Why we shoulld start decommissioning now

Chris Lloyd comments:
If the oil and gas industry starts decommissioning earlier and gets a pipeline of projects together, it will enable it to retain expertise, build up a supply chain and organisational capability – and reduce a future decommissioning bottleneck, says Chris Lloyd

At the moment there are nearly no decommissioning projects going on, and all the expertise, organisational capability and supplier capacity built up on the small number of projects is basically being lost, says Chris Lloyd, consultant with Petromall.

So it may make a lot of sense, in terms of reducing the overall decommissioning cost for the industry, if companies start decommissioning at least one major platform every two years right now. 

This would enable the industry to retain expertise from one project to the next, and build up organisational capability and supply chains, he says.

If companies want to keep producing a few more years to get a few last drops out of their reservoirs, then it may make sense to switch the production to subsea equipment and decommission the platform. Perhaps the subsea infrastructure can be re-used then the well is finally abandoned, he says.

Mr Lloyd has personal experience of the way decommissioning experience is being lost. He was a project engineer for the massive Frigg decommissioning project in 2008-2009, to dismantle and remove a cluster of platforms which lay over the maritime border between Norway and the UK. 

Mr Lloyd was working for heavy lift contractor Saipem, under major contractor Aker Kvaerner, for oil operator Total.

About 700 crew were involved in the decommissioning project, working around the clock for months, preparing the platform for decommissioning, heavy lift and transportation.

(Some trivia: the platform had ‘dual residency' being managed by both the UK and Norwegian authorities. It was possible to walk between the UK and the Norwegian waters across a bridge. For a while after decommissioning, the bridge was placed as an exhibit outside the Norwegian Petroleum Museum in Stavanger).

“That kind of effort requires a wide and deep variety of skills, everything from chartered structured engineers, naval architects, marine operations experts, down to cutters, welders, fitters, and everything in between. Behind those people there's an industrial hinterland of support personnel,” he says. 

“A project of this magnitude requires a significant amount of organisation to make it happen. It takes a long time to create an organisation for that group of people to get work done efficiently.” 

An enormous amount of decommissioning expertise and organisation was gathered in that project, which is basically now lost, because there haven't been any jobs done on that scale since, he says. “We've almost lost a generation worth of experience there.” 

Engineering contractor Aker Kvaerner built a quayside specifically for decommissioning Frigg (and an expected run of future projects), together with cranes, facilities to handle contaminated waste and chemicals.

Since then, there have not been any more decommissioning projects of that scale, so the quayside is being used as a supply base. However it could be brought into action for decommissioning if it was required again, Mr Lloyd says. 

Organisational capability
It is not just the expertise which is lost at the end of a standalone decommissioning project, the organisational capability is also lost.
A decommissioning project ends up with many concentric layers of different companies all working together.

In the middle you have people working on very specific parts of the project, what is going to be cut and what is going to be lifted, and doing risk assessments.

Outside that, there is a layer of people doing related tasks, but not so deeply in the project, for example people operating tugboats or doing a short term cutting or welding task, with the company following its own processes and procedures. 

Outside that, there are people doing tasks which support the decommissioning but are not doing decommissioning – such as catering, laundry, accounting. 

In some respects, operating a tugboat or doing catering on a decommissioning project is exactly the same as many other projects, but in other respects it is not the same.

“In some circumstances the decommissioning element is so different to normal, but no-one recognises that until it's too late,” he says. 

A project pipeline
So it may make sense for the industry to come together and put together a project pipeline, starting a major decommissioning project as soon as possible and after that decommissioning a major platform every 2 years, he says.

That way, people with the right expertise have a reason to stay in the oil and gas industry rather than look elsewhere. 

The industry can build up expertise, which is usually a pathway to finding ways to reduce costs.

Sometimes the obstruction to decommissioning comes from the people who work on the platform, who see it as a way of signing away their salary. But this problem could be solved simply by oil and gas companies assuring their employees and contractors that they have further employment for them after their platform has gone, Mr Lloyd says.  

Supply chain
The current situation for the North Sea decommissioning supply chain is that there is some expertise being developed from some projects, many suppliers ready to provide decommissioning services, and not much work (because hardly any decommissioning projects are happening).

There are plenty of individuals and companies ready to provide decommissioning services, as can be seen by looking through the delegate lists of decommissioning conferences. But they aren't yet able to actually learn from a real project, he says.

There are also companies outside the oil and gas industry – such as in the nuclear industry – who have relevant expertise they would like to offer. 

“The supply chain is ready and is keen, but there's very little the supply chain can do without someone to award them a contract,” he says. 

Industry bodies have been calling for innovative ideas and technology, and it is being delivered, he says. 

But contractors do not have budgets which enable them to develop methods and retain staff, unless they are getting a stream of relevant work. 

Going subsea early
Another idea is that an operator could replace a platform today with new subsea infrastructure, sized around a reduced production rate. 

The processing equipment on the platform could be moved subsea, or the well could be tied to a neighbouring platform, and the oil or gas processed there.

Or oil could be gathered and processed on a low cost FPSO.

Companies can get shot of the complex liability of having old offshore platforms, and replace them with something with much more manageable decommissioning challenges.

It might even be possible to re-use some of the subsea equipment when the well reaches the end of its life. 

“Doing something like that - will keep production levels up, keep fields alive, remove the bulk of the decommissioning liability from an oil company balance sheet, and replace it with a much smaller and easier to deal with liability for the subsea efforts,” he says.

Chris Lloyd was interviewed by Karl Jeffrey of Future Energy Publishing Ltd


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