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Decommissioning - The Cost Challenge

Nils Cohrs

23 May 2018

Ensure MER UK

behaviour implemented

Supportsupply chain

to develop capacity and

efficiency

Promote collaboration across industry

Identify cost reduction

opportunities/ challenges for

decommissioning

Publicise benchmarks using OGA

Stewardship Survey data

Engage early on decommissioning

plans with operators

To steer the UKCS overall decommissioning cost to £39bn* or less * 2016 money

OGA Decommissioning

Identify and share lessons

learned

How?

Our team’s mission

Asset Stewardship Expectations

Cost certainty and reduction

Delivery capability

Scope, guidance and stakeholder engagement

Driving targeted cost efficiency programmes including innovative and regional approaches with extensive and effective knowledge sharing and best practice adoption

Developing an efficient and exportable low cost and profitable delivery capability supported by a competent and efficient supply chain, a selection of business execution models all designed to

allocate risk, align industry participants and drive down costs

Working with BEIS and other relevant parties to identify and evaluate opportunities to further optimise and define parameters for decommissioning scope and improve industry engagement

Builds on the Strategy

Focus over the next year

Reviewed on an annual basis

Clear action plan and timetable for delivery

Sets out a number of key deliverables

Strategy and Programme

Costs

59.7bn 59.7bn

Source: OGA 2017 Decom Cost Report using 2016 UKCS Stewardship Survey Data

5

Late life operation RemovalWarm stack/suspension Cold stack/suspension

Decommissioning Workflow

Dismantling Monitoring

OGA

OPRED

HSE

MER UKDecommissioning Cost

DP approvalDP execution and progress monitoring

Review

Offshore Safety Case adherence with regular amendmentsOnshore H&S regs

Need for Change

P90

P50

P10

Transformational approach

P90

P50

P10

Business as usual

Cost

Cost

Prob

abili

ty

Prob

abili

ty

• Industry and government have shared desire to minimise cost

• Awareness that business as usual will not be sufficient to transform cost

• Typical improvements of 35% seen in other industries e.g. automotive and aviation

How to deliver the £39bn target

Diagram for illustration only

By realising opportunities By minimising risks

8

DecommissioningProduction Installations 0 Northern North Sea Pipeline(s) Wells Execution Plan

Name DescriptionInstallation

CategoryPOB Mass (Te) Premise Ref.: Description OD (") Dist.(km) Product Premise Well Base OGUK Type Well-Count Late-Life Management

Alfalfa A Integrated platform Combination 110 12,000 Remove PL678 Kittiwake A Platform to Fulmar Receiver Tree 0 0 Gas Remove Type 0 0Alfalfa B NUI - Normally Unmanned Installation Combination 0 7,000 Remove PL123 Well-211/19- 2 to Murchison Platform 3 0 Light Oil Part Remove Type 1 0

0 PL517 Rob Roy Production Manifold to PL Seabed Location 5 0 Well Fluids Leave Type 2 00 0 0 Type 3 200 0 0 Type 4 0

Subsea structures Number Mass (Te) Premise 0 0 Type 0 2Mass: 0-25 Te Subsea 5 Remove 0 0 Type 1 0Mass: 25-150 Te Subsea 2 Remove 0 0 Type 2 0Mass: 150-500 Te Subsea 2 Remove 0 0 Type 3 7 P&AMass: 500+ Te Subsea 1 1,100 Remove 0 0 Type 4 0

Scope & Cost Phasing (£MM) Prior Years Future Cost L/Cycle Cost Est.Quality % Lifecycle 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 +Operator Proj.Mgmt 0 MM£ 61 MM£ 61 MM£ AACE Class 4 12% £10 £10 £10 £10 £5 £5 £5 £5 £1 -£ -£ -£ -£ -£ -£ Running/Owners Costs 0 MM£ 125 MM£ 125 MM£ AACE Class 4 25% -£ £50 £50 £20 £5 -£ -£ -£ -£ -£ -£ -£ -£ -£ -£ Well P&A 0 MM£ 90 MM£ 90 MM£ AACE Class 4 18% £10 £20 £20 £10 £30 -£ -£ -£ -£ -£ -£ -£ -£ -£ -£ Fac./Pipelines Make Safe 0 MM£ 10 MM£ 10 MM£ AACE Class 4 2% -£ £10 -£ -£ -£ -£ -£ -£ -£ -£ -£ -£ -£ -£ -£ Topsides Preparation 0 MM£ 50 MM£ 50 MM£ AACE Class 4 £20 £20 £10 -£ -£ -£ -£ -£ -£ -£ -£ -£ -£ -£ -£ Topsides Removal 0 MM£ 90 MM£ 90 MM£ AACE Class 4 -£ -£ -£ -£ -£ £90 -£ -£ -£ -£ -£ -£ -£ -£ -£ Fac./Pipeline Make SafeSub-structure removal 0 MM£ 50 MM£ 50 MM£ AACE Class 3 -£ -£ -£ -£ -£ -£ £50 -£ -£ -£ -£ -£ -£ -£ -£ Super-/Sub-structure recycling 0 MM£ 6 MM£ 6 MM£ AACE Class 3 -£ -£ -£ -£ -£ -£ £2 £4 -£ -£ -£ -£ -£ -£ -£ Subsea infrastructure 0 MM£ 10 MM£ 10 MM£ AACE Class 4 -£ -£ -£ -£ -£ -£ -£ £10 -£ -£ -£ -£ -£ -£ -£ Site remediation 0 MM£ 1 MM£ 1 MM£ AACE Class 4 -£ -£ -£ -£ -£ -£ -£ £1 -£ -£ -£ -£ -£ -£ -£ Monitoring 0 MM£ 2 MM£ 2 MM£ AACE Class 4 0% -£ -£ -£ -£ -£ -£ -£ -£ £1 -£ -£ -£ £1 -£ £1Cessation of Production (Year) 2019 495 MM£ 495 MM£ Warm StackCold Stack Removals & Recycling

Scope & Cost Phasin Prior Years Future CostOperator Proj.Mgmt -£ 61£ Running/Owners Co -£ 125£ Well P&A -£ 90£ Fac./Pipelines Make -£ 10£ Topsides Preparatio -£ 50£ ContractingTopsides Removal -£ 90£ Sub-structure remov -£ 50£ Super-/Sub-structur -£ 6£ Subsea infrastructur -£ 10£ Site remediation -£ 1£ Monitoring -£ 2£

Business Environment

Operating Model

Industry Collaboration

Facilities re-use / Carbon Capture & Storage

Saving Opportunities vs P10s vs P50sProject Management £36 £12 MMPost-CoP Running Costs £58 £0 MMWell P&A £42 £0 MMFacilities/Pipelines Make Safe £7 £0 MMTopsides & Substructure Prep. + Removal £148 £10 MMTopsides & Substructure recycling & disposal £4 £4 MMSubsea infrastructure £4 £0 MMSite remediation £1 £0 MMMonitoring £1 £0 MM

£301 £26 MM

Summary / Conclusion

42%

Conclusion Added on Cost Category review tab

Total

19 February 2018 I.Fozdar

Conclusion Added on Cost Category review tab

Conclusion Added on Cost Category review tab

Conclusion Added on Cost Category review tab

Conclusion Added on Cost Category review tab

Platform

Subsea

Conclusion Added on Cost Category review tab

Conclusion Added on Cost Category review tab

Conclusion Added on Cost Category review tab

Conclusion Added on Cost Category review tab

Conclusion Added on Cost Category review tab

£-

£20

£40

£60

£80

£100

£120

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 +

MM

Decommissioning Cost Phasing

Operator Proj.Mgmt Running/Owners Costs Well P&A Fac./Pipelines Make Safe Topsides Preparation Topsides Removal Sub-structure removal Super-/Sub-structure recycling Subsea infrastructure Site remediation Monitoring

Decommissioning Cost Breakdown (WBS)

Operator Proj.Mgmt Running/Owners Costs Well P&A Fac./Pipelines Make Safe Topsides Preparation Topsides Removal

Sub-structure removal Super-/Sub-structure recycling Subsea infrastructure Site remediation Monitoring£0

£50

£100

£150

£200

£0

£50

£100

£150

£200

Project Management Post-CoP Running Costs Well P&A Facilities/Pipelines MakeSafe

Topsides & SubstructurePrep. + Removal

Topsides & Substructurerecycling & disposal

Subsea infrastructure Site remediation Monitoring

Decommissioning Project Cost Uncertainty and UKCS Benchmarks

Project P10 - P90 Range

Project Lifecycle Total Spend

UKCS Benchmark P10 - P50 Range

Decommissioning Dashboard

How to measure success to deliver the target?

1.Change in total cost forecast vs previous year from Asset Stewardship Survey

2.Change in key cost area benchmark (P50) after each Stewardship Survey with new actual data

3.Improved cost definition for first 5 and 10 year forecast

4.Actual industry success stories indicating realised savings

OGA’s key deliverables in 2018

1.Publish 2018 Decommissioning Cost Report

2.Publish Decommissioning Lessons learnt report

3.Complete Tier reviews with top 10 operators (based on total spent forecast over next 5 years)

4.Issue update for Decommissioning Delivery Plan

Minimise the cost of decommissioning in an appropriate manner, with a focus on delivering what would otherwise not be delivered by industry

Objective:

Team:

Terri King (ConocoPhillips) Nils Cohrs (OGA)Nigel Lees (Wood/Decom NS) Win Thornton (BP)Roy Aspden (CNRI) Mike Tholen (O&GUK) Pauline Innes (BEIS)

Decommissioning Task Force

Decommissioning Task Force Plan 2018

Decommissioning Task Force Website

Thank you