Decommissioning Insight 2017
DECOMMISSIONING INSIGHT 2017
3.2 A Growing Market Across the North Sea, the current inventory of offshore infrastructure that will eventually require decommissioning includes over 11,000 wells, a pipeline network of 45,000 kilometres (including cables and umbilicals), 560 steel platforms and 24 gravity-based structures. In addition, there are some 40,000 mattresses plus hundreds of thousands of tonnes of other offshore infrastructure such as subsea templates and manifolds. To date, around 10 per cent of oil and gas platforms installed across the North Sea have been decommissioned and less than 5 per cent of pipelines. While decommissioning activity has not yet started in Denmark, it is already a growing market in the UK, Norway and The Netherlands. Decommissioning on the UKCS expanded from 2 per cent of total industry expenditure in 2010 to 7 per cent (£1.2 billion) in 2016. This is expected to reach £1.8 billion in 2017, representing 11 per cent of total industry expenditure (£17.1 billion). In Norway, decommissioning represented 2 per cent (£400 million) of expenditure offshore in 2010. The Norwegian Petroleum Directorate forecasts that this will double as decommissioning expenditure is expected to rise to £800 million by 2021 4 . While in The Netherlands, EBN forecasts that decommissioning expenditure will total between £650-£800 million over the next five years, which is similar to the forecast spend on capital expenditure (£570-£800 million) 5 . Decommissioning does not represent a new industry, but is part of the natural life cycle of an installation, relying on many of the same people and skills that have already been developed through oil and gas exploration and production. It encompasses a broad range of activities from well plugging and abandonment (P&A), to cleaning and flushing of facilities and pipelines, offshore removals and onshore disposal. With almost half of the estimated expenditure on the UKCS up to 2025 in well P&A, and a further 16 per cent to be spent on the preparatory work for decommissioning and running facilities after they cease production, much of the employment will be in these areas. The operator and service sector is already applying its extensive project delivery, engineering and offshore construction skills to deliver decommissioning projects across the North Sea and will continue to mature as the industry learns through experience. Well P&A is a key focus area and is benefitting from increasing technology development. Activities such as onshore recycling and final disposal are meanwhile increasingly visible and therefore attract significant attention, despite representing just 2 per cent of total expenditure in decommissioning on the UKCS from 2017 to 2025. The decommissioning of subsea infrastructure, meanwhile, is a less established discipline offering scope for companies to showcase and apply their expertise by driving innovation in subsea engineering. In the UK, current experience suggests that the supply chain already has the necessary skills and equipment to compete for over 80 per cent of the total decommissioning scope forecast over the next decade. However, companies must be able to compete successfully for this work in a global marketplace on quality, efficiency and cost. The supply chain has a significant role to play in offering cost-efficient solutions, while maintaining focus on high environmental and safety standards.
4 See Norwegian Petroleum Directorate at www.npd.no/en 5 See EBN’s Focus on Energy report, June 2017, at http://bit.ly/EBNenergyfocus
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