Road Testing a

Decommissioning

Cost Reduction

Opportunity Tool

Win Thornton

VP Decommissioning BP

28 November 2017

WHAT IS THIS TOOL?

A transparent way to assess the impact of various strategies/scenarios on the decommissioning costs

of the UKCS versus an established reference case.

A way to measure the journey toward the OGA aspiration of reducing decommissioning costs by 35%

In lieu of access to existing confidential UKCS basin wide decommissioning cost estimates

– BEIS cost estimate for fiduciary accountability (confidential)

– OGA Asset Stewardship cost estimate as summarized in Insight (confidential)

Team

– Bill Sutherland

– Peter Adlington

– Willem Van Es

– Win Thornton

– Don Orr

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PROBABALISTIC APPROACH (A WORK IN PROGRESS)

• A high level probabilistic model developed to help understand the key uncertainties relating

to the cost of decommissioning offshore assets in the UKCS

– cost estimating has been carried out at a level of aggregation which does not identify individual

assets

– it has been based on the current assets in the UKCS, utilises the OGUK WBS structure, and

makes maximum use of existing norms and benchmarks

– separate models for five key sections in the cost estimate (wells P&A, post-CoP Opex, topsides,

jackets, subsea)

– use of a top-down approach which concentrates completely on the key uncertainty drivers and

levers (AACE Class 5)

– The modelling has been carried out using Excel and @Risk

• The probabilistic model will tests the potential benefits of implementing different

decommissioning approaches to those which have been assumed in the base estimate3

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P&A TOPSIDES JACKET

POST COP OPEX SUBSEA

Minimize Duration

Flexible Contractor Window

MAJOR DECOMMISSIONING WBS ELEMENTSCurrent Approach and Sequencing

Sequence

COP

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RESOURCE DAYS ARE “ATOMIC” UNITSTarget Supply Chain Metrics – Equipment Utilization

Rig Days (P&A)

Operating Days (OPEX) Manned NUI Lighthouse

HLV Days (Topsides & Jacket)

CSV (Subsea)

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USE GEOGRAPHIC BASINS AS PROXY FOR ARCHTYPEUncertainty on Asset, Count, Configuration & Condition

FPSO

CGBX

X NNS

CNS

SNS

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OUTPUT DECOMMISSIONING COST DISTRIBUTIONSimilar Distribution to OGUK Insight

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WELL P&A INPUT UNCERTAINTIES

Inputs Ranked by Effect on Output Mean

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OUTPUT WELL P&A COSTS

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EXAMPLE COST SAVINGS OPPORTUNITIES FOR WELL P&A

Wells P&A Opportunities Assumptions/Rationale% Red Well

P&A

Reduce the number of well

barriers

Save between 4-6 days/well. Assume that 15% of the well stock will

benefit3%

Improved FEL prior to starting

P&ASave between 25% and 50% of train wrecks 3%

Improved platform systems

reliability during Wells P&A

Save between 3-5 days/well via better systems reliability. Assume that

10% of the well stock will benefit1%

Use of campaigns (efficiency

gains)

Save between 10/11/17 days per well, but only for 30% of SNS wells

since such efficiency gains cannot be for all SNS wells4%

Use of LWIVs in place of rigs

for subsea well P&As

Save of on the day rate for subsea wells that a LWIV vessel can be

used for, compared with using a semi-sub rig. Assume that this is

applicable to 15% of the relevant rig days

1%

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FACILITIES INPUT UNCERTAINTIES

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Inputs Ranked by Effect on Output Mean

OUTPUT FACILITIES DECOMMISSIONING COSTS

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EXAMPLE COST SAVINGS OPPORTUNITIES FOR FACILITIES

Facilities Opportunities Assumptions/Rationale% Red

Facility

P&A platform wells prior to

CoP

Save on post-CoP Opex by plugging & abandoning wells prior to CoP.

Saving of 25%/35%/50% range was applied to P&A platform days.8%

Minimise the Post-CoP

unmanned period

Save 25%/50%/75% range compared to P50 estimate from minimising

the post-CoP period. 3%

Transfer Duty Holder for

cleaning and preparation

phase

Transfer Duty Holder from Operator to contractor to save cost. Percent

saving for phase in range 30%/40%/50%.2%

Flotel in lieu of HLV for

accommodation during

topsides preparation

Percentage range of 60%/65%/72% is the saving by using flotels

compared with the NNS and SNS HLV rates.2%

Additional derogation for NNS

jackets

Percentage range of 12%/15%/20% saving if greater derogation is

allowed for NNS jackets.2%

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INTIAL OBSERVATIONS OF A WORK IN PROGRESS

• Upside cost risks exist due to condition uncertainties

• Input duration ranges based on latest best performance

• Best cost reduction strategy is to perform work during downcycle

market conditions

• Cost reduction through higher rig/vessel utilization

• Cost reduction through P&A pre-COP

• Stay tuned for final work product in 2018

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