Digital technology and decommissioning

The oil and gas decommissioning industry is growing massively, in the North Sea. A large amount of digital technology is involved. The Digital Energy Journal went to the Decom Offshore 2016 conference in Aberdeen in May to find out more.


The decommissioning industry in the UK sector of the North Sea is seeing very fast growth. Annual spend was under £300m during 2007 to 2011. From 2012 to 2015 it was £0.5m to £1.1bn. For 2016 to 2017, it will be £1bn to £2bn annually, said Professor Paul de Leeuw, Director of Oil and Gas Institute, Robert Gordon University. He was giving the opening talk at the Decom Offshore 2016 conference in Aberdeen in May, organised by the trade industry body Decom North Sea.
The projected decommissioning spend of the whole North Sea is now £46bn to £56bn, which is bigger than the annual GDP of about 120 countries. Today in the UK North Sea, ‘we plug and abandon more wells in the North Sea than we drill, we cease production on more fields than we bring on steam, and decommissioning expenditure is greater than expenditure in newly approved fields,’ he said. ‘The tax rebate is greater than the tax paid by industry.

Mr de Leeuw’s researchers looked at production declines in countries around the world, and found that the fastest declines over the period 2010 to 2014, in percentage terms was in (1) Syria, (2) Libya, (3) UK, (4) Tunisia, (5) Yemen, (6) India. The UK is the fastest declining major basin in the world. 2015 production was up 10 per cent in the UK, but that does not make a big difference to the overall picture, he said. Of the 400 fields in the North Sea, 300 produce under 2,500 barrels of oil per day (bopd), and 100 of those do under 1,000 bopd, he said. ‘I can see very quickly we’re going to have a two tier North Sea, one focussed on investment and production, one focussed on decommissioning in the most cost effective way,’ he said. The UK North Sea has a reputation for being a world leader in asset management, now it needs to become a world leader in decommissioning, he said. Not many oil companies see decommissioning as a strategic part of their overall business. The UK decommissioning cost currently accounts for under 2 per cent of global capital budgets for oil majors, and about half of that spending is returned as a tax rebate.

This means that we will probably need to see specialist decommissioning companies being formed to do the work, where decommissioning is central to their business. ‘I’m surprised that hasn’t happened yet,’ he said. In terms of technology research, the Industry Technology Facilitator (ITF) group, which organises joint company research projects, has only done 5 decommissioning projects so far out of 250 it has done. ‘We must do better,’ he said.


Jim Christie, OGA

Jim Christie, head of decommissioning with the Oil and Gas Authority (OGA), said that many people in government are getting concerned about the costs. His organisation has pledged to cut the cost of decommissioning by 35 per cent. This 35 per cent figure is based on looking at how much other similar industries managed to reduce costs. But OGA has not yet worked out where the 35 per cent will come from. Under current legislation, oil and gas companies considering decommissioning need to discuss their plans with the OGA, which will typically ask companies if they have looked at alternative uses to extend the life of the asset. It will expect companies to collaborate in decommissioning, and plan and execute decommissioning with cost minimisation in mind. One issue is that the relationship between operators and contractors is typically very adversarial. ‘Decommissioning requires a new mindset,’ he said. The industry could also be thinking more about how to re-use equipment rather than scrap it. As an example, ‘We see a vibrant re-use of valves in the GOM which we don’t see in the UK,’ he said.


Oil and Gas UK

Karis Vieira, senior business analyst with industry group Oil & Gas UK, presented the results of Oil and Gas UK’s latest decommissioning study. The study is produced annually, and covers the next 10 years. It is available free of charge online as ‘Decommissioning Insight’ (see This year’s study was based on interviews with 28 operators in the UK, and 5 in Norway, affected by decommissioning, she said. It found that there are 1500 wells to be plugged and abandoned in the UK and Norway over the next 10 years, of which only 300 are in Norway. There is also 6000km of pipelines to be decommissioned, of which 350km is in Norway. Only 18 per cent of the decommissioning expenditure is in actually removing the asset. The rest is in preparing the topside for removal, and plugging and abandonment, she said. A further question is what happens to the steel, with 800,000 tonnes over 10 years to be decommissioned, of which 620,000 is from UKCS. ‘Where is this actually going to go? Does UK have the capability?’ she asked. There is still much uncertainty about the costs, with many estimates flagged as +/- 100 per cent, she said.



David C Quintiere, Senior Manager, Accenture, talked about his companies efforts to help companies better estimate decommissioning costs, with cost estimates going up every year since 2005. Factors driving the increase include a poor initial understanding of the scope of work, mismatch between demand and supply of service equipment, perhaps difficult wells, and regulation which ‘may not be in our favour’, he said. On other hand, the costs could come down from continuous improvement and collaboration, and regulation may help us, he said. Currently every company is planning decommissioning in isolation. One concern is that people spend too much time talking about how accurate the cost estimates are – rather than spending time working out how to bring the costs down, he said.


L2P2 – information online

The Decom North Sea industry trade body is putting together an online resource with information about decommissioning projects called Late Life Planning Portal (L2P2), online at Willem Van Es, Decommissioning Manager, Wood Group PSN and Pamela Ogilvie, Business Manager, Decom North Sea. The aim is to reduce the amount of work required to ‘appraise, select, define’ decommissioning work, because people can take advantage of previous work, said Willem Van Es, Decommissioning Manager, Wood Group PSN.

It is designed as an online tool kit, which ‘which explains what you need to think about and what questions to ask yourself. It gives you access to ideas others have tried before you,’ he said. It could also be a useful tool for regulators. Mr Van Es emphasised that if the industry can reduce its decommissioning costs, then the overall business model of the industry will improve, which will mean it is actually able to operate for more years.

The website will be optimised for tablets as well as PCs, and will have a chatroom. But the most important aspect is the quality of content, said Pamela Ogilvie, Business Manager, Decom North Sea. It will be possible to submit content online.


Software to plan decommissioning

Danish consultancy NIRAS has developed a software tool called Offshore Decommissioning of Installations (ODIN), which aims to guide the user through the decommissioning planning phase, including financial, risk and environmental issues. It can be used by everybody involved in decommissioning, including suppliers. Information is also archived for the benefit of future users. The software has tools to build a model of how you plan to do the decommissioning, built up iteratively by asking you questions, telling you what you need to research, and doing computing, said Johan Finsteen Gjodvad, Project Manager & Coordinator of Offshore Decommissioning, NIRAS Once you have a decommissioning model in place, you can use the software to send out tenders.

After the project has taken place, you can make documents about your experience and upload them into the database, where they can be made available for future users in your company. For example, you might make a map of where the hazardous material is on a platform and the best way to remove it, which can be useful to a future decommissioning project. The software is based on IRMA (Integrated Management of Material in URBAN Development), an EU supported research and development project to make a software tool for urban demolition. The software has connections to online pricing from certain contractors. The software can also access NIRAS’ expertise managing onshore decommissioning including with hazardous materials. In terms of managing hazardous materials (such as asbestos), the company firmly believes it is better to break the platform up onshore (ie take it onshore in one piece) if you can, he said. There is also a trend for more items to be considered hazardous, so you may have items on your old platforms which will be classified as hazardous in future.

The UK based Welding Institute (TWI) is a technology partner in ODIN, Mr Finsteen Gjodvad said. Shipbroker Maersk Broker is a partner in ODIN, and can make its expertise on the various decommissioning vessels and their availability accessible through the service. This can include transport vessels, crane vessels and jack-up construction vessels. 70 per cent of removal costs can be the costs of hiring a vessel, said Lynne Nordby, Senior Manager Specialised Tonnage, Maersk Broker. There is also a shortage of heavy lift vessels, which gives the owners market power.


Gradual decommissioning

It may be helpful to plan a gradual decommissioning, removing items of plant from the platform when they are no longer required, or taking them out of service, rather than doing it all in one go, said Hamish Tait, head of integrity engineering with Stork. Currently there is no tax rebate available for partial decommissioning, which is perhaps something to change. ‘If the taxpayer has 50 per cent of the bill, why not spread it?’ he asked. As an asset gets to late life, it needs to handle a smaller amount of production, so you can ‘de-rate’ equipment (adjust it to be optimum for lower production rates). You can have a corresponding reduction in the fire and gas performance standard. You can make adjustments to your maintenance plan because you don’t need all of the equipment operating at top condition. You can have reduced inspections, increased corrosion allowances,

Alternatively, since the asset is older, it might need more frequent assessments and repairs. Mr Tait was asked how critical technology is to decommissioning work. ‘It is not just technology, it is understanding of it,’ he replied. ‘That means increasing their competence in using these techniques.’


Keltbray Engineering

UK decommissioning and demolition company Keltbray Engineering does not currently work in the oil and gas industry, but it is keen to apply its expertise from other regulated industries, such as pharmaceuticals, petrochemicals, rail and nuclear, said Bob Johnstone, managing director, Keltbray Decommissioning. Keltbray’s way of working is to strongly encourage collaborative working, aiming to embed someone from the client organisation in its own team, or alternatively the Keltbray team would like to physically work at the client company, he said. Ideally the client team would have some knowledge of demolition techniques and skills, so they can understand some of the ideas Keltbray can come up with. For example, for onshore decommissioning, it might suggest lowering the roof of a building to the ground, rather than demolishing it where it is. The company uses 3D modelling techniques to better understand the structures. Keltbray emphasises the importance of staff temperament. For this work, you need people who are comfortable having someone else standing behind them watching what they are doing, and not everybody is, he said.


Pipeline cleaning

When offshore oil and gas infrastructure is decommissioned, that means both the platforms and the pipelines. And a major challenge with decommissioning pipelines is cleaning any residue hydrocarbons from inside them. Typically, the oil and gas industry uses pigs to clean pipelines (a device which is sent through the pipeline), and then flushes it with water, until the water coming out of the end of the pipeline has an oil concentration of lower than 30 parts per million, the maximum allowed under the OSPAR regulation. Pipelines will often include hardened debris, wax and sludge, which is hard to remove by flushing, said Jim Alexander, Sales Manager UK Key Accounts & New Services, Baker Hughes.

One approach is to send two mechanical pigs through the pipeline, with a scale removing chemical between them, he said. There are also brush pigs and scraper pigs. You can link several pigs together in a ‘pig train’ to remove all kinds of debris. You need a way to get the pig out of the other end of the pipe, and there is a potential for a pig to get stuck. There are ‘gel pigs’, a rigid or semi-rigid chemical material which can be sent through pipelines with tight bends, changes in internal diameter or no launching or receiving hardware. These can remove debris, and help recover stuck mechanical pigs. Gel pigs can be unpredictable, and make less efficient cleaning, he said. To verify cleanliness, you can put an explosion certified (ATEX) data logger inside a carrier pig.
‘The cleaner you want it the more costly it will be,’ he said. Iain Shepherd, PPS global engineering manager with Halliburton said that ‘we decommissioned more pipelines in the last year than we have in the last 20,’ he said.

Some pipelines have seen many changes of ownership, and documentation gets lost. There can be wax, scale and hydrates. ‘Sometimes there are a number of different types of deposit’. ‘It’s very difficult to predict what’s in there and how much it’s going to cost,’ he said. You can work out the volume of deposit in a pipeline by sending a gel through a pipeline and calculating how long it flows through, using measurements of the flow rate and pressure. But you don’t know the profile of the deposit. There is also pressure pulse technology, which sends a pressure pulse through the pipeline and can detect any blockage within a few metres.


Improving collaboration

Ron Hardie, Commercial Manager tendering with Bibby Offshore talked about a workshop the company recently organised with 18 clients to discuss ways they could collaborate better. One example is that a vessel could be chartered so it goes from one client’s platform to another’s directly, rather than going back to shore between jobs. As an example, four customer jobs together cost £3.7m, or £939k per customer. Through better collaboration the total costs reduced to £2.25m, a saving of £376k for each client. Ron van der Laan, regional Director, Peterson talked about the vessel sharing system which Peterson supports, in the Southern North Sea pool, founded in 2002.

Clients share logistics services, vessels, supply bases, warehouses, helicopters and ground transport. You need good systems for this to work, and transparency, so people don’t feel like they are being ripped off. ‘This can also work in decommissioning,’ he said.

Matthew Taylor, Regional Systems Manager, Costain Upstream talked about how the company uses the BS11000, a British standard for Collaborative Business Relationships. ‘It helps collaboration teams achieve what they want,’ he said. ‘Your organisation has people, assets, processes, knowhow, it doesn’t have all the answers on its own. If you can find another organisation which is probably different to yours, you can pool relevant resource and achieve mutual benefits.’ In a discussion session on cost reduction, one speaker noted that it is very hard to align people’s interests while working on decommissioning, in an environment where there is no value being generated. ‘The workforce feels they are working themselves out of a job,’ she said.

There is generally much less money available for decommissioning than there is in oil and gas operations, she said. So it is like turning yourself from a high cost airline into a low cost one.


Technology improvement

Ernie Lamza of OGIC said that there is tremendous scope for technology improvement in well plugging and abandonment, cleaning and removing hydrocarbons and scale, and physically removing improvements.

OGIC is one of 8 innovation centres established by the Scottish government, and aims to help technology get further in the ‘technology readiness level’, in particular crossing the ‘chasm’ between ideas to deployment. It can also fund 50 per cent of the cost of development work, or up to 70 per cent for smaller companies. – online service is a new online service with information about decommissioning projects, set up by UK technology company Animus, and Strategic Decom, a decommissioning consultancy based in Aberdeen. The full service is available for £495 a year, but there is also free content available. The software is provided online (cloud-based) and accessed through a browser. The software is built using a modern JavaScript framework. Information available includes a database of decommissioning technology, data shown on a map, a library of decommissioning relevant reading, data analysis tools and news. Additionally, training materials made by Strategic Decom are being released soon. The industry news, technology database, UKCS installation visualisation, library and map are available free of charge. Advanced features, including more visualisations, additional map layers, and access to exclusive and curated materials are available in the paid version.

The mapping tool enables you to look at the North Sea, and select or deselect if you want to see wells, geology, decommissioning information, fields, discoveries or facilities. It covers UK, Dutch, Danish and Norwegian waters. Individual layer selection and additional functionality such as exporting views and measuring distances is limited to Premium users. In the visualisation tool you can see data about UKCS installations, including the different types of platform, manned and unmanned, sorted by operator. So for example, see all platforms operated by Perenco, what type they are, when they first extracted and who owns them. Animus Technology is also involved in other similar Business Intelligence projects to visualise and leverage the value of data, and has received support from the UK Space Agency for its mapping applications.


Source: Digital Energy Journal


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