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New Decom Hotspots Opening Up

The offshore support industry faces a busy few decades as numerous decommissioning opportunities present themselves around the world.

In April, Ocean Installer’s construction support vessel, the Normand Vision, took up station in the Chinquetti field, 80 km off the coast of Mauritania in West Africa, as it began one of the region’s main new decommissioning projects.

The contract, which was awarded by Malaysia’s state-owned Petronas, highlights one of the latest “decom” hotspots that will keep the offshore supply industry on its toes for the next 20-30 years.

A new wave of decomissioning activity is emerging as time runs out for dated infrastructure in offshore exploration areas other than the North Sea and Mexico, the busiest areas until now. According to a report entitled Preparing for the next wave of offshore decommissioning released in April by Boston Consulting Group (BCG), three of the busiest regions will be Southeast Asia, Latin America and West Africa, where about half of the fixed platforms and wells are due to become uneconomical in the next 20 years.

Other, newer fields are also approaching abandonment. According to BCG, Egypt, India and Italy each have about 150-200 structures and 700 to 1,000 wells that will have to be dismantled by 2038. China, which has some of the oldest fields in the world, will also have to start decommissioning up to 200 platforms and 2,000 wells in coming years. Further south, Australia has about 50 structures and 700 wells of a similar age.

The Arabian Gulf is also shaping up as a future decommissioning hot spot. Within the next 20 years, more than 1,000 structures and 3,000 wells there will be more than 30 years old and become due for dismantling.

And in the Northern Hemisphere, besides the usual action in the North Sea, 40-year-old infrastructure in the Celtic Sea off southern Ireland is approaching its use-by date. In July two companies – PSE Kinsale Energy and PSE Seven Heads — applied for permission to decommission a range of production facilities lying up to 70 km off the coast of County Cork.

Hive of activity

For the foreseeable future, the North Sea will remain a hive of plug and abandonment activity. According to the Oil and Gas Authority, the all-in decommissioning costs could reach US$150Bn, a sum that covers the cost of taking down more than 600 fixed installations and plugging and abandoning more than 7,000 wells.

One of the more immediate projects is the dismantling of Equinor’s 36-year-old Huldra Field facility in the Norwegian North Sea that stopped production in 2014. Norwegian regulator, the Petroleum Safety Authority, signed off decommissioning approval in July.

As such, most of the infrastructure built in the 1970s is coming down and creating a new era of work for the offshore support industry. “Decommissioning is a costly challenge and for many countries, the value at stake in handling these projects properly could be worth several billion dollars,” noted BCG.

The potential opportunities have led to the establishment of new kinds of specialists, such as Maersk Decom, which was established in April to offer “bundled decommissioning solutions”. To begin with, the group will cover up to 80% of the entire decommissioning operation and use outside contractors for the rest, but eventually it intends to pull all of it under the Maersk Decom umbrella. That comprises project management, well plug and abandonment, removal of subsea infrastructure and towage.

The removal of offshore infrastructure presents special challenges. While age is obviously a determining factor, so is the period of disuse. For platforms that have been left to the elements for several years, the difficulty of the job goes up several notches, and so do the costs; the helipad may no longer be useable; walkways and handrails have often become unsafe; original lifting equipment such as cranes may have rusted; and in certain cases the infrastructure has deteriorated so badly that it has to be partially rebuilt before it can be brought down.

“We have seen instances in which decommissioning took nearly twice as long as planned because contractors needed to make repairs before the project could proceed, leading to significantly higher costs,” reported BCG.

Another recurring problem is a dearth of information on which to base the project. Sometimes, say contractors, there is no documentation at all and even if information is available, it may be outdated, for instance because pipelines may have moved from their original location on the seabed.

Red tape

Regulatory scrutiny is intensifying just about everywhere. In the UK Continental Shelf, contractors must deal with more than a dozen different governmental and non-governmental organisations before projects get the green light.

The Netherlands has recently updated its decommissioning regulations. With about 150 offshore platforms and 1,800 still active wells, the country has come up with a 20-year blueprint known as the Netherlands master plan for decommissioning and re-use. The stakes are high – the North Sea nation estimates it will cost around US$9Bn to retire its offshore infrastructure.

The programme is billed as the world’s first national platform for decommissioning. As in the UK, the Netherlands’ plan is based on collaboration between operators, contractors, government bodies and other interested parties.

Other nations are also pursuing aggressive decommissioning goals, albeit with varying degrees of success. By early 2018, Brazil had only overseen the removal of six fixed platforms and five floating ones, equivalent to less than 5% of its total offshore platforms. As a result, the government is now fine-tuning its decom system.

Similarly, Thailand has only just established a legal framework for decommissioning under the Petroleum Act, while an initiative known as Decommissioning 2.0 is designed to streamline the process with a one-stop service for obtaining approvals.

It appears that the realisation is now dawning that state agencies need to get organised. “A country with decommissioning liabilities of US$14Bn, the median level among the top 30 countries by total liability, could generate savings of more than US$1Bn by improving its decommissioning performance,” noted BCG. This would be based on a 25% reduction in the average cost per well, or a 30% saving per tonne in the removal of topside infrastructure.

With these kinds of savings on offer, it makes a great deal of sense for governments and regulators to take a close look at the processes they currently have in place.

The need for speed

In decommissioning projects speed of execution is everything, as Scotland-based James Fisher Offshore (JFO) can vouch. Among a variety of recent work, in Thailand the company was contracted to dismantle pipelines from the seabed and cut them into sections for transportation to shore. In Australia, JFO’s offshore technicians undertook a rapid-response assignment at 24-hours’ notice to fix faulty pipelines and in Malaysia, using subsea equipment, they assisted in the decommissioning of a floating storage and offloading vessel.

In the Middle East, JFO has repeatedly deployed a formidable array of equipment, including four large demolition shears for pipeline demolition and recovery projects, sometimes undertaking several projects at once.

“JSO has been busy on many projects,” explained chief executive Jack Davidson. “Customers appreciate the way we bring complete methodologies and cost-effective solutions for what are often highly complex offshore projects. And we like to work fast.”

Decommissioning vessels are becoming more specialised all the time, as Ocean Installer’s Normand Vision illustrates. A type VARD 3 06, the ship is built for the kind of heavy construction (or de-construction) work required by large dismantling projects offshore. Among other equipment, the vessel boasts a 400-tonne capacity active heave-compensated crane and a launch system for remotely-operated vehicles that do much of the subsea inspection.

In China, construction will start later this year on two new 96 m multi-activity jack-up units (MAUs), one of the workhorses of decommissioning projects. Ordered by Netherlands-based Overdulve Offshore Services International and classified by DNV GL, the four-legged, self-elevating vessels are designed to work fast, with two cranes that have a combined lifting capacity of 2,400 tonnes when hoisting in tandem. Self-propelled by four steerable thrusters, the MAUs will also have the latest advanced dynamic-positioning systems.

“The MAUs will be equipped for light drilling operations to close wells,” explained DNV GL Maritime’s business development manager for Benelux Bas Veerman. “In addition, they can deconstruct the topside of an oil rig’s structure and remove the jacket structure.”

In deconstruction work, speed is essential, especially in hostile waters. Early last year, Antwerp-based Scaldis Salvage and Marine was able to dismantle Tullow Oil’s Horne and Wren field in the North Sea in just three days with the aid of the Rambiz, a heavy-lift vessel. In that time Scaldis completed an in-and-out seabed survey, removed the topside and fastened it on board the Rambiz, dredged and cut the jacket piles, installed internal lifting tools and hoisted the jacket off the seafloor.

With the jacket suspended from a crane and the topside on deck, the Rambiz was then towed back to Flushing in the Netherlands.


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