The cost of decommissioning the U.K.’s offshore facilities has been tagged at $77.4 billion by the UK Oil & Gas Authority (OGA). Even when applying the shared industry goal of reducing costs by a minimum of 35%, this leaves a tally of $50.6 billion.

Such a budget is of significant interest at any time, even more so as the U.K. supply chain tries to recover from the harshest downturn in a generation. With decommissioning work set to grow increasingly as more and more mature assets reach the end of their production life—with three operators submitting pans in recent weeks—this emerging sector could bolster revenue streams across the U.K. for some years to come.

In addition to the OGA’s figures, a report in late 2016 by IHS Markit forecast that the decommissioning of mature offshore platforms, subsea wells and related assets is increasing rapidly, with more than 600 projects expected to be disposed of around the world during the next five years alone.

IHS Markit predicted that spending on decommissioning projects will increase from about $2.4 billion in 2015 to $13 billion a year by 2040, equivalent to an increase of 540%. This underlines the growth of decommissioning and the value it holds.

Veolia-Peterson Takes In Leman BH

Apart from contractors, yards and ports have also been planning ahead for an influx of much-needed work.

On July 11, the Shell Leman BH topsides arrived for decommissioning at Veolia-Peterson’s purpose-built facility at Peel Ports Great Yarmouth in eastern England.

This will be followed by a separate 50 m (164 ft) high steel jacket structure, which will remain pinned to the seafloor until its transfer to Great Yarmouth later this month.

The purpose-built Veolia-Peterson decommissioning facility at Great Yarmouth Outer Harbour, which is owned by Peel Ports Group, will manage the deconstruction and recycling of both topsides and jacket structures that comprise about 1,600 tonnes of materials and assets, the port said.

InterMoor Eyes Opportunities

It is not just U.K. companies that have noticed the potential to pick up contracts. U.S.-based player InterMoor has added rigless well abandonment capabilities to its U.K.-based services as it looks to secure more work from decommissioning in the U.K.

“Consolidating the capabilities of former sister company OIS Ltd., InterMoor UK can now help plan and execute turnkey suspended well decommissioning campaigns. This includes vessel charter and project management of all onshore and offshore operations from the initial review of well schematics to the production of end of well reports,” InterMoor UK said.

Mike Kearney, decommissioning lead at InterMoor, said “In the current industry downturn, not owning a vessel is an advantage, as it means we can focus 100% of our efforts on the needs of the client rather than on our vessel utilization rate.”

Kearney added that the team has a solid track record in the decommissioning of suspended wells and has completed 128 wells since 1996 in the North Sea.

New UK Work Looms

In recent weeks, three operators tabled decommissioning plans to the OGA. These will soon lead to tendering, so the work is starting to stream in and is forecast to increase steadily.

In late June, Fairfield Energy submitted a draft decommissioning plan for the Dunlin, Merlin and Osprey field subsea installations and pipelines in the U.K. North Sea to the U.K. government.

The Greater Dunlin Area is located in U.K. Blocks 211/23a and 211/24, which lie about 500 km (311 miles) north-northeast of Aberdeen in the East Shetland Basin and just 11 km (7 miles) from the Norwegian boundary line.

Fairfield submitted its draft plans for the decommissioning of the Dunlin Fuel Gas Import and Dunlin Power Import and Osprey and Merlin subsea satellite fields and associated infrastructure.

In total 45 wells will be plugged and abandoned (P&A) on the Dunlin Alpha platform as well as 16 subsea P&As on the Osprey and Merlin areas. Also on the cards are the removal and/or decommissioning in-situ of the Dunlin, Osprey and Merlin subsea infrastructure.

Following ‘Make Safe’ activity, the Dunlin Alpha topsides removal is required, as well as the derogation of the concrete gravity base and legs to an approved state.

There is also the work for onshore recycling and/or disposal of topsides materials.

“The supply chain is set to benefit substantially from the award of contracts associated with the safe and efficient decommissioning of the Greater Dunlin Area and its associated infrastructure over the lifespan of the project. We do not underestimate the role that the supply chain will play in solving some of the complex challenges associated with elements of the decommissioning project,” Fairfield said.

Also in late June, U.S. operator Marathon Oil submitted a draft decommissioning program for its Brae Area facilities in the U.K. North Sea to the authorities.

The Brae Area lies around 274 km (170 miles) northeast of Aberdeen at a water depth of 110 m (361 ft).

The area consists of three fixed jacket platforms, three Marathon-operated subsea tiebacks and numerous pipelines and subsea components. Third parties also use the Brae Area facilities.

In the draft submitted to the U.K.’s Department for Business, Energy and Industrial Strategy, Marathon outlined four decommissioning programs for 14 installations and 64 pipelines.

The document contains combined decommissioning plans for Brae Alpha and Brae Bravo platforms, including jacket/sub-structure and Brae Bravo flare jacket/substructure and bridge. It also includes Central Brae subsea template, associated pipelines, flowlines umbilicals and power cables. It also includes West Brae subsea wells, manifold and extension manifold, Sedgwick wells and associated pipelines, flowlines and umbilicals.

In March, Canadian Natural Resources (CNR) submitted a draft of a decommissioning plan for its Ninian North platform (NNP) in the North Sea to the OGA.

The company plans to start the abandonment of the NNP this year. Under the decommissioning plan, CNR will plug and abandon platform wells, as well as fully remove the topsides and returned them to shore, and partially remove the jacket.

—Steve Hamlen