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DECOM
MISSIO
NIN
G IN
SIGHT 2014
OIL &
GAS U
K
DECOMMISSIONING INSIGHT 2014
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
DECOMMISSIONING INSIGHT 2014
DECOMMISSIONING INSIGHT 2014
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.
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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
DECOMMISSIONING INSIGHT 2014
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
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5
6
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DECOMMISSIONING INSIGHT 2014
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
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7TheDecommissioning Cost Estimating Guidelinesareavailabletodownloadat www.oilandgasuk.co.uk/publications/publications.cfm
DECOMMISSIONING INSIGHT 2014
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.
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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
DECOMMISSIONING INSIGHT 2014
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
Increased Uncertainty in Forecasts
Source: Oil & Gas UK
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.
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DECOMMISSIONING INSIGHT 2014
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
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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
Increased Uncertainty in Forecasts
Source: Oil & Gas UK
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.
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DECOMMISSIONING INSIGHT 2014
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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*%
Source: Oil & Gas UK
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.
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DECOMMISSIONING INSIGHT 2014
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
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2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Fore
cast
Exp
endi
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(£ M
illio
n)
Num
ber o
f Wel
ls
Platform Subsea Development Subsea E&A Total Well P&A Expenditure
Increased Uncertainty in Forecasts
Source: Oil & Gas UK
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
DECOMMISSIONING INSIGHT 2014
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
Source: Oil & Gas UK
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
Increased Uncertainty in Forecasts
Source: Oil & Gas UK
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
DECOMMISSIONING INSIGHT 2014
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
Source: Oil & Gas UK
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
Source: Oil & Gas UK
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
DECOMMISSIONING INSIGHT 2014
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
Increased Uncertainty in Forecasts
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
Increased Uncertainty in Forecasts
Source: Oil & Gas UK
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
DECOMMISSIONING INSIGHT 2014
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¤t-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
Increased Uncertainty in Forecasts
Source: Oil & Gas UK
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
DECOMMISSIONING INSIGHT 2014
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)
Increased Uncertainty in Forecasts
Source: Oil & Gas UK
Weight (tonnes) 2014 to 2023
Number 2014 to 2023
Total Expenditure 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)
Increased Uncertainty in Forecasts
Source: Oil & Gas UK
Substructure Removal Weight (tonnes) 2014 to 2023
Total Expenditure 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
DECOMMISSIONING INSIGHT 2014
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
Source: Oil & Gas UK
Removal Cost per Tonne 2013 Average 2014 Average Topsides £3,600 £4,000Substructures £5,700 £4,500
1
2
3
4
5
6
7
DECOMMISSIONING INSIGHT 2014
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
Increased Uncertainty in Forecasts
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
Increased Uncertainty in Forecasts
Source: Oil & Gas UK
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
Increased Uncertainty in Forecasts
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
Increased Uncertainty in Forecasts
Source: Oil & Gas UK
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
DECOMMISSIONING INSIGHT 2014
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")
Increased Uncertainty in Forecasts
Source: Oil & Gas UK
Number 2014 to 2023
Length (km) 2014 to 2023
Total Expenditure 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
Increased Uncertainty in Forecasts
Number 2014 to 2023
Length (km) 2014 to 2023
Total Expenditure 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
DECOMMISSIONING INSIGHT 2014
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
Increased Uncertainty in Forecasts
Source: Oil & Gas UK
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
DECOMMISSIONING INSIGHT 2014
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)
Increased Uncertainty in Forecasts
Source: Oil & Gas UK
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
DECOMMISSIONING INSIGHT 2014
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
DECOMMISSIONING INSIGHT 2014
42
Notes
43
Oil & Gas UK (Aberdeen)3rdFloorTheExchange262MarketStreetAberdeenAB115PJ
Tel:01224577250
Oil & Gas UK (London)6thFloorEastPortland House BressendenPlaceLondonSW1E5BH
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ISBN1903004349©2014TheUKOilandGasIndustryAssociationLimited,tradingasOil&GasUK
DECOM
MISSIO
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SIGHT 2014
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