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6/19/2014
1
Brian Nixon, Chief Executive
NDA Scottish SME Steering Team
Dounreay, Thursday 13 February 2014
market
challenges
opportunities
the role for Decom North Sea
courtesy Peterson SBS / Veolia
oil & gas decommissioning ‐ agenda
6/19/2014
2
general situation in UK Continental Shelf
£11.4 billion CAPEX in 2012 with forecast of £13.5 billion in 2013 £44 billion of capital investment approved and under development 45 new projects approved in 2011 & 2012
however:‐ production in UKCS has fallen for 11 straight years (10.7% in 2012 alone) concerns over unplanned shutdowns, reliability of equipment etc. operating costs rising – produced water, energy consumption, asset integrity, etc. production efficiency falling only 13 new exploration wells started in 2013
resulting in several assets nearing CoP and decommissioning
The Convention for the Protection of the marine Environment of the north
east Atlantic ‐ ‘OSPAR Convention‘.
Signed and ratified by all Contracting Parties to the original Oslo or Paris Conventions (Belgium, Denmark, the European Union, France, Germany, Iceland, Ireland, the Netherlands, Norway, Portugal, Spain, Sweden and the United Kingdom and Northern Ireland) and by Luxembourg and Switzerland.
regulations for offshore decommissioning
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little thought of decommissioning at design and build stage, or through life of asset
most operators preparing for first project
forecast costs rising
multiple drivers to defer
limited experience – operators or contractors
decommissioning projects unique and stand alone
some market observations
0
1000
2000
3000
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042
£m (Real 2011)
Potential Decommissioning Expenditure$70/bbl and 40p/therm
Hurdle : Real NPV @ 10% / Devex @ 10% > 0.3
Cns Irish Sea MF NNS SNS WoS
forecast decommissioning expenditure
0
200
400
600
800
1,000
1,200
1,400
1,600
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Forecast Expen
diture (£
Million)
Year
Northern North Sea Central North Sea Southern North Sea Irish Sea
Source: Oil & Gas UK
Increased Uncertainty in Forecasts£10.4 billion in the UKCS
(~£20 billion across the North Sea)
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0
1000
2000
3000
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042
£m (Real 2011)
Potential Decommissioning Expenditure$70/bbl and 40p/therm
Hurdle : Real NPV @ 10% / Devex @ 10% > 0.3
Cns Irish Sea MF NNS SNS WoS
decommissioning expenditure ‐ UKCS
11%
43%
13%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Prop
ortion
of Total Expen
diture For Each Work
Breakdo
wn Structure Co
mpo
nent
Monitoring
Topsides and SubstructureRecycling
Site Remediation
Subsea Infrastructure
Topsides Removal
Substructure Removal
Topsides Preparation
Facility/Pipeline Making Safe
Wells
Facility Running/Owners'Costs
Operator ProjectManagement
Source: Oil & Gas UK
Overheads:19%
Wells: 43%
Removal:21*%
*This relates to expenditure clearly identified as removal
1% of > £30 billion= £300 million
market
challenges
opportunities
the role for Decom North Sea
courtesy Peterson SBS / Veolia
oil & gas decommissioning ‐ agenda
6/19/2014
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•Exploration & appraisal
+$
Years
-$
development
abandonment
production
operations
challenge - the oil & gas life cycle
exploration & appraisal
regular industry perception of life cycle
decommissioning often overlooked
programme to DECC June 2013 – CoP in 2014
topsides ‐ 24,548 tonnes – 26 modules
steel jacket ‐ 24,640 tonnes (excl piles)
water depth 156m – 150 km NE of Shetland
33 platform & subsea wells
drill cuttings pile – degrade naturally in time
export pipeline – remedial rock placement
infield pipelines & branches ‐ removed
Steel Piled Jacket (SPJ) structuresCNR International – Murchison Platform
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Gravity Base Structures (GBS) Shell Brent Field
production ceased December 2011
contracts for topsides removal, transportation and
onshore disposal recently awarded (removal 2015)
GBS ~ 400,000 tonnes likely to remain in place
P&A of wells underway – many years of work
topsides preparation underway – years of work
>300 studies ‐ programme not yet submitted
first project for Pieter Schelte
SNS steel piled jackets / platforms‐ ~400 installations
typically less than 1,500 tonnes jacket weight
up to ~ 1,400 tonnes topsides weight
many unmanned (i.e. no accommodation)
mainly gas producers
total removal expected
courtesy Veolia / Petersen SBS – Shell Inde
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subsea infrastructure
wells P&A
manifolds
flowlines
umbilicals
mid height arches
protection covers
mooring systems
some removal options
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market
challenges
opportunities
the role for Decom North Sea
courtesy Peterson SBS / Veolia
oil & gas decommissioning ‐ agenda
decommissioningwork breakdown
structure
suspension live
cleaning & decommissioning
suspension cold (NUI/MMI)
onshore disposal
continuing liability
disconnectionwell
abandonmentpreparation for CoP
removal
ReservoirConceptsImpact sRisksInventorySurveysInspectionsRe‐useTechnicalSocietalEnvironment
Tier 1 contractorsCare and maintenanceInspectionIntegrity
P&A of wellsRig upgradesWaste and scale treatmentPost productionops. supportRig‐less options
Isolation/PurgingCleaning & treatingWaste disposal Waste accountingPost productionops. support
DisconnectionSplit modulesRemove small &loose itemsPrepare for NUI/MMIPost productionops. support
MaintenanceStructural integrityMonitoringWaiting for removal
Hook downModule separationPadeye refurbishmentSea bed clean‐upRemoval :‐Single liftReverse engineeringPiece small
OffloadingCleaning & handlinghazardous materialsDeconstructionRecycle and disposalPossible re‐use
Monitoring programme :‐remainingstructuresor subsea
typical phases indecommissioning programmes
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market
challenges
opportunities
the role for Decom North Sea
courtesy Peterson SBS / Veolia
oil & gas decommissioning ‐ agenda
since 2010 ‐the industry forum for decommissioning
not‐for‐profit organisation, privately funded
230 member companies from Denmark, Germany, Norway, The Netherlands, the UK and USA
membership across the whole sector:‐operators (large & small), contractors, marine, subsea, onshore disposal, wells P&A, legal, environmental, specialist services, consultants etc
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Decom North Sea’s role in the industry
stimulating a vibrant, efficient and cost effective industry
promoting collaboration and the sharing of knowledge and learning
developing models, templates and guidelines for the decommissioning sector
responding to economic and technical challenges facing the sector
researching other sectors for synergies and experience (GoM, nuclear, salvage)
stimulating a vibrant, efficient and cost effective industry
promoting collaboration and the sharing of knowledge and learning
developing models, templates and guidelines for the decommissioning sector
responding to economic and technical challenges facing the sector
researching other sectors for synergies and experience (GoM, nuclear, salvage)
joint industry initiatives
standard template for decommissioning programmes
standard template for decommissioning programmes
research greater re‐use of plant and equipment
research greater re‐use of plant and equipment
model template for EIAsmodel template for EIAs
compensation models in different phases and types of decommissioning compensation models in different
phases and types of decommissioning
North Sea map of onshore disposal facilities
North Sea map of onshore disposal facilities
Southern North Seaspecial interest groupSouthern North Seaspecial interest group
work together earlier & betterwork together earlier & better
more reliable activity forecasts to support industry investment
more reliable activity forecasts to support industry investment
multi‐party approach ‐ start with wells P&Amulti‐party approach ‐ start with wells P&A raise awareness & profile of
decommissioningraise awareness & profile of
decommissioning
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benefits of membership
operator programme update events
training courses
industry lunch ‘n learns
learning journeys around the North Sea
2 annual conferences (one with Oil & Gas UK)
work groups and steering groups on JIPs
website with industry capability matrix
regular newsletters
market intelligence reports
business advice
operator programme update events
training courses
industry lunch ‘n learns
learning journeys around the North Sea
2 annual conferences (one with Oil & Gas UK)
work groups and steering groups on JIPs
website with industry capability matrix
regular newsletters
market intelligence reports
business advice
