Smarter and greener decommissioning
Project and financing models for decommissioning are moving up oil and gas operators’ agenda worldwide as ‘lower for longer’ oil prices raise questions about how long aging assets can operate viably beyond their design lives.
The UK Continental Shelf (UKCS) is set for a wave of large, expensive projects in deeper offshore locations including Shell’s Brent field; Norway is also planning for future decommissioning. Collaborative discussions between operators, contractors and government agencies are preparing the way for cheaper but safe and sustainable decommissioning approaches and practices.
Netherlands is also pressing on with an industry-led approach, particularly for offshore platforms but also onshore. Italy faces a future decom challenge and shares with other countries a growing interest in ‘green decommissioning’.
“Decommissioning at large scale is a relatively recent development, but there is a growing knowledge base to make it cost-effective, safe and sustainable,” says Ben Oudman, director and country manager, Netherlands, DNV GL – Oil & Gas.
“There is a great scope to share expertise within the industry and to engage with regulators to achieve clearer guidance so that disruption to neighbouring fields can be minimized.”
The Netherlands expects its 50-year old oil and gas industry to produce for a few decades more but is progressing a national decommissioning plan. Twenty-three platforms have been decommissioned, but more than 150 platforms are still operating. Of 3,800 wells drilled by last year, 2,000 had been permanently abandoned, leaving 1,800 with an average age around 25 years to tackle in the future.
“We expect an increase in decommissioning activity around 2025,” says Rob Beks, principal consultant, DNV GL – Oil & Gas.
This scenario is shared by Energie Beheer Nederland (EBN) which has published a masterplan for decommissioning and re-use in association with Nogepa, the industry association representing the interests of oil and gas exploration and production businesses in the Netherlands.
“A large number of platforms will reach CoP (Cessation of Production) within the next five (5) years. We have seen lower investments in near field exploration and appraisal. We have also seen unit Opex going down. The decline in production, however, cannot be stopped and will continue. As a consequence, many platforms will inevitably reach their end of operational lifetime,” says Eric Kreft, Lead Decommissioning at EBN.
On behalf of the state, EBN co-invests as a non-operating 40 per cent partner in the exploration, production and storage of natural gas and oil.
“Netherlands offshore platforms are relatively small and in shallower water compared with those in the UKCS and Norway, making life easier regarding lifting, for example,” Beks observes.
“That said, besides approved re-use, national and international regulations still oblige operators to completely remove installations after cessation of production.”
Smarter approaches in sight
In common with many other jurisdictions, Netherlands regulations for permanent abandonment of wells are prescriptive rather than goal-setting.
“They do not cover certain procedures common in current abandonment practices, such as casing milling,” Beks says.