oil & gas decommissioning agenda market challenges - - PDF document

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oil & gas decommissioning agenda market challenges - - PDF document

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6/19/2014 NDA Scottish SME Steering Team Dounreay, Thursday 13 February 2014 Brian Nixon, Chief Executive oil & gas decommissioning agenda market challenges opportunities the role for Decom North Sea courtesy Peterson SBS /

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SLIDE 1

6/19/2014 1

Brian Nixon, Chief Executive

NDA Scottish SME Steering Team

Dounreay, Thursday 13 February 2014

  • market
  • challenges
  • opportunities
  • the role for Decom North Sea

courtesy Peterson SBS / Veolia

  • il & gas decommissioning ‐ agenda
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SLIDE 2

6/19/2014 2

general situation in UK Continental Shelf

  • £11.4 billion CAPEX in 2012 with forecast of £13.5 billion in 2013
  • £44 billion of capital investment approved and under development
  • 45 new projects approved in 2011 & 2012

however:‐

  • production in UKCS has fallen for 11 straight years (10.7% in 2012 alone)
  • concerns over unplanned shutdowns, reliability of equipment etc.
  • perating costs rising – produced water, energy consumption, asset integrity, etc.
  • production efficiency falling
  • nly 13 new exploration wells started in 2013

resulting in several assets nearing CoP and decommissioning

The Convention for the Protection of the marine Environment of the north east Atlantic ‐ ‘OSPAR Convention‘. Signed and ratified by all Contracting Parties to the original Oslo or Paris Conventions (Belgium, Denmark, the European Union, France, Germany, Iceland, Ireland, the Netherlands, Norway, Portugal, Spain, Sweden and the United Kingdom and Northern Ireland) and by Luxembourg and Switzerland.

regulations for offshore decommissioning

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6/19/2014 3

  • little thought of decommissioning at design and

build stage, or through life of asset

  • most operators preparing for first project
  • forecast costs rising
  • multiple drivers to defer
  • limited experience – operators or contractors
  • decommissioning projects unique and stand alone

some market observations

1000 2000 3000

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042

£m (Real 2011) Potential Decommissioning Expenditure $70/bbl and 40p/therm Hurdle : Real NPV @ 10% / Devex @ 10% > 0.3 Cns Irish Sea MF NNS SNS WoS

forecast decommissioning expenditure

200 400 600 800 1,000 1,200 1,400 1,600 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Forecast Expenditure (£ Million) Year

Northern North Sea Central North Sea Southern North Sea Irish Sea Source: Oil & Gas UK

Increased Uncertainty in Forecasts

£10.4 billion in the UKCS (~£20 billion across the North Sea)

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6/19/2014 4

1000 2000 3000

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042

£m (Real 2011) Potential Decommissioning Expenditure $70/bbl and 40p/therm Hurdle : Real NPV @ 10% / Devex @ 10% > 0.3 Cns Irish Sea MF NNS SNS WoS

decommissioning expenditure ‐ UKCS

11% 43% 13% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Proportion of Total Expenditure For Each Work Breakdown Structure Component

Monitoring Topsides and Substructure Recycling Site Remediation Subsea Infrastructure Topsides Removal Substructure Removal Topsides Preparation Facility/Pipeline Making Safe Wells Facility Running/Owners' Costs Operator Project Management Source: Oil & Gas UK

Overheads:19% Wells: 43% Removal: 21*%

*This relates to expenditure clearly identified as removal

1% of > £30 billion = £300 million

  • market
  • challenges
  • opportunities
  • the role for Decom North Sea

courtesy Peterson SBS / Veolia

  • il & gas decommissioning ‐ agenda
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SLIDE 5

6/19/2014 5

  • Exploration & appraisal

+$

Years

  • $

development abandonment production

  • perations

challenge - the oil & gas life cycle

exploration & appraisal regular industry perception of life cycle decommissioning often overlooked

  • programme to DECC June 2013 – CoP in 2014
  • topsides ‐ 24,548 tonnes – 26 modules
  • steel jacket ‐ 24,640 tonnes (excl piles)
  • water depth 156m – 150 km NE of Shetland
  • 33 platform & subsea wells
  • drill cuttings pile – degrade naturally in time
  • export pipeline – remedial rock placement
  • infield pipelines & branches ‐ removed

Steel Piled Jacket (SPJ) structures CNR International – Murchison Platform

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6/19/2014 6

Gravity Base Structures (GBS) Shell Brent Field

  • production ceased December 2011
  • contracts for topsides removal, transportation and
  • nshore disposal recently awarded (removal 2015)
  • GBS ~ 400,000 tonnes likely to remain in place
  • P&A of wells underway – many years of work
  • topsides preparation underway – years of work
  • >300 studies ‐ programme not yet submitted
  • first project for Pieter Schelte

SNS steel piled jackets / platforms ‐ ~400 installations

  • typically less than 1,500 tonnes jacket weight
  • up to ~ 1,400 tonnes topsides weight
  • many unmanned

(i.e. no accommodation)

  • mainly gas producers
  • total removal expected

courtesy Veolia / Petersen SBS – Shell Inde

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6/19/2014 7

subsea infrastructure

  • wells P&A
  • manifolds
  • flowlines
  • umbilicals
  • mid height arches
  • protection covers
  • mooring systems

some removal options

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6/19/2014 8

  • market
  • challenges
  • opportunities
  • the role for Decom North Sea

courtesy Peterson SBS / Veolia

  • il & gas decommissioning ‐ agenda

decommissioning work breakdown structure suspension live cleaning & decommissioning suspension cold (NUI/MMI)

  • nshore

disposal continuing liability disconnection well abandonment preparation for CoP removal Reservoir Concepts Impact s Risks Inventory Surveys Inspections Re‐use Technical Societal Environment Tier 1 contractors Care and maintenance Inspection Integrity P&A of wells Rig upgrades Waste and scale treatment Post production

  • ps. support

Rig‐less options Isolation/Purging Cleaning & treating Waste disposal Waste accounting Post production

  • ps. support

Disconnection Split modules Remove small & loose items Prepare for NUI/MMI Post production

  • ps. support

Maintenance Structural integrity Monitoring Waiting for removal Hook down Module separation Padeye refurbishment Sea bed clean‐up Removal :‐ Single lift Reverse engineering Piece small Offloading Cleaning & handling hazardous materials Deconstruction Recycle and disposal Possible re‐use Monitoring programme :‐ remaining structures

  • r subsea

typical phases in decommissioning programmes

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6/19/2014 9

  • market
  • challenges
  • opportunities
  • the role for Decom North Sea

courtesy Peterson SBS / Veolia

  • il & gas decommissioning ‐ agenda

since 2010 ‐ the industry forum for decommissioning

  • not‐for‐profit organisation, privately

funded

  • 230 member companies from

Denmark, Germany, Norway, The Netherlands, the UK and USA

  • membership across the whole sector:‐
  • perators (large & small), contractors,

marine, subsea, onshore disposal, wells P&A, legal, environmental, specialist services, consultants etc

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6/19/2014 10

Decom North Sea’s role in the industry

  • stimulating a vibrant, efficient and cost

effective industry

  • promoting collaboration and the sharing of

knowledge and learning

  • developing models, templates and guidelines

for the decommissioning sector

  • responding to economic and technical

challenges facing the sector

  • researching other sectors for synergies and

experience (GoM, nuclear, salvage)

  • stimulating a vibrant, efficient and cost

effective industry

  • promoting collaboration and the sharing of

knowledge and learning

  • developing models, templates and guidelines

for the decommissioning sector

  • responding to economic and technical

challenges facing the sector

  • researching other sectors for synergies and

experience (GoM, nuclear, salvage)

joint industry initiatives

standard template for decommissioning programmes standard template for decommissioning programmes research greater re‐use of plant and equipment research greater re‐use of plant and equipment model template for EIAs model template for EIAs compensation models in different phases and types of decommissioning compensation models in different phases and types of decommissioning North Sea map of onshore disposal facilities North Sea map of onshore disposal facilities Southern North Sea special interest group Southern North Sea special interest group work together earlier & better work together earlier & better more reliable activity forecasts to support industry investment more reliable activity forecasts to support industry investment multi‐party approach ‐ start with wells P&A multi‐party approach ‐ start with wells P&A raise awareness & profile of decommissioning raise awareness & profile of decommissioning

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6/19/2014 11

benefits of membership

  • perator programme update events
  • training courses
  • industry lunch ‘n learns
  • learning journeys around the North Sea
  • 2 annual conferences (one with Oil & Gas UK)
  • work groups and steering groups on JIPs
  • website with industry capability matrix
  • regular newsletters
  • market intelligence reports
  • business advice
  • perator programme update events
  • training courses
  • industry lunch ‘n learns
  • learning journeys around the North Sea
  • 2 annual conferences (one with Oil & Gas UK)
  • work groups and steering groups on JIPs
  • website with industry capability matrix
  • regular newsletters
  • market intelligence reports
  • business advice

bnixon@decomnorthsea.com shillyear@decomnorthsea.com jmann@decomnorthsea.com