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Decommissioning - the growth business in North Sea oil & gas

Decommissioning - the growth business in North Sea oil & gas
Having suffered heavy losses from the diminishing North Sea oil and gas industry, Denmark, Germany, Norway and the UK are now looking at the prospect of up to $82bn to decommission rigs throughout the area over the next 25 years, according to a report by analysts Douglas-Westwood.

With exploration now well and truly over, a new offshore investment race is now on, this time to snare as much of this lucrative new work as possible. With the largest share of the installations, the UK will be making the lion’s share of the expenditure, up to $50bn according to the report.

“In the UK over the 2019 - 2026 period, we will see the removal of 144 platforms – 51% of all platform removals in the UK over the forecast period,” said author of the report Ben Wilby. “The UK will retain a high level of spend to 2040, accounting for well over 50% of the market in both scenarios. Spend will reach almost $51bn in Scenario 1 and $44bn in Scenario 2.”

The good news is that “Many of the skills developed in oil and gas production are transferable,” according to Oil & Gas UK HSE & Environment Director Mick Borwell. “The amount of skilled people also depends on the size and type of decommissioning project. Over the next five to 10 years, decommissioning activities for example will be dominated by well plugging and abandonment.

“It is at the comparative assessment stage, when a number of options are considered, that significant opportunities exist for supply chain companies to develop innovative technologies for decommissioning,” Borwell explained to Seatrade Maritime News. “For example in the decommissioning of pipelines, these might include expertise in services in de-burial, pipeline cleaning, subsea cutting, lifting, reverse-installation and mattress removal.”

Much will depend on new capacity for “Single-lift” capability, offered by a new generation of super heavy lifting vessels such as the gargantuan 2014-built Pioneering Spirit. Instead of taking rig modules in piece-by-piece, these vessels could haul away an entire topside, saving up to $12bn, North-Sea-wide, versus conventional piecemeal operations.

Shell has already opted for this technology in decommissioning the Brent oil field this year, contracting Pioneering Spirit to hoist one of its four rigs, the 24,200 tonne Brent Delta platform, in a single stroke.

Last month, Forth Ports announced it would make its biggest ever investment in the Port of Dundee, adding a new 200 m-long heavy lift quayside dedicated to taking delivery of rig topsides, worth £10m. This capability deepwater berth and significant land area of around 60 acres.

“This is an important, privately funded investment for the Port of Dundee which is ideally placed to service the needs of North Sea oil & gas, decommissioning and Scotland’s offshore wind sector over the coming years.

“The port’s existing skills base and location, combined with its riverside berths, deep water and rock river bed, put the port in a key position to become a hub for these sectors for construction, operations and maintenance and for decommissioning.”

As to what is being done to ensure that the UK secures its share of lucrative decommissioning business Borwell said:  “In terms of UK companies getting decommissioning business, it would be up to each individual company.

“Oil & Gas UK’s role, as a trade association, is to ensure that information, in a non-proprietary form, about decommissioning is readily accessible via a number of channels. It is in the interests of all parties that the supply chain has the information it needs to develop at an efficient and effective rate to meet the demands of the emerging UKCS decommissioning market – and this needs to happen alongside the industry’s focus on maintaining offshore production in the North Sea for as long as it’s safe and economically possible to do.”