OEEC: ‘The decom is real’
Tuesday, October 10, the Offshore Energy Exhibition & Conference (OEEC) kicked off early in the morning in Amsterdam RAI with a technical session named Decommissioning, which was packed with visitors eager to learn more about this sector.
The session focused on decommissioning and re-use plans for the offshore facilities in the North Sea, discussing what this means for everyone involved in the process, from operators to service providers.
It was moderated by Eric Kreft, lead Decommissioning ad interim at Energie Beheer Nederland (EBN), a Dutch government-owned company that invests in the exploration, extraction and storage of oil and gas on behalf of the state.
Kreft was the program manager for the “Netherlands Masterplan for Decommissioning and Re-Use”, developed by EBN in cooperation with Netherlands Oil and Gas Exploration and Production Association (NOGEPA) and IRO, and presented last year. The objective of this plan was to provide clarity on what needs to be done and by whom to jointly and successfully decommission and re-use the Dutch E&P infrastructure.
Speaking of the Dutch infrastructure, the country’s offshore decommissioning portfolio consists of about 150 platforms and about 700 wells, spread across ten operators. The current cost estimates of decommissioning these assets in the next 20 years amount to about €6.7 billion, of which the Dutch State contributes approximately €5 billion, directly and through EBN.
The session featured presentations by speakers from the UK, Norway, and the Netherlands. Out of these three, the UK has the largest decommissioning liability and Norway comes second. These are followed by the Netherlands and Denmark.
In his introduction, Kreft revealed that the decommissioning efforts in the UK are estimated to peak in 2024-2025. If this happens in all the countries straddling the North Sea it will result in cost inefficiencies.
The first speaker at the session was Roger Esson, CEO at Decom North Sea, which is a UK-based non-profit organization handling the decommissioning challenge in the UK.
“I’m really just a chief salesman for the decommissioning sector,” Esson said at the beginning of his presentation.
In a nutshell, his organization is interested in how the supply chain is developed making sure there is a credible supply chain when the industry gets to decommissioning across the North Sea. Esson noted that the organization’s focus is not only on Scotland and the UK but that the organization has members across the world.
“Our interest is to try and help those members to connect their capability with the opportunities that will be in the decommissioning sector over the next forty years.”
How to avoid the peak decom?
Esson emphasized the industry is going to have to be very careful and get the discussion going on how to avoid the decommissioning efforts peak expected in 2024-2025 because it’s not just going to be in the North Sea. As Esson pointed out, there will be work in the Gulf of Mexico, there could be work in Brazil, West Africa, and Australia so the inevitable question is does the industry have the people and capabilities to do it in a very short time scale.
The regional authorities are looking at how to maximize the opportunities across the North Sea and as the wheels are rolling and everyone is working towards a decommissioning plan, the countries straddling the North Sea need to work together to avoid the peak.
“The decom is real,” Esson underlined. However, this does not mean that the efforts towards extracting all the resources possible are no longer the focus of the industry.
The UK sector is looking to deliver 35% in cost savings and for this to be achieved, the industry will have to step away from the “business as usual” mode of operating.
“What we really want to do is to create a world-class decommissioning sector,” Esson said.
He ended his presentation by pointing out the importance of getting the cost element right.
Next up was Ian Fozdar, Infrastructure Decommissioning Manager at UK’s Oil & Gas Authority (OGA). Fozdar gave a brief overview of the regulator’s task when it comes to decommissioning, detailed the approach the UK is taking related to reducing costs and how the OGA is trying to use collaboration to change the game early on. As detailed by Fozdar, the UK has about 4,000 wells to decommission.
According to Fozdar, the UK’s current cost estimate for decommissioning is £59.7 billion. Considering this number unacceptable, the OGA and the oil and gas sector are working to reduce the decom costs by 35 percent.
The next speaker, Eric van Ewijk, Exploration Manager with EBN, introduced his company and NOGEPA. Van Ewijk talked about the challenge that decommissioning of aging infrastructure poses for the Dutch oil and gas sector and the follow up of the Netherlands Masterplan for Decommissioning and Re-Use, which is setting up the National Platform for Re-use and Decommissioning.
The platform will be launched later today at the Offshore Energy Exhibition & Conference. Operating under the name Nexstep, the mission of the National Platform for Re-use & Decommissioning is to serve as an inclusive and collaborative umbrella organization that coordinates, facilitates and seeks dialogue on the re-use and decommissioning agenda for oil and gas infrastructure in the Netherlands.
Talking about cost savings in decommissioning, Van Ewijk said: “We have to start now.”
When it comes to decommissioning the country’s offshore infrastructure, the cost estimate totals 5 billion euros. Van Ewijk also mentioned that the masterplan for decommissioning was made to reduce the cost estimates.
The next speaker, Thijs Huijskes, Reservoir Engineer at EBN, pointed out that in order to avoid the peak in decom efforts, the key is to spread the workload as much as possible. Huijskes concluded that there is considerable value in collaboration.
The final speaker at the session was David Büchmiller, Senior Engineer, Drilling and Well Technology at DNV GL who talked about performance-based abandonment of offshore wells.
The presentations were followed by a Q&A section of the session during which the audience members had an opportunity to pose their questions regarding the session’s topic to the speakers.
Offshore Energy Today Staff