Decom dollars

Elaine Maslin

October 30, 2017

More than 700 offshore fields are expected to cease production in the next five years, according to forecasts. Elaine Maslin reports.

Two major events appeared to fire the starting gun for the UK’s offshore decommissioning market to take off this year – the single lift removal of the Brent Delta topsides and the piece-meal removal of the Murchison platform.

Yet, while spending is indeed forecast to ramp up over coming years, in the near-term, it’s not being driven by these huge facility removals, it’s more about the plugging and abandonment (P&A) work and smaller field removals.

Globally, some 700 offshore oil and gas fields are expected to cease production in the next five years, according to Wood Mackenzie, seeing spending on decommissioning increase from US$3.6 billion per year on average, in 2013-17, to $6 billion in 2018-22.

Of the field cessations, about 19% are forecast to be in the UK North Sea, which accounted for 17% of the total in the preceding five years.

The three regions with the most activity globally are the North Sea, Asia Pacific and the US Gulf of Mexico deep water, says Fiona Legate, analyst with Wood Mackenzie. Activity in Asia Pacific has been increasing, she says, while the Gulf of Mexico work is legacy work, mostly subsea.

The North Sea, the UK specifically, is leading in terms of activity and spending, however, she says. “When you look at offshore decommissioning activity globally, the UK is miles ahead. It is ahead in the number of fields ceasing and decommissioning costs.” Some 134 fields are expected to cease over the period 2018-2022, says Wood Mackenzie, although many will not have topsides facilities.

Westwood Energy anticipates the removal of 290 platforms and over 3000 wells in the UK over 2017-2040, at a cost of more than $55 billion.

“When you look at spend, the UK is leading the way,” Legate says. “Over the next five years $13 million of spend is predicted, at 40% of the total.” To put it another way, spending is set to increase from under $2 billion/yr in 2013 to $8 billion/yr by 2022. “Norway is also quite a big spender going forward, the Netherlands too, but the UK is leading,” Legate adds.

Part of the regional activity could be due to cheaper rig rates, she says, accelerating P&A campaigns. In some cases, it could be where a rig is already on hire and it’s being used for P&A work instead of exploration or production well drilling. Operators are learning that by running campaigns, they can reduce costs by learning from repeat activity, at 30-40% in some cases, Legate says, depending on the company and the rig, as well as if it’s subsea or platform wells.

“From a UK point of view, for years the view has been that decommissioning is going to increase and it’s been shifted to the right. But there’s definitely been a step change in attitude. The downturn made companies think about it much more.” However, in the main, it’s been a lot of smaller fields and tiebacks, the Brent Delta removal, with the rest of the Brent facilities to come, and the Murchison platform, being the only larger fixed facilities being decommissioned.

“At $100/bbl, they could keep the smaller fields producing. Now there is no point.”

Yet, we’re still only at the start of the “bow wave.” Only certain yards can receive larger topsides at the moment, but there’s not been demand so it hasn’t been an issue (although UK decommissioning work going overseas has been a bone of contention). Ports are also investing in facilities so that in future there will be more capacity (OE: May 2017, Building Capacity), Legate says. “We are starting to see signs the service sector is getting ready for this activity.”

While Norway hasn’t seen a high number of field cessations, it has had high decommissioning spending, Legate notes. This is due to “mid-life” decommissioning work, Legate says, i.e. work on the likes of the giant Ekofisk and Valhall fields, which has seen some of the older infrastructure removed, while the fields continue production and also see new facilities installed as part of redevelopment work.

Deepwater Gulf of Mexico has the third highest number of fields ceasing over the last years, and is forecast to be in the same position in the next five years. Some 54 fields are expected to cease production in 2018-22, with spending pegged at $3 billion over that period. These will mostly be small mature fields that have been tied into existing production facilities, Legate says.

Asia Pacific, meanwhile, is likely to account for about $25 billion of spending in 2018-2022, most of which will be in Australia and Indonesia with some in Thailand, Legate concludes.  

Making light work of Leman
Veolia and Peterson accepted the first offshore structure into their Great Yarmouth decommissioning facility, the Shell Leman BH platform accommodation block and jacket.

The 1000-tonne topside, used as quarters for staff working on the Leman BT and Leman BK platforms, 62km north of Great Yarmouth, and its 50m-high, 700-tonne jacket arrived in July. Both were delivered by Boskalis, which had contracted Veolia and Peterson for recycling of the 1600-tonne of facilities, following offshore removal and transport.

Boudewijn Versluijs, commercial manager decommissioning, Boskalis, outlined the removal process at a Decom North Sea event in Aberdeen late September. Accessing the platform, in 31m water depth, with an Ampelmann walk to work system, rope access technicians installed scaffolding to aid removal of a staircase from the cellar deck. The platform legs were then cut below the spider deck and the topsides removed using the Taklift 4 floating shearleg barge, with 2200-tonne crane capacity and taken in the hook to Great Yarmouth. There it was placed on upended recycled pipe, so that the stabbing cones and then the rest of the legs could be cut off. It was then transferred to an SPT transporter to be moved from the quayside.

A rigging platform – a stable platform with a crane for lifting cutting gear on, etc., was installed on to the jacket before it could be lifted out. Soil plugs from the piles were also removed and the legs cut -3m below the sea bed inside the jacket leg before the lifting operation, which again used the Taklift 4. Once on the quayside, it was also moved using an SPT transporter before being pre-cut then toppled, ready to be cut up.

Photo from Veolia/Peterson.  

Further Reading:

Building Capacity
Yards are actively building capacity for onshore removals as North Sea decommissioning starts to pick up pace. Elaine Maslin reports.