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More than 500 platforms on the UK Continental Shelf need to be decommissioned, including approximately 300 subsea production systems, eight large concrete substructures, 31 large steel jackets and 220 other steel jackets.

There are currently 19 decommissioning projects taking place or being developed on the UKCS, on 21 offshore fields.

According to the newly released North Sea Decommissioning Strategy Report 2015, the projected total decommissioning spend will rise by between £41.3 billion and £46 billion through to 2040, based on 2014 valuations.

A further £3 billion of decommissioning expenditure is forecast for projects that are yet to be developed in the UKCS.

Hence, the overall total could reach £49 billion, increasing to £58.2 billion by 2050.

The report provides insight on strategic planning, risk management approaches and effective scheduling and costing practices for the UK North Sea, one of the world’s biggest markets for future decommissioning operations.

The study also provides detailed case studies of North Sea decommissioning projects such as Maersk’s Leadon Field, Marathon Oil’s Brae Area, Premier Oil’s Shelley Field and Shell’s Brent Field.

Upcoming surge

While UKCS decommissioning expenditure is estimated at £1 billion in 2014, amounting to 4% of the total expenditure on the UKCS during the year, the report expects this figure to double to £2 billion by 2018.

Over the last few months, new draft decommissioning programs have been published, such as Shell’s Brent Delta topside removal, Centrica’s Stamford subsea development, Perenco’s Thames, Arthur and Gawain developments and Tullow’s Horne, Wren, Orwell and Wissey developments.

Twenty Cease of Productions (COPs) are expected in 2015, with an annual rise estimated to close to 40 by 2021.  

 But increased activity could put high pressure on the supply chain and lead to projects’ cost increases.

Hence, it is essential to devise effective strategies to assess and reduce costs.

Reducing costs

According to the report, well plugging and abandonment (P&A) is the largest item of expenditure within decommissioning, as well as the area where most cost savings can be achieved.

The report estimates an £25.8 billion well P&A spend from 2014 to 2050, which includes £18 billion (60%) on platform wells and £9 billion (40%) on subsea wells. In the UK North Sea, the majority of wells are platform wells, representing 73%, while subsea wells make up 27%.

Organizing well P&A campaigns in advance and collaboratively is, according to the report, the most efficient way of saving costs and can bring 10-40% P&A savings per unit.

According to the report, effective cost reduction strategies should be based on proper planning and engineering, in order to gauge the extent of the decommissioning scope and the relevant cost.

Decommissioning costs have often soared, with remarkable financial repercussions. In order to avoid this, it is of the utmost importance for decommissioning to be included in late life strategy, implemented 5-10 years before COP.

One of the main costs consists in keeping facilities running and maintained after cessation of production in order to support decommissioning activity. To minimize costs, it is essential to get the platform isolated and to a hydrocarbon-safe state.

Cost increases often take place during the front end phases, since financial provision estimates do not fully address the project’s scope, according to the report.

While technology improvements have contributed to cost optimization and performance improvement, new technologies have not yet provided “step change improvements in performance”, the report states.

Effective cost reduction strategies should include integrated end of life planning and asset value plans, as well as optimization of a project portfolio by finding a good balance between schedules and costing.

A common saying amongst decommissioning professionals holds true-- you can never be too early when planning for decommissioning, but you can be too late.

To get more insights on strategic planning, risk management approaches and effective scheduling and costing practices for the UK North Sea, check out the North Sea Decommissioning Strategy Report 2015.