagementofthesestructurescanposeagreaterchallengethanthemanagementofsubstructureswhicharepredominantlymadeofsteelandcanbeprocessedandrecycled.Recentdecommissioningprojectsdemonstratehighlevelsofreuseandrecyclingat95percentofall recoveredmaterial24. Examplesof reuseand recyclingofmaterial fromtheUKCS includePerenco’sreuseoftopsidesfromtheirsouthernNorthSeaWellandplatformforanewdevelopmentinWestAfricaandtheuseofNorthWestHutton’saccommodationmoduleasanofficefacilityatadisposalyard.

Justover481,000tonnesareforecasttocomeonshorefrom2014to2023,60percentofwhichisconcentratedin theCNSandNNS. Inaddition to tonnage fromtopsidesandsubstructures, thisalso includes tonnage from subseainfrastructure.

Thechosenoffshoreremovalmethodhasimplicationsforonshoredisposalasthesizeofvessel,aswellastheweightanddimensionsofthematerialremoved,willdictatewheredisposalcantakeplace.ThedecommissioningoftheBrentA,BandDtopsidesandBrentAsubstructurewillbecomethelargestsingle-lifttodateontheUKCS,and,assuch,willrequirealargeenoughload-bearingquaytoreceivethem.ThestructureswillbetakentoAbleSeatonPortwhichiscurrentlyundergoingconstructiontoexpandtheport’scapacity25.

23SeetheDepartmentofEnergy&ClimateChangePathfinderwebsiteat www.og.decc.gov.uk/pathfinder/decommissioningindex.html

24Oil&GasUK’spublicationonThe Decommissioning of Steel Piled Jackets in the North Sea Region (October 2012) is availabletodownloadatwww.oilandgasuk.co.uk/cmsfiles/modules/publications/pdfs/OP074.pdf

25Seewww.ableuk.com/able-lands-another-rig-recycling-contract

37

Topsides and Substructure Onshore Recycling in the Central and Northern North Sea

Correlatingwiththeforecastfortopsideandsubstructureremoval,recyclingactivityisforecasttobehigherfrom2016to2020 intheCNSandNNSareas,reaching87,100tonnes in2020.However, it is likelythatthispeak inactivitywilllevelout.

Figure 21: Forecast of Tonnage Coming Onshore for Recycling and Disposal in the Central and Northern North Sea from 2014 to 2023

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Tota

l Wei

ght (

Tonn

es)

Topside Substructure Other Subsea Infrastructure



Weight (tonnes) 2014 to 2023 Total Expenditure 2014 to 2023Onshore recycling £150millionTopsides 159,600Substructure 65,000Subseainfrastructure 64,200

1

2

3

4

5

6

7


38

Topsides and Substructure Onshore Recycling in the Southern North Sea and Irish Sea

RecyclingactivityisrelativelyconsistentintheSNSandISareasfrom2016to2021,reflectingtheforecastoutlinedintheremovalssectionofthisreport.In2020,activityreaches49,000tonnes,althoughitislikelythatthiswillsmoothoutwhenforecastsarerevisited.

Figure 22: Forecast of Tonnage Coming Onshore for Recycling and Disposal in the Southern North Sea and Irish Sea from 2014 to 2023

0

10,000

20,000

30,000

40,000

50,000

60,000

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Tota

l Wei

ght (

Tonn

es)



Weight (tonnes) 2014 to 2023 Total Expenditure 2014 to 2023Onshore recycling 192,600 £125million

39

6.6SiteRemediationandMonitoring

Siteremediationactivitiesincludepilemanagement,clearingdecommissionedoilfielddebris(witha500-metrezoneand200-metrepipelinecorridor)andover-trawlsurveystodemonstratethattheseabedissafeforfishermen.

Expenditure for site remediation is forecast at £270million between 2014 and 2023. Almost 95 per cent of this is forecast to be spent in the CNS and NNS areas and it is expected to peak in line with topside and substructureremoval.

Monitoring is the final stage in the decommissioning process. Operators are required to carry out post-decommissioningsurveysandmonitorthesitebeyondphysicaldecommissioning.Thespecificdetailsoftheprogrammeareagreedwiththeregulatoronaproject-by-projectbasis.

ForecastexpenditureonmonitoringontheUKCSis£67millionacrosstheten-yearperiod,over80percentofwhichisintheCNSandNNS.Theexpenditureforecasthasmorethandoubledinthe2014reportcomparedto2013,whichreflectstheimpactofthenewprojectsincludedinthesurveyforthefirsttime,aswellasincreasedexpenditurefromexistingprojects.

1

2

3

4

5

6

7


40

7. Appendices

Appendixa)WorkBreakDownStructureDefinitions

STAGES-LEVEL1

Operator project management Activitiesincludeprojectmanagementcoreteam,stakeholderengagement,studiestosupportdecommissioningprogrammeandscopedefinition/methoddevelopment,decommissioningprogrammepreparationanddecommissioningprogrammereporting/close-out(admiraltycharts,fishsafeetc.).

Facility running/owner costs Activitiesincludelogistics(aviationandmarine),operationsteam,deckcrew,powergeneration,platformservices,integritymanagement(inspectionandmaintenance)andoperationsspecialistservicese.g.wastemanagement.

Well plugging and abandonment Activitiesincluderigupgrades,studiestosupportwellprogrammes,wellsuspension(spreadrate/duration),wellsprojectmanagement,operationssupport,specialistservicese.g.wireline,conductorrecovery,cleaningandrecycling,vessel.

Facilities/pipelines making safe Activitiesincludeoperations(drain,flush,purgeandvent),physicalisolation (de-energise,ventanddrain),cleaning,pipelinepiggingandwastemanagement.

Topsides preparation Activitiesincludeengineering-upoftemporaryutilities(power,airandwater),moduleprocess/utilitiesseparation,droppedobjectsurveysandsubsequentremedialactions.

Topsides removal Activitiesincluderemovalpreparation(reinforcementsandstructuralseparationforremoval),vesseloperations,sea-fastening,transportationandload-in.

Substructure removal Activitiesincluderemovalpreparation,removal,vessel,sea-fastening,transportationandload-in.

Topsides and substructure onshore recycling

Activitiesincludecleaningandhandlinghazardouswaste,deconstruction,re-use,recycle,disposalandwastemanagementaccounting(traceabilityofallstreams).

Subsea infrastructure (pipelines, umbilicals)

Activitiesincludevesselpreparationforsubseaend-state(remove,trench, rock-dump),sea-fasteningandtransportation,load-in,subseaprojectmanagementandwastemanagementaccounting(traceabilityofallstreams).

Site remediation Activitiesincludepilemanagement,oilfielddebrisclearance(500mzoneand200mpipelinecorridor)andover-trawlsurveys.

Monitoring Activitiesincludenavigationaidsmaintenanceandmonitoringprogrammeforanyfacilitiesthatremain.

Note–Although logistics (aviationandmarine)areonly itemisedherefor facilityrunning/operatorcosts theyshouldbeassignedtoeachstage,asappropriate.

41

Appendixb)AssociationfortheAdvancementofCostEngineeringClassifications

Primary Characteristic

Secondary Characteristic

EstimateClass

LevelofProjectDefinition(expressedas%ofcompletedefinition)

EndUsageTypicalPurposeofEstimate

Methodology TypicalEstimatingMethod

ExpectedAccuracyRangeTypicalVariationinLowandHigh Range

Class 5 0%to2% Conceptscreening

Capacityfactored,parametricmodels,judgementoranalogy

L:-20%to-50%H:+30%to+100%

Class 4 1%to15% StudyorfeasibilityEquipmentfactoredorparametricmodels

L:-15%to-30%H:+20%to+50%

Class 3 10%to40%Budgetauthorisationorcontrol

Semi-detailedunitcostswithassemblylevel line items

L:-10%to-20%H:+10%to+30%

Class 2 30%to70%Controlorbid/tender

Detailedunitcostswithforceddetailedtakeoff

L:-5%to-15%H:+5%to+20%

Class 1 50%to100%Checkestimateorbid/tender

Detailedunitcostwithdetailedtakeoff

L:-3%to-10%H:+3%to+15%

1

2

3

4

5

6

7


42

Notes

43

Oil & Gas UK (Aberdeen)3rdFloorTheExchange262MarketStreetAberdeenAB115PJ

Tel:01224577250

Oil & Gas UK (London)6thFloorEastPortland House BressendenPlaceLondonSW1E5BH

Tel:02078022400 [email protected]

www.oilandgasuk.co.uk

ISBN1903004349©2014TheUKOilandGasIndustryAssociationLimited,tradingasOil&GasUK

DECOM

MISSIO

NIN

G IN

SIGHT 2014

OIL &

GAS U

K

Documents

DECOMMISSIONING INSIGHT 2014 - Oil & Gas UKoilandgasuk.co.uk/wp-content/uploads/2015/05/OP098.pdf · The survey is based on the components of the decommissioning Work Breakdown Structure