The Opportunity of P&A to The North Sea Service Community

ANY EXAMINATION of the prospects for decommissioning including plugging and abandonment of wells across the North Sea suggests the future market is huge.

“Overall, decommissioning on the UK Continental Shelf (UKCS) from now until 2025 represents an estimated £17.6 billion opportunity, with over 50 per cent of this market to be found in the central North Sea,” according to a 2016 Decommissioning Insight report, published by Oil and Gas UK.

Including both the UK and Norwegian sectors there remains a backlog of around 1,832 wells to be tackled between 2016 and 2024.

That figure breaks down into 1,470 wells on the UK Continental Shelf (UKCS) and another 362 in the Norwegian North Sea. Around 1,180 wells are platform-based, and the remainder are located subsea. And, as exploration and development drilling continues those figures will increase, assuming well plugging and abandonment activity does not keep pace with drilling.

It is noted that the North Sea is a mature basin, so less drilling activity is taking place in comparison to other regions. However, P&A has not increased to the levels expected either – creating still a backlog of liability. During 2016, the Insight report forecast around 137 wells would be plugged and abandoned, while the prediction for 2017 is 230 wells.

The report goes on to suggest that year on year, the annual market for P&A work will average around 180 wells up to 2022. Thereafter activity is predicted to fall until a new wave of projects anticipated after 2023. Further market examination suggests the Central North Sea region will offer offshore contractors the largest opportunity, with an estimated 644 (35%) of wells to be P&A’d.

Conversely, the Norwegian Continental Shelf (NCS) has 362 wells to be P&A’d, with only one well due to be plugged in the Norwegian Sea.

Closer examination of the 644-well opportunity in the UK Central North Sea, suggests that the annual total of platform wells to be P&A’d in this region has fallen, year on year, from 292 estimated in 2015, to 241 in 2016, but the number of subsea wells is up, by 71, to 403 wells, Oil and Gas UK data indicates.

This rise in subsea well activity is partly explained by 21 new projects captured during the survey period, of which 19 are subsea, adding to the subsea well tally, encompassing both subsea well tiebacks to existing infrastructure, and single exploration wells. The Insight report says operators have been taking advantage of “Current low rig rates to carry out this activity during the down turn.”

Also: “The net decrease in platform wells is due to activity already completed, combined with field-life extension projects that have postponed decommissioning on some platforms to outside the survey timeframe.”

Turning to the duration for well P&A activity in both the Northern North Sea and Central North Sea (NNS and CNS), one expert has broken down the rig activity metrics. These suggest rig-less activity averages 6.6 days per well; rig plugging and abandonment is averaging out at 14.3 days and conductor and casing recovery, on average, takes another 10.6 days, according to Chris Gray, technical director of Strategic Decommissioning Consultants. (November 2015).

The average activity days for decommissioning CNS subsea wells is put at 39.71 days per well, with a peak of 117 and a low of 17.5 days, according to Gray, who was previously UK decommissioning manager for ConocoPhillips and an advisor to Marathon Oil.

Costs

Predictions of expenditure for decommissioning remain fairly constant: The Insight report says: “Owners’ costs are forecast to remain relatively stable across the timeframe, with an average annual expenditure of £340 million per year. Expenditure is forecast to increase towards the end of the survey timeframe as activity increases, peaking at £450 million in 2025.”

But specifically, well P&A costs are due to rise, to a £1.2 billion peak by 2024, “...with an average annual spend of just over £820 million over the next ten years.” This contrasts with £770 million predicted in 2015 and £640 million in 2014. Average costs for platform well P&A are put at £4.1 million per well; £6.2 million for suspended E&A wells, and £10.2 million for subsea development wells in the Central, Northern North Sea and West of Shetland areas.

Overall: “Annual expenditure on decommissioning is expected to reach around £2 billion on the UKCS by 2017 making up 12 per cent of total expenditure, but it is likely to remain close to £1 billion on the Norwegian Continental Shelf and 5 per cent of total expenditure,” says the Insight report.

Contracts

In March 2016, well management company Exceed recorded a new contract win with Fairfield Energy to plug and abandon 45 platform and 16 subsea wells on the company's Northern North Sea Dunlin platform. Exceed has allied with Weatherford, marrying its well- expertise with Weatherford's global P&A experience.

At the NNS Murchison field, where production ending early 2014, Heerema and AF Decomm Offshore are responsible for platform removal and disposal.

During summer 2017 Allseas’ dual-hulled called Pioneering Spirit single-lift vessel is set to remove the 22,200 tonnes Brent Delta platform topsides in the NNS following well P&A work by Archer. Brent conductor removal is the responsibility of Baker Hughes. Able UK is responsible for onshore topsides disposal for three Brent facilities, for the Brent Alpha platform steel jacket.

At the Leadon field, Petrex Developments was contracted to work on decommissioning and Harkand provided two dive support vessels for some of the offshore scope including project management and engineering for well P&A work.

Table: Current UKCS decommissioning projects (November 2016)

Operator Field Location
BG Atlantic and Cromarty Outer Moray Firth
BG Armada FlemingDrake and Hawkins fields CNS
BP Exploration Don NNS
BP Exploration Miller CNS
CNOOC Ettrick/Blackbird CNS
CNR International Murchison NNS
Endeavour Energy Renee / Rubie CNS
ENI UK Little Dotty SNS
ENI UK Hewett SNS
ENI UK Dawn SNS
ENI UK Big Dotty SNS
Maersk Group Leadon NNS
Marathon Oil UK Brae Area CNS
Perenco Oil and Gas Leman SNS
Perenco Oil and Gas Thames SNS
Perenco Oil and Gas Welland SNS
Premier Oil Glamis CNS
Shell Goldeneye CNS
Shell BrentNNS
TAQA GLOBAL Devenick NNS
TalismanSinopec Beatrice Moray Firth

Key: CNS – Central North Sea; NNS – Northern North Sea; SNS – Southern North Sea.

Sources: Project Pathfinder/Department of Energy and Climate Change / November 2016

Additional Info

  • Region: North Sea
  • Topic: Decommissioning
  • Month: August
  • Year: 2017
  • Content Type: Thought Leadership
Read 484 times Last modified on Wednesday, 16 August 2017 12:35