There has been much debate about investment, or more accurately lack of investment, for decommissioning, but as a basis for investment the only relevant fact is that decommissioning is inevitable. We are seeing evidence that North Sea decommissioning and removal is now becoming a reality. However, a clear focus is needed to prepare for decommissioning and recognizing what is required both in terms of information and skills.
There are currently about 700 installations in the North Sea that will, with a few exceptions such as gravity based structures (GBS), require removing (Figure 1). The United Kingdom has the greatest number of jackets (fixed platforms) to be removed. It is generally accepted that the major challenges of platform removal are with the larger installations, those with a topside weight in excess of 10,000 tonnes (Figure 2). These platforms are, with the odd exception, in water depths of more than 300 ft (100 m) in the United Kingdom and Norwegian waters.
About 12 years ago, the North Sea oil and gas industry began to prepare itself for the expected imminent bonanza of platform "abandonment" (the terminology used at that time). Politicians tried to appease the conflicting requirements of environmentalists who required all platforms to be removed and oil and gas operators who wanted them to remain. Virtually overnight a mini industry was born, promoting a new breed of innovative abandonment experts who offered a variety of options for what to do with redundant platforms, ranging from removal using thermo-nuclear devices to rescuing them or to converting them into offshore nightclubs/casinos. At this time Amoco was considering the options for North West Hutton with a view to ceasing production in 2003/4.
In the belief that this new market was about to take off, a number of companies started investing significant funds in developing platform removal concepts. However, the realization that a regulatory framework was needed to address the fate of redundant platforms, plus the prediction of high-removal costs, suddenly changed the focus of the industry to one of deferment and maximizing the return from offshore development. Since then we have seen a "cyclic" approach to decommissioning (the current term). This cycle usually coincides with the falling price of oil. Now 12 years later, it could be that the long-awaited decommissioning market in the North Sea is about to re-emerge. So what is the envisaged market and what are the challenges facing the oil and gas industry?
Decommissioning in the North Sea is in its infancy, with a total of 54 installations removed to date (Figure 3). Of these, the most notable are Brent Spar, Hutton TLP (both floaters) and Maureen (GBS), all of which were UK installations disposed of in Norway. The heaviest lift to date was the Frøy jacket (7,200 tonnes) which was removed in 2002 as a single lift by Heerema's semisubmersible crane vessel (SSCV) Thialf.
Figure 4 shows one possible projection of the forecast removal dates for North Sea fixed installations in all sectors. Peaks and troughs have been removed by leveling (normalizing) the peaks. Forecast dates are based on an assumption of a platform being removed one year after it is no longer deemed as commercially viable.
Several factors will influence the removal date:
Change of asset owner;
New technology to enhance further recovery;
Step-out developments using existing offshore infrastructure; and
A preference to "mothball" platforms until favorable market conditions prevail (new technology, maturity of the decommissioning market).
With the exception of a low oil price, all of the above will defer platform removal. Notwithstanding
this, the following can be expected to be removed soon:
Frigg field/MCP01 (Norway/United Kingdom) - Four topsides from gravity-based structures, two steel fixed platforms and one damaged jacket. All of these are deemed as technically challenging. Contract award for removal is planned for last quarter 2004, with work offshore planned from 2005;
Ekofisk (Norway/United Kingdom) - Twelve fixed structures and one GBS topside planned for removal from 2006;
NW Hutton (United Kingdom) - Large steel platform decommissioned and converted to a normally unattended installation (NUI) with removal expected 2006+; and
Thistle, Miller, Murchison - all large steel platforms in the UK North Sea - possible candidates for removal 2008+.
A number of estimates are available for the value of the decommissioning market, one for the UK market ranges from $14.394 billion. Approximately 50% of this figure is related to the preparation and removal costs for fixed steel platforms. A further observation showed that more than 50% of this cost related to marine activities, of which the heavy lift vessels were the most significant component.
Irrespective of which forecast is correct - there is a major prize to be won for innovation that results in significant cost reductions. One example is the concept of single lift technology driven by a perception that conventional heavy lift vessels are "too expensive, there is not enough competition and not enough vessels for both the installation and removal of platforms." A number of interesting concepts have been promoted over the past decade, including Pieter Schelte, MPU Heavy Lift, GM Lifter, TPG 500, but we are still a few years away from seeing any of these vessels become a reality. The reason is the "chicken and egg" syndrome; investors necessary to provide the capital to allow the vessels to be built require the guarantee of decommissioning contracts to provide a return. Oil companies are understandably reluctant to make a commitment until a vessel is built or the concept is proven. To break this impasse Phillips Norway (now ConocoPhillips) took the initiative in 2003 by committing to award two of its platforms for removal using single lift technology, providing certain criteria had been met. This was not to be, as all the concepts were rejected.
Factors that contributed to this decision may have been related to the terms and conditions and a failure to understand that contractors, especially in a new industry, cannot accept unlimited commercial risk.
There lies the second challenge. Unless an operator is prepared to recognise that bringing 'new blood' into the decommissioning market requires more favourable terms to share the risk, then there is a danger that the only competition for platform removal in the North Sea will be Heerema or Saipem.
Perceived reluctance to invest in decommissioning, coupled with the fact that very few platforms have been removed, means that practical experience in the North Sea is very limited, but there is plenty of experience available from the Gulf of Mexico related to removal of relatively small installations in a less hostile environment. The consequence of this is the stark realization that decommissioning is not just "a longer shutdown phase" or a "reverse hook-up." The following are a few issues worthy of note:
Structural integrity: It may be 25 years or more after installation that a platform is to be removed. During the platform's history many changes may have occurred through modifications and upgrades. The asset owners may have changed several times and, with each change, documents of the platform's earlier history may disappear. In addition, engineering standards and specifications have changed. Information necessary to verify that a topside module can be removed and transported safely may not be readily available. Extensive engineering surveys can solve this situation providing access is available - a difficult task once a platform has been mothballed and access depends on shuttling. Structural engineers are the key discipline in platform removal. Are there are enough experienced engineers available? Operators must recognize the need to ensure that accurate data (weight control, etc.) is readily available, and ensure access is available for surveys.
Organization: Once a platform has shutdown and hydrocarbons have been removed, it should no longer be considered as an operating platform. It becomes, in effect, a construction site. Consequently the offshore organization and working environment need to reflect this (It should be led by an experienced construction manager rather than the existing OIM). The team should retain the offshore experience for operating platform utilities but should primarily be contractors' personnel. Safety is paramount throughout and the work permit system is a fundamental component. However, this would need to be changed to reflect that hydrocarbons had been removed.
Cleaning and waste disposal: A balance should be struck between the extent of cleaning carried out offshore compared with the risk. It is a fundamental consideration that all waste streams are identified, quantified and disposal routes confirmed prior to any attempt to remove them. The North Sea offshore industry is well aware that the only current land-based disposal route for low specific activity (LSA), at Drigg, in Cumbria, northwest England, is unable to take the volumes that are generated. The clear focus for LSA is removal and disposal via the platform offshore (possibly by re-injection) rather than risk the regulatory consequences of radioactive or hazardous waste appearing in other countries via onshore dismantling yards.
At last it is obvious that decommissioning and removal is becoming a reality. Finally, it must be recognized that contractors are prepared to take a level of risk commensurate with the rewards as opposed to maximum risk for minimum reward.