energy - decommissioning 2002-4
TRANSCRIPT
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Offshore Decommissioning 2002
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OffshoreDecommissioning
Opportunities for Scottish BasedBusinesses
2001
(Including Update at March 2002)
Prepared by Eric Faulds Associates on behalf of
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Index Page
1.0 Introduction 2
2.0 Executive Summary and Recommendations 3
3.0 Decommissioning Background 8
4.0 Numbers, types, locations and weights of offshore 10installations.
5.0 Market Drivers. 14
6.0 Business Sectors. 18
7.0 Steel Platforms 19
8.0 Concrete Gravity Based Structures. 34
9.0 Subsea installations. 37
10.0 Drill cuttings 38
11.0 Pipelines 41
12.0 Well Plug and Abandon 44
13.0 Reuse of Offshore Installations 46
Internet References 50
Appendix A 51
All rights reserved. No part of this publication may be reproduced, stored in aretrieval system, or transmitted in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior writtenpermission of the publisher.
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1.0 Introduction
During the next couple of decades decommissioning of offshore structures will be
another major opportunity for Scotland. It is vitally important that we understand the
size and nature of the opportunity and develop the appropriate strategy to maximise
the economic impact to Scotland.
Scottish Enterprise Energy has commissioned this study as a first step in identifying
the opportunities and informing the industry of the same. Our next task will be
engaging other public sector partners as well as industry in appropriate dialogue to
determine the future course of action.
The focus of this report is on the decommissioning of offshore platforms. In addition
the report will cover other decommissioning sectors such as pipeline
decommissioning and drill cuttings where the information and knowledge available is
somewhat limited. Re-use of installations for new purposes will also be considered.
There is a paucity of reliable information on which to base predictions regarding the
development of the North Sea decommissioning market. This is in part due to the fact
that there has been very little experience of decommissioning to date and no
experience of removing very large offshore structures in any part of the world. In
addition, there are no regulations in place regarding aspects such as drill cuttingsand pipeline decommissioning. History has shown us that the predictions of likely
costs of major new engineering projects, where there is no previous experience, are
likely to be seriously underestimated. It is reasonable to expect the same situation
will occur in decommissioning, particularly for the early decommissioning projects.
A variety of public domain information as we ll as proprietary data have been used in
the preparation of this study. There is some lack of consistency in the data due to
the different sources but despite this we believe it is sufficiently reliable for the
purposes of this report.
Scottish Enterprise hope that this study would make a valuable contribution to the
subject of decommissioning of offshore facilities, and it would lead to maximisation of
economic benefits from this opportunity, to Scotland.
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2.0 Executive Summary
The offshore decommissioning market is still in its infancy and as a result there are
uncertainties regarding what the total market requirements may be and how the
market might develop. However, there are also a number of certainties. The cost of
decommissioning will be very high. We estimate that the total for the entire North Seais unlikely to be less than 20 billion and could easily be 30 billion. This expenditure
will be spread over a period of some 20 to 30 years and most importantly, it is a
market that is absolutely ce rtain to occur and it will occur on Scotlands doorstep.
We also believe that the underlying commercial drivers behind the decommissioning
market will ensure that it will be a relatively predictable market without the cyclical
swings in demand experienced in the development of the North Sea.
In terms of potential decommissioning market value, the tonnage of platforms to be
removed provides a good indication of the likely cost. In terms of tonnes of steel
contained in the offshore platforms, the approxima te split between countries is shown
in the pie chart below:
England
10%
Scotland
43%
Norway
38%
DK
2%NL
7%
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The total decommissioning market can be broken down into a number of distinct
activities. Whilst there is no North Sea track record for decommissioning it is difficult
to be precise about the total value of the market. The chart below gives the order of
magnitude of the UK Sector Costs.
Order of Magnitude UK Sector
Decommissioning Costs
02,0004,0006,0008,000
10,00012,00014,00016,000
Total
Pipe
lines
SteelPla
tforms
WellP
&A
ConcretePla
tforms
DrillCuttings
million
Cost estimate range
It is generally not recognised that plugging and abandoning wells will account for a
substantial part of the cost of decommissioning an offshore production platform. This
will be a significant expanding market that will require an increase in specialist
expertise and equipment. We envisage that companies already operating in Scotland
will be able to expand to meet these requirements and lead the way in developing
lower cost and more reliable techniques. There may also be opportunities for new
players.
The requirements for dealing with drill cutting waste deposited on the sea bed
beneath many of the installations off the Scottish Coast have not yet been
determined but there is little doubt that there will be significant market opportunities
for companies in the removal, handling and treatment of both drill cuttings and the
associated contaminated water.
There is likely to be a significant market in pipeline decommissioning which will be
dominated by the need for offshore marine equipment and diving services. However,
until the decommissioning requirements are better defined there are no obvious near
term business opportunities apart from the removal of small diameter flowlines and
cables associated with the decommissioning of subsea installations.
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The greatest near term market opportunities will be associated with the
decommissioning of fixed offshore platforms. The key question is how can Scottish
business ensure that it secures a large slice of this cake?
Approximately sixty to seventy percent of the cost of removing an offshore platform is
associated with the offshore heavy lift contractor and currently the heavy lift
equipment is owned and operated by Dutch and Italian companies. The vesselstypically operate out of The Netherlands or Norway. If the status quo remains then
Scotlands slice of the cake for platform removal will be limited to the supply of
offshore labour, diving vessels and onshore disposal.
The worldwide market for heavy lift vessels is increasing and with the additional
requirements of North Sea decommissioning, demand is likely to exceed supply and
apply upward pressure on prices. There is a perceived need for additional
competition in this market and this is expected to come from the development of a
new generation of heavy lift vessels aimed at the decommissioning market but also
capable of competing for new installation work. These new designs are being
developed in Norway and The Netherlands but there is a unique opportunity for
companies with a Scottish base not only to build these new vessels but, more
importantly, to operate them. If these new vessels can be based in Scotland then
Scotlands share of the market will be greatly enhanced since the vessels base not
only influences its maintenance and direct support activities it also influences the
operation of associated cargo barges, fabrication of necessary steelwork as well as
engineering design and project management work. The recently announced plan by
Phillips Petroleum in Norway to use the new technology vessels on the first two
removals of Ekofisk installations make it virtually certain that at least one of these
new generation vessels will be built and operated. We estimate that if one of the new
generation vessels could be based in Scotland then the value of steel platform
removal work coming to Scotland could amount to 4.5 billion and there is the
additional potential of income from the worldwide platform installation market.
Without a vessel based in Scotland the value of removal work coming to Scotland
may be as low as 1.5 billion. It will take both political and corporate initiatives to win
this prize.
There is now a general realisation that the onshore dismantling of offshore
installations will not create many jobs. Industry estimates suggest approximately 150
to 200 jobs per annum on average will be required in the UK. We anticipate that there
will be a requirement for about three decommissioning yards in the UK. Able UK,
based in Teesside is well established to dominate the Southern North Sea market
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and the deep water in Shetland along with its proximity to the Northern North Sea
fields will give the Shetland Decommissioning Company a distinct advantage over its
UK competitors. We believe however that the market could support an additional
yard located in Scotland.
A feature of decommissioning to date has been the continual slippage in the market
getting effectively underway. This has caused problems where a number ofcompanies have invested in the development of new technology only to find the start
of the market has slipped. There is no doubt that there will be a tendency for this
slippage to continue but there are a number of events planned to occur in 2001 which
are likely to be significant.
The Maureen (1) platform will be removed in mid summer and taken to
Norway. Whilst benefit to the UK may be limited it will raise awareness of the
decommissioning challenge.
It is expected that Phillips Petroleum in Norway will commence the
prequalification procedure for 3 of the Ekofisk installations in July this year
(2001). For two of the installations new technology lift equipment will have to
be used. It is expected these critical contracts will be awarded in Spring 2002.
TotalFinaElf(3) are due to publish their decommissioning plan for the Frigg
Field in the very near future. This will be a major decommissioning
programme and will include the first large platforms to be decommissioned in
the UK sector.
These events will arguably bring a renewed focus on decommissioning and with the
expectation of prequalification activities commencing this will require contractors to
seriously consider their position and plans for entry into the market.
The above summary has focussed on the major activities but given the enormous
size of the market a very small slice of the cake will represent a large volume of
business for many specialist companies.
Although the reuse of offshore facilities and equipment in newlocations has received
considerable attention and effort by decommissioning specialists, without much
success to date, the potential economic benefits suggest that this is not an aspect
that should be dismissed. There is a need to identify what markets, if any, could
utilise redundant North Sea installations.
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In addition, a number of offshore structures have been reused for new purposes with
the reuse of Brent Spar in Norway to form a new quay structure a prime example.
There have been suggestions that offshore installations could be used not only for
coastal engineering projects but also for offshore aquaculture and power generation
utilising wind and wave power. We believe that these ideas require study to
determine their merits.
It should not be forgotten that the UK government bears a significant part of the cost
of decommissioning (up to 60 to 70% in some instances) through tax rebates to the
oil companies. The use of redundant platforms to provide wealth creating
infrastructure improvements such as quaysides etc may help offset this charge on
the UK economy.
In conclusion, 2001 and 2002 is likely to see significant developments in the
Norwegian sector and investment in new technology lifting vessels. Early action is
required if Scottish based companies are to obtain a significant foothold in the
market. In particular there are new opportunities to build and operate new heavy lift
vessels, to take a lead in developing low cost well plugging technology, to develop
sea bed waste handling technology and to utilise offshore installations for renewable
energy and aquaculture purposes. All of these business areas have worldwide
applications. If business initiatives are not put in place, there is the likelihood that
Norwegian and Continental based companies will gain the lions share of the
decommissioning market in UK waters.
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3.0 Decommissioning Background.
The footings referred to above are the large heavy sections at the base of steel
jackets where the jacket is connected to the foundation piles. The maximum number
of steel installation footings that could be left partially in place under these
regulations is 34 out of approximately 600 in the North Sea.
The application of these new regulations has yet to be put to th e test although
Phillips Petroleum in Norway have proposed that derogation should be sought toleave the Ekofisk Concrete Tank structure in place.
3.1 Decommissioning Process.
The decommissioning process in the UK is governed by the requirements of the
Petroleum Act 1998. The process is clearly set out in guidance notes (14) published
by the DTI. In summary the process is as follows:
Stage 1. The Operator of the installation undertakes preliminary discussions with the
DTI. This will typically take place 3 to 5 years in advance of the expected
decommissioning date. The Operator will outline the likely timetable of future events.
Stage 2. Detailed discussions of a draft decommissioning proposal. For
straightforward cases where installations are being totally removed this is likely to be
Topsides
DEROGATION?
Must leave 55metres
water column above
remaining items
Must provide
navigation markings
YES
NO
NO
YES
YES
YES
UK REQUIREMENTSINSTALLATION
Steel Jacket10,000tonnes
Can dump or leave part
or whole in place
Can leave footings
Remove
Remove
Exceptional case
damage etc
Can dump or leave part
or whole in place
Can dump or leave part
or whole in place
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a straightforward process. However if the installation is large and has the potential to
be considered for derogation then the OSPAR requirements will have to be taken into
account.
Stage 3. Consultation with interested parties.
Stage 4. Formal submission of the decommissioning proposal and approval by theSecretary of State.
Stage 5.Execution of the work.
Stage 6.Monitoring of the site if applicable.
Particular points to note from the above process are that the Operator of the
installation drives the process and the regulator is the DTI who will make the final
decision regarding an Operators proposals. Although the regulations set out by the
OSPAR Convention are significant for a small number of large installations the
OSPAR Convention is not a regulator and has no decision making role in the
process. It is also relevant to note that both the OSPAR regulation and the DTI
Guidance notes require Operators to cooperate and share information on
decommissioning matters.
ALL CASES
Secretary of State
calls for formal
Submission
ADDITIONAL
ACTIVITIES
REQUIRED FOR
DEROGATION
Up to three
years before
decommission
Maximum of 32 weeks
for OSPAR consultation
process
Detailed
submission
and
consideration
of draft
programme
Consultation
with
interested
parties
Formal
submission
and approval
of
programme
Commence
main works
and undertake
site surveys
Monitoring
of
site
Preliminary
discussions
with
Government
Departments
Consultation
with OSPAR
Contracting
Parties
Assessment
of
options in
accordance
with
OSPAR
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4.0 Numbers, types, locations and weights of offshore installations
There are approximately 600 platforms located in the North and Irish Seas. The exact
number quoted by various sources varies, as there is no consistency in how
platforms are counted. For example some sources regard two platforms linkedtogether by a bridge as one platform whilst others count these as two platforms.
The platforms are located mainly in UK, Norwegian, Dutch and Danish waters.
The great majority of installations are fixed platforms comprising a steel jacket fixed
to the seabed with piles along with a topsides structure containing drilling, process
and living facilities. Approximately 4% of the total numbers are very large concrete
gravity based substructures. There are also a number of floating installations and
subsea installations
The table below shows the location of installations by type and by country.
Country SteelJacket
ConcreteSubstructure
Subsea
Floating Total
UK (UK) 227 12 56 17 312
Norway (N) 69 13 54 9 145
The Netherlands (NL) 118 2 7 127
Denmark (DK) 39 39
Germany (D) 1 1 2Total 454 28 117 26 625
It can be seen that the UK has 50% of the total number of North Sea installations
located in its controlled waters.
The cost of removing a platform increases with size and weight and therefore, for the
decommissioning market, the tonnage of materials to be disposed of is more
significant than installation numbers. Platforms tend to get larger and heavier as the
water gets deeper.
The table below gives the total weight in millions of tonnes of offshore platforms by
sector and type. Concrete substructures have been excluded.
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UK N NL DK D Total
Topsides(steel jacket platforms)
1.11 0.75 0.28 0.09
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England
10%
Scotland
43%
Norway38%
DK
2%NL
7%
National Tonnages
Sector Map showing number of steel platformsand total tonnage of steel
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The above analysis has looked at the distribution of offshore installations. There is a
lack of good data on other aspects of decommissioning such as pipelines and the
treatment of drill cuttings. As a general guide however, the UK and Scotland in
particular has the greatest share of the volume of each aspect of decommissioning.
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5.0 Market Drivers.
5.1 Timing.
The fundamental driver influencing an Operator when considering decommissioning
is that it is a very high cost outlay with no associated income.
A prime objective of both Operator and government is to maximise the production
from any field and combined with the financial penalty of decommissioning at the
end of field life there is every incentive to delay cessation of production for as long as
possible. This may be done by introducing cost saving measures in the production
and operating processes and could include selling the asset to a lower cost Operator
or by utilising new drilling and production technology or by a combination of all of
these measures.
An excellent example of field life extension is Shells Auk field, which was installed in
1974 with a life expectancy of no more than 7 years the latest prediction is that it
could produce until 2010.
Ultimately however fields will become uneconomic either through falling production
levels or through a drop in oil price. Both well production and oil price are difficult to
predict accurately and hence cessation of production dates may change from time to
time with a tendency for dates to recede.
It should be noted that a low oil price does not necessarily lead to early
decommissioning of installations since, in this instance, the Operators will be cash
constrained and will be extremely reluctant to spend money on activities that do not
generate income. Although high oil prices will tend to delay the cessation of
production of oil fields high oil prices may accelerate the cessation of production from
gas fields as consumers maximise their use of lower cost gas in preference to oil. It is
also important to note that cessation of production and decommissioning dates are
not necessarily closely linked. There may be many years between production
shutdown and the start of decommissioning.
There are however other drivers that may, in certain circumstances, tend to
accelerate decommissioning. Delaying a number of decommissioning projects could
build up a significant cash flow problem in the years ahead. Tax offsets will be
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generated and it may suit an Operator to optimise its tax position by
decommissioning earlier rather than later. Some Operators may also have fears
regarding the financial strength of some of their partners and would prefer not to
delay. It should be noted that all partners in a field are held liable for
decommissioning costs. In addition, the Government will not wish to see undue delay
which could increase financial risks if some licence owners ceased trading and there
will be pressure from fishermen and others to see the sea bed cleared of installations
as soon as practically possible.
Nevertheless, the overall trend is likely to be a delay decommissioning and this has
certainly been the experience to date.
5.2 Cooperation
With all Operators having to face the loss making business of decommissioning and
combined with the fact that it is not core business there is the basis for a much more
cooperative approach between Operators compared to new field development. In
addition, OSPAR regulation requires cooperation and DTI Guidance Notes state:
The Government is keen to encourage Industry co-operation and collaboration at the
decommissioning stage.
5.3 PoliticsAlthough different fiscal regimes exist in Norway and the UK the net effect of both isthat the Governments have to contribute a significant amount to the
decommissioning costs either directly in the case of Norway or indirectly through tax
relief in the UK.
An important consequence therefore, is that both Government and Operator
objectives are aligned as far as reducing decommissioning costs are concerned.
On environmental issues however there is the potential for divergence in that
Operators would generally prefer to see environmental issues evaluated on the basis
of sound science whereas Governments will tend to be more sensitive to emotionally
based public opinion. However, in reality, environmental considerations, although
important, are unlikely to have a further significant effect on the installation removal
market. The same cannot be said about the removal of drill cuttings and pipelines
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from the sea bed. Environmental issues will continue to play a significant role in
establishing the extent of these particular markets.
To date there has been limited political interest in ensuring that the UK maximises its
opportunities in this large new market. Most new business development has been
Norwegian based and without political pressure we will probably see Norway taking a
disproportionate amount of the North Sea decommissioning business.
Although EU trading rules do not permit Norway and the UK to protect their
decommissioning markets the Basel Convention on the export of waste which, in
essence, requires each country to dispose of its own waste could arguably be
applied to offshore decommissioning. There is therefore an expectation that although
Norway will tend to have an advantage in special situations such as Brent Spar and
Phillips Maureen, where deep water is particularly significant, the vast majority of UK
offshore installations will be decommissioned in the UK.
5.4 Effects of Drivers
It is important to appreciate that the market drivers in decommissioning are distinctly
different from new field development. Although both are high cost activities new field
development costs are offset by income to be generated from the investment.
Decommissioning costs must be met from cash available at the time of
implementation and any overrun in expenditure will have an immediate effect on a
companys annual profit. In new field development, time is normally a critical factor,
particularly once project development gets underway. In decommissioning, time will
be relatively unimportant and this is likely to have a significant influence in the way
the market develops. Generally, the longer a project is delayed the better the
financial return for the Operator in terms of net present value. The need to get a new
project completed on time tends to minimise cooperation between projects, even
within the same company. Decommissioning is likely to see much more cooperation
between companies.
The fundamental driver of high cost no income for the Operator will arguably lead
to a strong drive to create an industry with the greatest overall efficiency and hence
lowest possible cost consistent with safe and environmentally acceptable practices.
An efficient offshore decommissioning industry will require the following features:
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The best possible technology available when needed.
Competition.
Innovation.
Equipment and human resources available when needed. A predictable and smooth workflow without boom and bust periods.
The greatest single problem to date with respect to developing new technology has
been the trend for decommissioning start dates to continually slip. The development
of new heavy lift vessels has been particularly hampered in this respect with several
companies commencing development aiming for a market commencing in 2001 only
to find that it will not commence until 2003 at the earliest. Maintaining a development
team for an additional two years is clearly a significant burden.
The flexibility of decommissioning timing should however bring benefits in that it will
be feasible to delay a decommissioning start whilst a particular piece of technology is
developed if it can be shown that this will reduce cost. Another advantage arising
from the potential to delay is the expectation that it will be easier, compared to new
field development, to obtain contractual commitments from a client prior to a
developer investing capital in new hardware.
The oil industry is fully committed to the belief that competition drives down costs by
focussing on efficiency and encouraging innovation. There is no reason to believe
that the decommissioning business will be any different.
We believe that boom and bust periods will be less likely in the decommissioning
market. Our expectation is that contracts will generally be let on a multi-project basis
spread over a number of years and that the combination of timing flexibility and a
determination to keep costs down will smooth out the work flow. If a peak in demand
arises and is driving up costs then the projects will simply be delayed until supply and
demand are back in balance.
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6.0 Business Sectors.
6.1 General
Offshore decommissioning can be broken down into a number of distinct business
sectors comprising the decommissioning of steel platforms, concrete gravity based
platforms, sub-sea installations, drill cuttings, pipelines and well plug and
abandonment.
An indication of the order of magnitude costs of potential decommissioning costs for
each of these sectors is shown in the chart below. (Subsea decommissioning is
excluded as it is small in comparison to the other sectors)
Order of Magnitude UK Sector
Decommissioning Costs
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Total
Pipelin
es
SteelP
latform
s
WellP
&A
ConcretePlatf
orms
DrillC
uttings
million
Cost estimate range
It must be emphasised that the above numbers can only be regarded as rough
estimates but they do give an indication of the relative size of each sector.
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7.0 Steel Platforms.
7.1 Cost Breakdown
The estimated decommissioning cost of this sector, excluding the cost of
plugging and abandoning wells, is in the order of 4 to 7 billion for the UK
sector.
From our cost database we can derive the breakdown shown below of the
major business sectors within the steel platform decommissioning market.
Materials &
Fabrication
15%
Onshore
scrapping
4%
Design &
management
10%
Offshore
Support
10%
Offshore
Preps
10%
Marine
HLV
30%
Marine support
contracts21%
Onshore
29%
Each sector will be discussed below:
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7.1.1 Heavy Lift Vessel (HLV).
Virtually all offshore platforms were installed using heavy lift crane vessels such as
shown below. Similar vessels will be required for the removal of the installations
These specialist vessels with their unique lifting capacity up to 12,000 tonnes are, not
surprisingly, expensive pieces of equipment with costs ranging from typically
350,000 to 500,000/day and higher for exceptional lifts.
The heavy lift vessel will be the key resource during the offshore removal process.
7.1.2 Marine Support Contracts.
The heavy lift vessel will need the support of other specialist services. In particular
diving support, underwater cutting equipment, tugs, supply boats and cargo barges.
7.1.3 Offshore Preparation.
Before the heavy lift vessel can remove the topsides a considerable amount of
preparation work will have to be carried out prior to lifting. For example the facilities
will have to be cleaned of residual hydrocarbons where necessary and pipework,
ductwork, cables, structural steel etc. will have to be cut to release each section
being lifted. In addition, the lifted sections will require a thorough inspection and are
likely to need new lifting eyes to be attached to the structure which also may require
strengthening. All this work will require an offshore labour team.
7.1.4 Offshore Support.
Although some of the offshore preparation work may be able to be carried out while
the platform has adequate safety and life support facilities it is likely to reach a stage
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where a flotel (accommodation vessel) is required to provide the necessary support
to the labour team. In addition crew changing, equipment and supplies, catering, etc.
will be required to be provided via helicopter and supply boat.
7.1.5 Design and Management.
Clearly, a major decommissioning project will require an onshore team of engineers
to design a safe and efficient removal method and will need a team onshore and
offshore to manage the project.
7.1.6 Materials and Fabrication.
It is often not appreciated that there is likely to be a substantial amount of fabricated
steel required to ensure that the various platform sections can be safely lifted and
supported during transport to shore. This work will be heavy structural steel
fabrication. It is expected that this work will create many more jobs than those
created with onshore d isposal work.
7.1.7 Onshore Disposal.
Although onshore scrapping and waste disposal is perhaps perceived as a major part
of decommissioning it is in fact a relatively small part of the work as far as costs and
jobs are concerned.
When steel structures are removed they will either have to be reused, which is
considered to be an unlikely occurrence in most cases, or brought to shore for
dismantling and disposal. The basic requirements for an onshore decommissioning
site are that it must have a strong quayside with a water depth of around 9m, and
ideally over 20m, along with adequate space to layout the offshore facilities. In
addition, hard standings with a closed drain system will be required and there will be
a need for craneage and cutting plant. Existing technology will be capable of dealing
with onshore disposal.
The amount of hazardous wastes such as asbestos, radioactive material, etc. which
will come ashore with the structures will be very small relative to the total amount of
materials. However, these wastes will clearly need to be treated and disposed of in
accordance with regulations. Existing technology is capable of dealing with these
wastes. The disposal of low-level radioactive waste known as Low Specific Activity
(LSA) scale which forms on some pipework will need careful consideration by both
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contractors and authorities. In the UK there are a limited number of sites which are
licensed to remove the scale material and the UK depository for low level wastes at
Drigg does not have sufficient capacity under its current licence to take all of the
North Sea waste.
7.2 Steel Installation Technology Issues.
7.2.1 Conventional Heavy Lift Vessels.
The offshore steel platforms were generally installed by first transporting a steel
jacket structure on a barge, see photo below,launching the jacket into the sea and
pinning it to the sea bed using steel piles.
The topsides structures were placed in position using a heavy lift vessel such as the
one shown below:
In principle, it should be feasible to reverse the topsides installation process simply
by utilising a heavy lift vessel to remove the sections in the same sequence as they
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were originally installed. For the majority of offshore installations this should be
technically straightforward. There are however two problem areas worth noting.
1. The preparation of the offshore structures to make them safe to lift could be
extensive. Over the years many modifications may have taken place, such as
the installation of additional fire and blast walls following the Piper Alpha
disaster, which make the sections too heavy to lift without removing the
excess weight. Additionally all the interconnecting structural, electrical and
mechanical interconnections between each section will have to be cut taking
into account that the pipework may contain hydrocarbon residues. Efficient
cold cutting techniques will therefore be required.
2. Whilst it is feasible to lift a very large deck of up to 12,000 tonnes from a
cargo barge using two cranes acting in tandem as in the photo above, it willbe difficult to reverse the process in anything other than flat calm sea
conditions since placing a large deck structure onto a moving barge could
result in serious damage to the barge. In these cases the large decks may
have to be cut into smaller pieces or alternatively new stronger barges or
shock absorbing technology will have to be introduced.
The jacket installation process of launching the structures into the sea utilising gravity
clearly cannot be reversed for removal. Current technology requires the jackets to be
cut into lift size pieces for removal by a heavy lift crane vessel. The following issuesarise with the larger jacket structures:
A large number of underwater cuts of structural members will be required.
This could be several hundred for a large structure.
Very thick steels, up to 75mm and potentially greater, will have to be cut.
Efficient underwater cutting technology will be required.
Some jacket sections, the pile clusters in particular, will be extremely heavy
and will require complex lifting arrangements to ensure a safe lift.
Great care will be required to ensure that, as the structure is progressively
removed, the remaining structure remains stable.
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7.2.2 New Technology Lift Vessels.
There are a number of companies actively developing a new generation of heavy lift
vessels. The objective of the new vessels is to lift off the topsides of offshore
installations in a single lift and a number of the vessels also aim to remove jackets in
a single piece for transport to shore. The lifting capacity of these new vessels will be
up to 20,000 tonnes and potentially higher. The vessels will equally be able to be
used for offshore installation as well as removal.
These vessels can be compared to giant floating forklift trucks where the forks fit
under the deck and by deballasting the vessel the deck can be lifted from the
substructure.
Graphic impressions of the Pieter Schelte being designed by Excalibur Engineering
bv (6)are shown below. The picture sequence indicates how the topsides and jacket
of a large installation can be removed in two large lifts and transported to shore.
Installation of a new platform would simply reverse this process.
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A similar sequence is shown below for the Marine Shuttle (7) being designed in
Norway. There are a number of other vessels being developed essentially along
similar principles to the vessels indicated to the Pieter Schelte and the Marine
Shuttle.
The oil companies are currently studying the technical issues associated with these
vessels. However, to date no commitments have been made to use these vessels.
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7.3 Steel Installation Market Development.
The removal of the steel installations will be the most significant activity in the
decommissioning market and has received the greatest amount of study and
consideration to date. Nevertheless, as stated previously, there is virtually no
experience of the market in the North Sea and although a considerable amount of
decommissioning has taken place in the Gulf of Mexico the amount of learning that
can be transferred is limited. This is primarily due to the much greater size and
weight of the North Sea installations, particularly those in Scottish waters. The
following development predictions must therefore be treated as speculative.
The development of the North Sea construction market has been characterised by
cyclic activity where there has been an overheating of the market driving up prices
and equally there have been slack periods when there has been an overprovision of
resources.
Although there have been a number predictions of decommissioning dates and work
flow such as the one shown below showing jobs forecast published by the North Sea
Decommissioning Group (8), part of the Government/Industry Pilot Task Force.
NSDG Jobs Forecast
Decommissioning Jobs - SpreadDecommissioning Jobs Ear ly-Late Spread
-
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
3,500.00
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Onshore Decommissioining
Onshore Preparation
Design
Offshore Deconstruction
Well Abandonment
HLV
DS V
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The above would seem to predict a similar boom and bust pattern for
decommissioning. However the reader will note that the activity peaks occur at 2005,
10,15, 20 25 and 30. These round number peaks are almost certainly a reflection on
the inaccuracy of the predicted cessation of production date for each field. The fact
that decommission dates need not closely follow cessation of production is ignored.
We are firmly of the opinion that the above pattern of decommissioning will not
happen in practice because of the common goal of driving down cost and the fact
that timing is not a significant issue in decommissioning projects. If a boom period is
developing and tending to drive up prices, then projects will simply be delayed until a
better balance of supply and demand is reached. A good example of this smoothing
in practice is the published plan for the decommissioning of 14 platforms in the
Ekofisk field in the Norwegian sector. Phillips original plan to spread the
decommissioning work over four campaigns stretching from 2003 to 2015 (2). (This is
currently under review with work not now expected to commence until 2004) We
believe a more realistic pattern of decommissioning activity is indicated in the chart
below.
Potential shape of UK platform Decommissioning
Market
0
2
4
6
8
10
12
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040N
umberofplatformsdec
ommissione
perannum
As far as the near term market is concerned the prospects are as follows:
Maureen (1) A contract has already been awarded to Aker to remove this installation
in the summer of 2001 and to dismantle the installation in Norway. Like Spar,
Maureen is a unique type of structure where the deep water of Norway has highly
significant advantages compared to UK sites for decommissioning. The fact that
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Maureen will go to Norway for decommissioning should not be seen as an indicator
for future decommissioning of steel platforms.
Ekofisk (2).A huge field in the Norwegian sector where 15 installations are now
redundant. Two of the insta llations are in UK waters although they come under
Norwegian regulation. The platforms are in approximately 70 meters of water and are
typically 8,000 tonnes total weight although there are significant differences above
and below this figure. The field is operated by Phillips who have submitted
decommissioning plans to the Norwegian Government for approval. The need to
decommission these platforms is largely driven by subsidence of the reservoir and
the sea bed which has resulted in the topsides of the installations being at risk of
being damaged by storm waves. The decommissioning programme is therefore not
directly driven by production levels or oil price. The current intention is that Phillips
will formally commence the tendering process in July 2001 with an invitation to
contractors to prequalify for the decommissioning of the two installations in the UK
sector with the proviso that new lifting technology must be used and in addition they
will seek contractors for the decommissioning of the concrete tank storage
installation. It is expected that contracts will be let in Spring 2002. The requirement to
use new technology for the two UK installations and the need to build the new lift
vessels means that offshore removal is not likely to commence until 2004 o r 2005.
Frigg (3) This is another major decommissioning project consisting of 5 large
platforms plus a wrecked jacket structure. Three of the platforms are in the UK Sector
and two are in the Norwegian Sector. Three of the platforms are Concrete Gravity
Base Structures. It is anticipated that production in the field will cease in 2003 which
would suggest the earliest decommissioning date is likely to be 2005. The Frigg Field
installations will be the first large steel jacket and concrete installations to be
decommissioned in the UK Sector and must be a key target for UK companies
wishing to enter the decommissioning market.
Hutton TLP (13) This is another unique structure with an early decommissioning
date. The tension leg configuration makes this platform an excellent candidate for
reuse at other locations throughout the world and it is expected that the unit will be
sold in the near future and removed from the field in 2002 or 2003. There will also bea requirement to remove a seabed template and anchorages.
North West Hutton. This platform was expected to be an early decommissioning
project but the current high oil price has given it an extended period of economic life.
Subject to the oil price remaining high it is thought unlikely that decommissioning of
this installation will commence before 2005.
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7.4 Steel Installation - Market Opportunities
7.4.1 Heavy lift vessel.
Of all the business sectors the heavy lift vessel market is the most dominant. The
heavy lift vessel is the key piece of equipment required for removal of an offshoreinstallation and therefore has tended to take on the role of main contractor with other
sectors such as marine support, material and fabrication, onshore scrapping and
design and project management being subcontracts or part of a joint venture. The
heavy lift contractor will therefore have a strong influence over 60 to 70% of the
platform decommissioning costs.
It is important to understand the market requirements of these key players in the
decommissioning market. These are:
1. A deep water port. These extremely large lifting vessels have a minimum
draught of about 20 metres. There are no ports on the UK East coast that
meet this requirement. This limits their home port to either Rotterdam or a
number of locations in Norway. Rotterdam is the favoured location
particularly for Heerema which is a Dutch company. The choice of home port
is important since it tends to be the focus of all activities associated with the
operation of the vessel.
2. Cargo barge berths. Cargo barges to carry the structures either to or from
the installation site are an essential part of the lift vessel equipment spread.
The heavy lift companies own a fleet of these barges with additional barges
being hired from specialist supply companies when required. The company
owned barges tend to be moored in locations close to the operations centre of
the heavy lift vessels themselves which is of course outside the UK.
3. Steelwork fabrication. It is not generally appreciated that for removal (or
installation) of large offshore platforms several thousand tonnes of temporary
steelwork will have to be fabricated. These are special lifting aids and grillage
steelwork that must be installed on the cargo barges to both spread the load
on the barge and to facilitate removal of the structures from the barge. The
fact that the grillage steel needs to be installed on the cargo barge and the
lifting aids need to be available on the lifting vessel means that fabricators in
the vicinity of the vessel and barges home port tend to have an advantage.
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4. Diving and underwater vehicle support. The removal of the underwater
elements of offshore platforms will require the steel legs and bracings to be
cut. The number of cuts could amount to several hundred. Scottish based
companies are already well placed to meet this market.
5. Offshore preparations for lifting. There will be a considerable amount of
labour required to prepare the platform topsides for lifting. Modules will have
to be cleaned, the interconnecting structural, electrical and mechanical
systems will have to be cut, lifting points will have to be fitted, etc., etc.. Some
or all of this work may be undertaken by contractors already on the
installation as part of an Integrated Services Contract or it may have to be
supplied entirely by the Heavy Lift Contractor. Either way the existing
Aberdeen based service companies are extremely well placed to get this
work.
6. Engineering and Project Management. There will be a considerable
amount of engineering work required to ensure that the offshore dismantling
process undertaken by the Heavy Lift Contractor is undertaken in a safe way.
The requirement will primarily be for structural engineers. Currently this work
is undertaken by Heerema in their Leiden office and by Saipem in their
London office. There is no reason to believe that this pattern will change and
therefore there will be limited opportunity for Scottish Companies. Similarly
the contractors project management team will normally be based at the
contractors head office.
It can be seen from the above that as things stand today there is limited opportunity
for major involvement by Scottish companies to contribute to the heavy lift contractor
activities which in turn account for 60 to 70% of the platform removal market. The
supply of offshore labour and underwater vehicles and equipment will be the most
significant contributions from Scotland.
Can this situation by remedied? In our view this will not be easy. Even if a quay with
20 metres water depth were to be built it is difficult to envisage the vessels relocatingfrom their well established bases. Particularly now that the heavy lift market is
becoming increasingly more global.
There will be a greater opportunity for barge mooring and the associated structural
fabrication to be ba sed in Scotland particularly when decommissioning becomes an
established business and if cargo barges become dedicated to decommissioning
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work. The onshore decommissioning yards themselves will be an obvious possibility
to attract this business since the barges will be delivering their cargo to these yards.
There is also potential benefit for both the onshore disposal contractor and heavy lift
contractor if barges with cargo are over-wintered at the dismantling yard and the
dismantling work carried out on the barge. In this way the onshore disposal company
would save the considerable expense of taking the structures off the barge and in
return the heavy lift contractor would save on mooring costs.
Scotland is well placed to supply the necessary underwater services but to maintain
this position it is critical that the Scottish companies keep ahead of technology
development, particularly with respect to underwater cutting technology.
A more speculative but potentially much more rewarding approach for Scottish
business would be to attract one or more of the new technology lifting vessels.
Firstly there is the potential to build or fit out these new vessels in Scotland but more
significantly, as far as sustainable business is concerned, there is the opportunity to
have these vessels based in Scotland not only to serve the North Sea
decommissioning market but also the world wide installation market. By having the
vessels based in Scotland there is the potential to attract the full range of support
activities as well as the direct jobs associated with the heavy lift vessel and its
management.
In most cases these new vessels are being developed by design houses or
development companies without the necessary expertise to operate the new vessels.
They must link up with established construction companies before they can become
a credible force. There is clearly an opportunity for established Aberdeen based
offshore construction companies to link with the providers of the new vessels.
7.4.2 Onshore Disposal.
We believe tha t the myth that decommissioning would be the saviour of the Scottish
fabrication yards has largely been dispelled. However we consider it important to
emphasise that the value and jobs potential of onshore decommissioning is relatively
small. In a recent study as part of the Pilot Task Force (8) it was estimated that
onshore disposal would provide only 8% of the total decommissioning jobs
associated with platform decommissioning. This is the equivalent of 150 jobs per
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annum in the UK averaged over a 25-year period. Given that there will be a ramp up
and tail off of jobs then a peak job requirement of perhaps 200 can be envisaged.
Even if these estimates are doubled the prediction is still a very low number of jobs
compared to the numbers involved in fabrication. These estimates have recently
been supported by Aker in Norway who are predicting a requirement for 100 jobs on
average and a requirement for two decommissioning yards to serve the Norwegian
sector. (The Norwegian market is approximately two thirds the size of the UK
market).
We estimate that the UK could support 3 onshore decommissioning yards. The
established Able UK yard on Teesside is well placed for the Southern half of the
North Sea and the proposed facility in Shetland is particularly well placed for the
larger Northern facilities. The access to sheltered deep water gives Shetland a
particular advantage over other UK sites. There is perhaps potential for another yard
to be located in Scotland. The existing fabrication yards such as Nigg, Ardersier or
Methil are obvious candidates but there are a number of factors acting against them
in their current fabrication mode. Namely, overheads, high labour costs compared to
the demolition industry and management with a fabrication mind set. In short the
existing facilities are too sophisticated to be competitive. In the event that one of the
existing fabrication yards ceases trading as a fabricator then it would be feasible to
reinstate the yard for onshore decommissioning. With the UK likely to have an
overcapacity in onshore decommissioning capability for some time, possibly 10
years, we would not recommend investment at this time unless it is part of a
diversified development with alternative income streams.
7.4.3 Other areas
As explained previously the decommissioning market is potentially very large and
there will be opportunities for small and medium sized enterprises to play a
significant role. Examples are given below:
Weight engineering. Before an old structure can be lifted it will be necessary
to accurately check the actual weight to be lifted. This estimate will have to
take into account the many modifications that are likely to have taken place
over the life of the installation. It is quite conceivable that structures will have
to be reduced in weight before they can be lifted. There will therefore be a
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requirement for engineers to accurately check weights and to calculate
centres of gravity.
Structural Engineering. There will be a considerable amount of structural
engineering calculation required to enable these installations to be safely
removed.
NDT Inspection. As well as checking the weight of structures it will be
essential to check that the load bearing members of the structure are still
sound and that corrosion or other defects are not compromising the safety of
the lift.
Environmental assessment. The media attention given to Shells Brent Spar
proposal has created an impression that there are significant environmental
hazards associated with the decommissioning of offshore structures. Brent
Spar was a unique type of installation and cannot be used as a guide for the
decommissioning of typical offshore platforms. Whilst environmental
management will be important and there will be an ongoing requirement for
specialist support in this area it should not be regarded as a major element of
typical decommissioning projects.
Equipment reuse. The difference between a successful onshore disposal
contractor and an unsuccessful one may prove to hinge around success in
maximising the sale of reusable equipment rather than simply scrapping it.
There is a huge difference in value between resale and recycle but it requires
specialists to identify the markets for surplus equipment.
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8.0 Concrete Gravity Based Structures. (GBS)
8.1 General
There are relatively few concrete GBS platforms in the North Sea with 12 in the UK
and 13 in Norway.
Whilst regulations require that the topsides of concrete platform must be removed
and brought to shore or re -used the regulations recognise that it may be extremely
difficult to remove the concrete substructures of these platforms. The regulations
therefore permit exceptions or derogations to be permitted from the general rule of
complete removal.
Although the offshore removal of the topsides from the concrete platforms may bemore challenging compared to the steel platforms we do not see significantly different
technologies or equipment being required. There may be a greater requirement for
temporary lifting aids relative to the steel platforms but given the relative ly small
number of concrete GBS platforms this will not be significant in the overall market
place.
The more significant issue is the feasibility of removing the concrete substructures
from their offshore location and bringing them inshore for breaking up. Although a
Norwegian study carried out in 1998 concluded that it would be feasible to remove
concrete structures their work considered a second generation structure with
systems built-in to assist the refloatation. Even for the second generation platforms
the risks are not inconsiderable and there is a general belief within the industry that
whilst it may be feasible to refloat the concrete structures the risks to both personnel
and environment will generally be unacceptably high. This view has been reinforced
by Phillips Norway concluding that they wish to leave the concrete tank installation in
place in the Ekofisk field.
There are no reliable published estimates of the costs of decommissioning the
concrete GBS structures but if the platforms are removed from the field there is no
doubt that the costs will be extremely high. Even the leave in place option will have
significant costs associated with it. Not only for the removal of the topsides but also
for the cleaning of the oil storage tanks.
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8.2 Concrete Platform Technology Issues
Studies are underway to assess the viability of removing these platforms but to date
little has been published.
The generally recognised problems associated with removal are:
1. Restoration of buoyancy. Many penetrations through the concrete walls and
base slab will have to be plugged to restore buoyancy to the structure. The
feasibility of establishing reliable plugs is questionable.
2. Release of the soil suction. The soil beneath the base of the installation will
have to be pressurised to release the natural suction that will exist between
structure and soil.
3. Grout and soil may adhere to the underside of the structure when the
structure is refloated. The consequences of this heavy mass suddenly
detaching itself from the base will have to be assessed.
4. Many of the pipework systems used for installation will have corroded and
become unserviceable.
5. The structures may have suffered in-service damage and deterioration which
will be difficult to measure.
An alternative to total removal would be to take off the deck from the platform and to
leave the concrete legs sticking out of the water with suitable navigation warnings.Removal of the deck section should be relatively straightforward using conventional
heavy lift vessels. However there are question marks regarding how clean the oil
storage cells need to be before the structure is abandoned and what methods can be
used to clean them given that access is extremely limited. It seems likely that the
tank cleaning process could produce large quantities of contaminated sea water
which will have to be cleaned before returning the treated water to the sea.
Rather that leave the legs protruding above the sea surface it has been suggested
that the legs should be cut off underwater. International guidelines requires the cut to
be made at least 55 metres below the sea surface. This option will require the
development of underwater concrete cutting technology and will require a detailed
engineering assessment to determine the viability of the idea.
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Some platforms will however be easier to remove than others and any that are
brought inshore for demolition will require a suitable deepwater site and nearby
drydock. Loch Kishorn is an obvious candidate for consideration in Scotland.
8.3 Concrete Platform Market Development.
This is a particularly difficult market to predict. The picture should become clearer in
the next few months when TotalFinaElfs plans for the decommissioning of the three
concrete platforms in the Frigg field are published. (Two of the three platforms are in
the UK sector with the other being in the Norwegian sector).
If as expected, the majority of the installations remain in place then the market
development will be limited to cleaning and monitoring activities.
Like the steel platform decommissioning market, we see no reason to believe that
decommissioning of concrete installations will not be spread over a number of years
to minimise peaks and troughs.
8.4 Concrete Platform Market Opportunities.
If some or all are brough t inshore for decommissioning then there will be a need to
reopen a dry dock facility such as Kishorn and there will be a high number of jobs incomparison to the steel structure decommissioning activity. We estimate that it could
take two to three years at an inshore location to demolish a concrete GBS whose
weight may be as great as 350,000 tonnes.
Assuming the majority of the concrete platforms remain in place then opportunities
will exist for companies to provide the technology and the services to clean the
storage cells before the structures are left to decay naturally which may take several
hundred years. Given the difficulty in accessing the storage cells it is not clear what
the best methods of cleaning will be but there is little doubt that this activity will be
time consuming and expensive. Disposal of the waste hydrocarbons and cleaning
fluids is also a potentially expensive operation.
There will be a requirement for ongoing monitoring of the platforms if they are left in
place.
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9.0 Subsea installations.
9.1 General
The market for the removal of subsea installation is relatively small in comparison to
the overall market. The work will be undertaken almost exclusively by diving and
ROV specialists.
9.2 Technical Issues.
We do not believe that there are any significant technology issues associated with
the removal of subsea installations.
9.3 Market Development.
This is a relatively small market sector and we believe that the technology and
capability is in place to undertake this work. Like the other markets, there will be
timing flexibility and it therefore seems likely that these smaller projects will be used
to smooth the utilisation of personnel and equipment between larger
decommissioning projects.
9.4 Market Opportunities
We do not envisage any significant new market opportunities other than an eventual
expansion of existing capabilities as the decommissioning of subsea activities
increases.
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10.0 Drill cuttings.
10.1 General
Beneath many of the installations in the Central and Northern North Seas there are
accumulations of rock cuttings deposited on the sea bed as a result of the drilling of
wells. These cuttings are contaminated by oils used to make up the drilling fluids and
are potentially toxic if disturbed. There is estimated to be over 1 million cubic metres
of cuttings on the sea bed in the UK sector.
The industry has initiated a wide ranging study along with other interested parties to
determine the Best Environmental Practice and Best Available Techniques with
respect to these cuttings piles. All reports completed to date are published on the
UKOOA website (9).
At this point in time it is not clear if the best solution will be to leave the cuttings in
place or to remove them.
With so much uncertainty, it is not feasible to give a reliable estimate of the value of
this market but if the majority of the piles have to be removed from the UKCS then
the cost is likely to be over a 1 billion and could be significantly greater.
10.2 Technical Issues
The basic issues are:
From an environmental standpoint is it better to leave the cuttings undisturbed
on the sea bed to naturally degrade over time or is the best overall solution to
remove them?
If the answer is to remove some or all of the cuttings what is the best
technology to develop to undertake this task with minimum environmental
impact?
Are there alternative solutions to removal such as covering the cuttings or
perhaps using biotechnology methods to accelerate natural degradation?
If the cuttings are removed there will be considerable quantities of
contaminated water brought to the surface. Tests to date have had a
water/cuttings ratio as high as 10/1. How and where can this water be
treated?
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If the cuttings are removed how are they to be disposed of? The ideal would
be to identify an economic reuse for the material since the cuttings do not
make good land fill material.
All of the above issues are being studied in the UKOOA research and development
project.
10.3 Market Development
Until the current research and development programme is complete it is not clear
how this market will develop.
It seems likely that there will be a need to remove some drill cuttings the minimum
will be that required to get access to remove the platform structure and the maximum
could be the removal of all drill cuttings.
Waste regulations will tend to dictate that all UK sector cuttings return to the UK and
all Norwegian cuttings return to Norway for disposal.
The removal of cuttings will require the development of specialist equipment and
processes. It seems likely that an integrated solution will be required combining the
removal method, the water and cuttings handling process and the onshore disposal
processes. If we assume that the removal requirement will be greater than the
minimum then there will be a requirement for at least two companies offering
competitive solutions.
10.4 Market Opportunities
This is a potentially large market in which there are no current players. There will be
significant opportunities for innovative solutions and technology development. We
believe the important areas to consider are:
In-situ measuring and monitoring equipment.
Development of leave-in-place solutions.
Development of underwater suction pumps to remove the material from deep
water.
On-ship water treatment equipment.
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Onshore water receiving and treatment plants.
Onshore cuttings cleaning.
Re-use of cuttings material.
Companies interested in this market should keep abreast of the UKOOA initiative andshould consider having solutions developed for the Ekofisk and Frigg
decommissioning projects.
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11.0 Pipelines
11.1 General
According to DTI figures there are 10,430 km of offshore pipelines in the UK. Like
drill cuttings the decommissioning requirements for pipelines are unclear. There are
no international rules or guidelines available. The guidelines issued by the DTI
indicate that decisions will be taken in the light of individual circumstances and with
little pipeline decommissioning having been undertaken to date there are no
precedents on which to base any predictions of the likely size and shape of the
pipeline decommissioning market.
The Norwegian Ministry of Oil and Energy has taken a lead in researching the
possible options and has recently published the results of their studies (10).
It would seem that the final outcome will include a number of solutions including
leaving in place, trenching and burying or totally removing. It is impossible to predict
at this stage the mix of solutions that will be applied and combined with the fact that
there are no reliable cost estimates for each of these solutions it is not possible to
give a reliable cost estimate for this market. Using the range of costs quoted in the
Norwegian study and adjusting for the greater length of UK pipelines then a low
estimate based on trenching only of 325 million is obtained with a high estimate of
3.8 billion for complete removal. Allowing for a range of different solutions then a
cost range of 1 billion to 3 billion could be considered reasonable given the current
uncertainties.
These costs will be totally dominated by the cost of specialist marine construction
equipment.
11.2 Technical Issues.
Pipelines associated with offshore oil and gas production can either be buried, lie inopen trenches or simply lie on the sea bed.
The key decommissioning issue is the cost and environmental effects of removing
the pipelines versus the environmental effect of leaving them to decay in situ
particularly the effect it may have on fishing activities. The larger diameter export
pipelines have a heavy coating of concrete surrounding the pipe that makes them
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more difficult to remove and recycle compared to the smaller infield pipelines which
have less heavy coatings and can often be removed from the sea bed by reeling up
onto a ship.
Leaving buried pipelines in place in areas where the sea bed is stable would
arguably not pose significant problems for fishermen. However, some of the
Southern North Sea areas are prone to the movement of sand waves which can
alternately bury and uncover pipelines. There will be arguments that these pipelines
should be removed.
For pipelines lying on the sea bed, research suggests that trenching the line will be a
significantly lower cost option compared to complete removal.
For unburied lines it would be feasible to dump rocks over the lines to provide cover
but there are strong objections to this solution from fishermen.
The final solution may well be a mix of removal, trenching and covering but at this
point in time no firm predictions can be made.
If lines are to be left in place then clearly they will need to be flushed and cleaned.
11.3 Market Development
There is little doubt that there will be an ongoing market for the removal of small
diameter lines and cables which are not buried. This market can be served by the
existing capability in underwater services.
There is also likely to be a requirement for trenching of pipelines since this appears
to be one of the favoured decommissioning options. There is also likely to be a
requirement for the total removal of pipelines in some areas where trenching or
leaving on the sea bed are not acceptable in the long term. In either event, there will
be a need for specialist marine equipment.
11.4 Business Opportunities
The near term market is likely to be limited to the removal of relatively small lines and
cables which can be accommodated by the existing contracting market.
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Longer term opportunities need to await further research, dialogue between
interested parties and regulator guidance. At the present time there are no
indications of any early activity with respect to research or regulatory developments.
However the market is potentially large.
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12.0 Well Plug and Abandon
12.1 General.
Interest in decommissioning has, to date generally been concerned with onshore
disposal of structures which is in fact one of the smallest sectors in the market and
little attention has been paid to well abandonment which is likely to account for
almost a third of the cost of decommissioning a production platform.
Well abandonment cost estimates are highly variable ranging from the cost of
straightforward platform based wells, the cost of difficulties arising from corrosion of
the well tubulars through to the costs associated with complex high temperature high
pressure wells and to subsea wells. There are reportedly 2,400 wells to be plugged
and abandoned in the UK sector and we estimate that the total cost of this activitycould be in the order of 1 billion to 1.5 billion.
12.2 Technical Issues.
This is a highly specialised activity which will typically be carried out by specialist
contractors for both platform and subsea wells. It is likely that platform wells will be
abandoned in a phased manner during the final years of production. In this way the
associated overhead costs can be shared with other installation activities.
With the cost of well abandonment being a major element of field decommissioning
there is obviously an interest from oil companies in new technology to help reduce
these costs. Techniques using coiled tubing are now being utilised and no doubt
further research and development work will be needed to tackle the challenge of
reducing costs whilst at the same time increasing reliability.
A conference sponsored by Robert Gordon University in Aberdeen on 28th
and 29th
March 2001 is believed to be the first of its kind to focus on North Sea well plug andabandonment issues and is a sign that greater attention is now being paid to this
important subject.
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12.3 Market Development
In the Gulf of Mexico well plug and abandonment is generally undertaken by
specialist contractors using techniques that do not require the use of a drilling rig. It
seem likely that similar developments will occur in the North Sea although it remains
to be seen whether rigless techniques will be suitable in all cases in the North Sea.
In the UK there are already companies developing specialist equipment and
expertise for the North Sea market. The size of the future market suggests that there
will be further openings for specialist operators and equipment developers.
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13.0 Reuse of Offshore Installations
13.1 General
Much of international and national environmental legislation on waste is based on the
waste hierarchy that says, in order of importance:
1. Minimise the creation of waste.
2. Reuse assets rather than create new.
3. Recycle materials rather than use new resources.
4. Dispose of the material in landfill or by incineration.
Whilst close to 100% of the material in offshore platforms can be recycled it is clearly
more desirable if the assets can be reused.
There are two distinct aspects to the reuse of redundant offshore platforms. Namely
reuse in whole or in part for hydrocarbon production or for reuse for non-oil and gas
related purposes.
1.2 Reuse for oil and gas production.
In the Gulf of Mexico reuse of redundant platforms is a well established process. In
the North Sea area, several oil companies have put considerable time and effort into
trying to find a buyer for their installations but to date there has been no success. We
believe the reasons for the lack of success are a combination of the following:
Limited number of North Sea assets decommissioned to date.
North Sea is a mature area that is almost exclusively using subsea and
floating production technology to develop remaining reserves. Therefore there
is not a market within the North Sea for old platforms.
The ageing North Sea structures and their large size are not well suited to
new developing areas in the world
There is an attitude amongst designers that new is best.
Whilst there will no doubt be reuse of the more versatile of the North Sea structures
such as the Hutton TLP and the FPSO installations it is difficult to envisage a reuse
market developing on the scale of the Gulf of Mexico.
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Nevertheless, there is a very significant financial prize on offer if a platform can be
sold rather than scrapped and we therefore anticipate that efforts will continue to be
made to sell installations.
We are not aware of any studies having been undertaken to identify where potential
reuse markets might lie. If they do exist, then we would expect them to be located in
developing areas such as China, Far East, Eastern Europe, Asia and West Africa. A
study of these markets could be considered to determine if there is scope for reuse of
North Sea assets.
An essential ingredient of being able to reuse installations is to be able to match
sellers with potential buyers. A Dutch company, The Web Platform Brokers (11), has
been set up to undertake this function with the aid of the world wide web.
The sale of a complete platform including jacket and topsides to a new owner such
that the facility is a close fit to the new requirements is unlikely. In particular the
jacket structures will be difficult to reuse without the new water depth being very
close to the original North Sea location. A more realistic reuse is to take the topsides
of a North Sea installation and place it on a new support structure. It is even more
realistic to envisage particular sections of a topsides structure such as the living
quarters, drilling rig, power generation modules etc. being used in new locations.
Ultimately there will be an overlap with the onshore disposal industry which will also
be aiming to sell as much reusable equipment as possible.
If markets can be identified and buyers matched with sellers then there could be a
limited but profitable business in removing, modifying and reinstalling North Sea
platforms.
13.3 Reuse for non-oil and gas purposes.
13.3.1 Reuse offshore
It is important to regard a redundant platform as an asset rather than an industrial
relic destined for the scrap heap. The challenge, therefore, is to identify the best use
of these assets in position in the North Sea. It is a mistake to believe that structurally
these installations are nearing the end of their life. Indeed the concrete structures are
likely to survive for several hundred years without maintenance and the challenge of
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finding a new use for old concrete installations is particularly relevant since many of
them are unlikely to be moved.
There have been many reuse ideas put forward in the past such as prisons, hotels,
casinos etc. most of which have no likelihood of being financially viable.
There are however two generic areas which we believe merit further study to
determine if there is any prospect of viability.
Power Generation.
There is an abundance of wind and wave power at the offshore platform locations.
Whilst there may be limited space available to mount wind turbines we feel there may
be opportunities to harness considerable quantities of wave power. One of the
serious proposals considered by Shell for the reuse of Brent Spar was the use of
Spar as a hub for an array of wave power generation buoys using a novel technology
being developed by Ocean Power Technologies Inc in the United States. The
proposal was to generate 15 MW of power using Spar. A large offshore platform
would clearly be capable of generating a much greater output.
If the legs of the concrete platforms are opened to the sea then it may be viable to
generate power from the resultant oscillating air column in the legs using the same
principles as being put into practice by Wavegen (12).
Lastly, an idea brought to our attention by a Norwegian environmental pressure
group, Bellona, is to use offshore platforms to generate large power outputs from gas
turbines but rather than discharge the exhaust gases to the atmosphere the gases
would be injected into underground reservoirs. In this way large amounts of fossil fuel
power could be generated without atmospheric emissions.
Question marks have been raised regarding the economics of laying power cables
from offshore to land but it is interesting to note that BP are planning to lay cables
from land to some of their offshore installations so that power can be supplied from
onshore stations. These same cables could presumably be used in the opposite
direction.
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An alternative suggestion to exporting electricity from an offshore installation is to use
the offshore power for the electrolysis of seawater to produce hydrogen the fuel for
cars of the future.
The viability of the above and similar ideas is clearly highly questionable but we
believe that there is sufficient merit to justify a serious investigation to determine if
the ideas should be discarded or developed.
Aquaculture.
We have been advised by fish farming specialists that there is a desire in the fish
farming industry to move away from inshore areas to more exposed offshore
locations. This would open up new disease free areas and opportunities to raise
different species.
Suggestions put forward are to have fish cages that can be lowered below the wave
zone for much or the year but raised during the summer period for harvesting.
Other ideas have suggested using platforms as nursery areas for development of
young fish which would eventually be released to the wild.
We are not competent to judge the merits of these ideas but given the current
pressure on fish stocks there is an argument for looking more closely at these ideas.
It is conceivable that both power generation and aquaculture could occur at the same
location.
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Internet References.
1. http://www.phillips66.com/maureen/default.htm
2. http://phillips.netpower.no/3. http://www.totalfinaelf.no
4. http://www.shell.com/uk-en/directory/0,4010,25268,00.html5. http://www.ospar.org6. http://www.excalibur-engineering.com
7. http://www.msoinc.com8. http://www.pilottaskforce.co.uk
9. http://www.ukooa.co.uk10. http://odin.dep.no/oed/norsk/html/rapporter/14/#_Toc47586188711. http://www.web-platform-brokers.com
12. http://www.wa