An operator has outlined how decommissioning costs in the Gulf of Mexico could be reduced sharply with better planning and collaboration among operators and the supply chain.

Win Thornton, vice president of decommissioning at BP Exploration & Production Inc., said costs could be cut by up to 20% if operators coordinated their cessation of production (COP) schedules in order to optimize the deployment of decommissioning teams.

He also said that better forward planning would allow the operating expenditure (opex) burden of decommissioning to be offset by continuing hydrocarbon production.

Effective forward planning would also allow operators to better manage the resources, like people and equipment, needed for future decommissioning obligations.

“One of my roles is integrating the decommissioning across all the functions within the corporation – finance, to reservoirs, to wells, to projects, to the regions – and to make sure we’re doing the best things in the decommissioning space,” Mr Thornton said, addressing a conference at DecomWorld’s Gulf of Mexico Decommissioning & Abandonment Summit in Houston in March.

He said the main question for him was: What would a case of optimum delivery look like?

As an example he gave a scenario where two operators had properties near each other in the Gulf.

Theoretically, he said, it should be possible for the operators to coordinate their COP dates, plan jointly, and combine engineering teams.

“If we had that laid out in a strategic plan with five, ten years’ line of sight, what could be done to optimise the delivery on that?” he said.

“You could have a well crew do multiple projects with lessons learned from one to the next,” he said. “You mobilize just once to the area.

“And I would assert that we have more opportunity for savings by collaborating and minimizing modes, and joining teams, than we do from technology developments, but we have to have a strategic plan in place in order to actuate those.

“You could make 15% to 20% difference in your costs,” he said.

Reducing the financial burden

In terms of minimizing opex during decommissioning, Mr Thornton said there was a major opportunity to reduce the financial burden with better forward planning.

With an integrated late-life management plan for an asset, the operator can better prepare in advance, he said.

“You’re knocking out a few idle wells as you’re still producing,” he said, “so decommissioning isn’t having to bear all the opex costs for 150 people on the platform.

“As you get down to the bitter end, you’re done with your well P&A, your platform’s prepped, you go home and you wait. You can immediately go into derrick barge removal, or you can wait a bit. You’ve got the flexibility to time that out against your marketplace. I can wait for the heavy lift market to soften out a bit and get a discount.”

He contrasted that with the operator who waits until COP: “You have the same durations, but [this operator has] three or four years in his schedule that he’s bearing one hundred percent of his opex against his decommissioning bill. And I would assert not many of us are including that in our provisioning.”

Forward planning

Better forward planning would also allow operators to manage their people and equipment resources more effectively, he said.

“I may want to use this information as I look ahead over the next five years to make different staffing decisions in order to retain the expertise and balance that against my portfolio of decommissioning and other projects,” he said.

“Same thing around vessel usage. I’ve got a sense of how much heavy lift I might need in an area. I can factor that in to our long-term supply chain interface with heavy-lift contractors.”

“There’s no reason in a portfolio not to have this type of information,” he said. “That’s an example of what an optimized plan might look like, [where] we can collaborate with internally, with our partners, our peers, and with the supply chain.”

Mr Thornton said responsibility for some things rests naturally with operators, such as COP timing, asset definition and providing overall accountability for the assets.

But he said the supply chain also has a big role to play. It can help formulate decommissioning plans, provide a forward-looking view of the market, and help with the integration of services.

Even more, he said, the supply chain could actively lead in the continuous improvement of decommissioning delivery.

“I just wanted to toss that out as an opportunity,” he told the audience. “I think it’s got to be an operator-led activity. We only ask that we control the timing. We’ve got to get our act together internally, with our partners, before we can really improve things with you the supply chain.”

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