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Energy Insight: Decommissioning offshore oil and gas

EI Knowledge; 13/02/2019

As Oil & Gas fields reach the end of their lifespan they must be decommissioned; a complex task which involves a number of skilled workers to ensure that the wells and platforms are safely and efficiently removed and dismantled. Over the next 10 - 20 years there are a large number of offshore platforms worldwide that will have to be decommissioned.

Although decommissioning is not a new technology, with a number of small platforms removed from the Gulf of Mexico, the North Sea is expected to be one of the first areas in which the technology that has been developed so far will be put into practice, in what is considered to be one of the most challenging environments on Earth.

Countries involved will be the UK, Norway, Denmark and Holland with other oil and gas producers likely to become involved over the next few decades. For North Sea operators, this presents a huge challenge and an opportunity to develop new industrial practices and provide training and guidelines for technical specialists in the field.

Figure 1. Oil platforms worldwide by region (World Economic Forum, 2018)

At present Europe, mainly the North Sea, is the largest global market for decommissioning.

Oil and gas production from the UK sector of the North Sea peaked in 1999/2000 with production at 137 million tons (BP Statistical Review of World Energy). By 2017 this had declined to 47 million tons (BP Statistical Review of World Energy) making the UK a major producer but leaving a large number of offshore structures (platforms, pipelines and associated equipment) facing redundancy.

Estimates, as given in the Oil and Gas UK Decommissioning Insight Report for UKCS and Norway until 2025 include:

109 platforms,
around 1800 wells,
5000 miles of pipeline and 64,000 tons of subsea structures
hundreds of miles of subsea power and communication cables.

In an International context, estimates for decommissioning costs in the Gulf of Mexico, probably the world’s most mature offshore province, over the same period, are £3 billion.

The decommissioning process

Removing and cleaning all production and pipeline risers.
Removing the platform from its foundations by cutting the supports at least 15 ft below the sea bed.
Towing the platform ashore and cutting it up in a demolition yard.
Clearing the offshore site of any debris and other obstructions that might be a danger to any future sea bed users. This will include the cleaning and removal of any onshore pipelines and power cables.

The costs for decommissioning UKCS structures and pipelines over the next 10 years is estimated at £17 billion. However, there is also the potential for the creation of thousands of skilled jobs and training programs which can be used into the future all over the world. And decommissioning does not only apply to oil and gas structures. Away from offshore oil and gas, the UK is at the forefront of offshore wind energy and, when these structures come to the end of there useful lives, there will again be the need for a new era of decommissioning.

Until very recently, Offshore wind farms, being a relatively new concept, have mainly concentrated on improving installation technology and efficient operation. However, some have now come to the end of their useful lives, originally considered to be around 20 – 25 years.

The first UK wind farm to be decommissioned is Blythe, the UK’s first offshore wind farm, commissioned in 2000 and consisting of two 2-megawatt turbines off Northumberland. Although, in this instance, on a far smaller scale than oil installation removal, the skills and disposal practices can be shared and built on to establish a set of skills that will be of use to both offshore oil and wind decommissioning projects.

Figure 2. The Transocean Winner which ran aground on the Isle of Lewis after losing a tow-line while being moved for scrapping in Malta.

For the present, with regards to installation and removal technology, a lot of offshore structures will be replaced by offshore wind turbines which will, in addition to the structures themselves, need huge quantities of electricity cables and all of which will, in the future have to be removed.

BP has already dismantled the North West Hutton platform, the first large North Sea installation to be dismantled providing some 20,000 tons of recycled steel. The company aims to either recycle or reuse around 97% of decommissioned material.

Brent Spar was an oil storage and loading buoy operated by Shell scheduled, with Government approval, to be decommissioned in the Atlantic in 1995. Greenpeace organized worldwide protests based on a huge overestimation of the amount of oil remaining in the buoy’s storage tanks which would, it was claimed, seep into the ocean. Shell had proposed 2 options for disposal:

Onshore dismantling – estimated cost £41 million.
Disposal at sea, based on well conducted scientific research – cost around £17 million.

Based on the Greenpeace campaign, Shell withdrew and Brent Spar was first moored for several years in Norway before being partly reused to build a quay at Mekjarvik with the rest being dismantled in a Norwegian landfill.

Bodies responsible for and involved in UKCS offshore abandonment

The decommissioning of offshore oil and gas installations and pipelines on the United Kingdom Continental Shelf (UKCS) is controlled through the Petroleum Act 1998. (In this context, Abandonment is an alternative, and now less used, term for decommissioning.)

The responsibility for ensuring that the requirements of the Petroleum Act 1998 are complied with rests with the Offshore Petroleum Regulator for Environment and Decommissioning (OPRED) which sits within the Department for Business, Energy and Industrial Strategy (BEIS). Initially the law laid down that the entire structure had to be removed. Under the OSPAR convention, foundations, both concrete and steel, below the sea-bed can be left in place depending on the difficulty in removing them.

OPRED provides guidance on the regulatory requirements for decommissioning. Final guidance on the Environmental Considerations for Decommissioning (Section 12) has now been incorporated into the guidance notes.

Improved recovery – extending the lives of existing fields

Part of the success of the North Sea as a centre of technical excellence has been due to the industry’s ability to extend the productive lives of mature fields, and with them their platforms, developing marginal and remote satellite reservoirs and optimising efficiency of production. A recent report, from PWC in 2016, The future of North Sea oil & gas: a sea change suggests that plans for decommissioning might be premature with 20 – 30 billion boe (barrels of oil equivalent) waiting to be exploited.

“The North Sea is here to stay and is alive and kicking – the people who will turn off the lights in the Norwegian sector haven’t even been born yet.” Eirik Waerness, Chief Economist, Statoil, quoted in the PWC report, The future of North Sea oil and gas, mentioned above.

The Wood Review published by the UK Oil and Gas Authority in 2014 looked at the then current situation in the UK oil and gas industry. In addition to decommissioning, this made recommendations on maximizing recovery and extending the useful lives of some fields into the 2030s and beyond.

Alternatives to decommissioning

In a recent presentation, Green decomissioning: Re-use of North Sea offshore assets in a sustainable energy future, B L Oudman of DNV suggested creating a financial plus from decommissioning by using electricity produced by wind turbines located in plants on offshore platforms to produce hydrogen by electrolysis (power to gas). The gas could be transported ashore via existing pipelines thereby converting fluctuating energy from wind generation into storable gas. This could improve or maintain the capacity of existing pipeline infrastructure as natural gas production rates decline. To support this, Oudman cites calculations suggesting that transporting gas is around 20 times cheaper per kilowatt per 100 km than transmitting electricity.

Project and financing plans for decommissioning are getting a higher profile in oil and gas operators’ agendas worldwide and numerous options are being considered.

Given the scale of decommissioning worldwide, most offshore operators are making long term plans to “make it cost-effective, safe and sustainable.” While major decommissioning work has already been carried out in various areas, the collaborative effort needed to ensure that operators, contractors, regulatory bodies and environmental groups are working towards cooperation and the sharing of information and experience to keep costs down while ensuring sustainable and cheaper decommissioning.

Rigs to reefs

Studies carried out in the Gulf of Mexico where hundreds of structures have been “decommissioned in situ” with the structures sunk to provide habitats for marine life show that a typical 8 leg structure provides shelter for between 12 – 14,000 fish. This is in any case a process that begins immediately an offshore structure in installed with marine creatures making a home in its ironwork encouraged by the shelter provided and the warmth created by constantly operating machinery. Although there are considerations, for example pollution caused by rusting metals, this is an option that needs to be considered. The Bureau of Safety and Environmental Enforcement in the USA produced, in 2007, a National Artificial Reef Plan.

In the UK, the Brent Spar decommissioning was intended to be used as a model for similar projects in the North Atlantic.

While many might be worried about marine pollution caused by slowly corroding metal structures in the depths – Brent Spar was due to be sunk at a depth of about 10,000 feet in the North Atlantic – considerations about removing, transporting and dismantling vast structures weighing up to 100,000 tons need to be looked at in the context of safety, cost, actual dismantling work and carbon footprint. While some of the work created will be highly complex, long term and requiring new levels of skills, much will be done by temporary and relatively unskilled contractors. As in the case of much ship-breaking in recent years, it could well be “offshored” to areas where health, safety and environmental legislation is less enforced than in Northern Europe for example.

Organisations involved in decommissioning

Arup has published a review of decommissioning capacity - Decommissioning in the North Sea giving an insight into the prospects for the new industry and opportunities new skills and expertise.

Decom North Sea is a membership organisation working to share expertise, encourage collaboration and cut costs for oil and gas decommissioning.

Oil and Gas UK are a representative body for the oil and gas industry that has been active in the North Sea for over 40 years. The 2018 Decommissioning Insight Report looks at both the UK’s offshore decommissioning as well as that of other countries involved, Norway, Holland and Denmark, over the coming 10 years.

Oil and Gas Authority is a UK government body set up to promote and regulate the oil and gas industry and maximise economic recovery

OSPAR Oslo and Paris conventions started in 1972 to protect the marine environment in the North-East Atlantic. This involve the governments of 15 countries as well as the EU.

UK Government: The decommissioning of redundant offshore installations is regulated in the UK by the Department for Business, Energy & Industrial Strategy (BEIS). This is a relatively new activity but will probably increase over the next few years. BEIS has published guidelines: Oil and gas: decommissioning of offshore installations and pipelines.

Energy Insight details

Subjects: Human and organisational factors, Decommissioning