Should Scotland grasp the opportunity to become a ‘centre of excellence’ for oil and gas decommissioning? By Nathan Swankie
Forecasts suggest that 100 platforms (and 7500 km of pipelines) will be decommissioned over the next decade in the North Sea, giving the UK supply chain industry the chance to develop world-class decommissioning opportunities. Decommissioning activity in the North Sea is predicted to grow steadily and average £1.8 billion per annum over the next decade. Globally it is forecast that approximately 600 platforms will be decommissioned over the next five years.
Perhaps conscious of previous missed chances, both the UK and Scottish governments have been taking steps to help convert this opportunity.
Notably, the Scottish government launched the £5 million Decommissioning Challenge Fund (DCF) in February 2017 with the intention of enhancing the capability of the Scottish supply chain, with funding and assistance available for projects that will contribute to making Scotland a world leader in decommissioning.
This was followed by an announcement in the 2018 Autumn Budget, with Chancellor Philip Hammond issuing a call for evidence on plans to make Scotland a global decommissioning hub.
Most recently, the National Decommissioning Centre (NDC) located in Newburgh officially opened its doors in January 2019. This £38 million world leading research and development centre is a partnership between the University of Aberdeen and the Oil and Gas Technology Centre. The NDC is intended to share and advance knowledge in areas such as decommissioning technologies, environmental assessment and predictive modelling, and economics. The focus on each topic is transforming the traditional approaches to decommissioning and driving late life extension and decommissioning cost reduction.
Current challenges facing the decommissioning industry
Decommissioning is a technically challenging process, and the North Sea is the first region in the world to undertake it at scale in deep waters. Planning a decommissioning project can take several years of leadin work, which includes undertaking the necessary safety, environmental and engineering studies to fully understand the scope of the project and how it should be executed, engagement with stakeholders, seeking the necessary approvals, and selecting contractors.
The massive structures that require decommissioning were designed for structural integrity, not ease of removal. A further complication is that much of the infrastructure is inter-connected, so careful sequencing is required to avoid adjacent assets either being decommissioned prematurely or requiring additional infrastructure to remain operational.
Perhaps the biggest challenge is finding a way to reduce decommissioning costs. In 2016, the Oil and Gas Authority challenged the industry to reduce offshore decommissioning costs by 35 per cent (based on an estimate of £59 billion up to 2050).
Developing existing capabilities to benefit the oil and gas decommissioning industry
Scotland is well positioned to support the oil and gas decommissioning industry. Decommissioning requires a similar skill set to that needed for oil and gas exploration and production.
Indeed, Scottish firms can provide capability and expertise across the full spectrum of needs, including consultancy, project management, cleaning, topsides preparation, subsea, pipelines, wells, ports infrastructure and waste management. There are already examples of informal and formal supply chain collaborations emerging to support the decommissioning industry.
Scotland’s global reputation as an engineering hub will help maximise investment
Aberdeen is truly a global oil and gas hub and Scotland is Europe’s oil capital. Dozens of multi-nationals and hundreds of Scottish/UK supply chain companies can be found in a small geographic area. Across Scotland we have over 2000 supply chain companies supporting the oil and gas industry. Scottish expertise has delivered innovation for the oil and gas industry for decades, and it makes sense to tap into this prowess. The opening of the NDC is a perfect illustration of how Scottish skills and experience have attracted investment. Furthermore, oil and gas decommissioning is becoming a truly global business and offers opportunities well beyond the North Sea. We are already seeing an increase in global trade and using our expertise to train others in emerging markets. Thought leadership, such as the collaboration between Robert Gordon University and the University of Aberdeen to launch a Masters in oil and gas decommissioning, will continue to enhance our international reputation.
Well plugging and abandonment represents approximately 50 per cent of the overall forecast cost of decommissioning, so it’s no surprise that this is an area of focus for innovation. The Oil & Gas Technology Centre has recently invested £1.3 million in four projects aiming to transform well plugging and abandonment. The Oil and Gas Innovation Centre (OGIC) has also supported this part of the decommissioning industry through matching two companies with Robert Gordon and Glasgow University respectively, specifically with the aim of developing ways to lower well plugging and abandonment costs.
As an emergent industry, there is considerable scope for innovation and disruption. The development of the ‘Pioneering Spirit’ by Allseas for the single-lift of very large topsides is an obvious example. Over the longer term, transformational change is likely to include both innovative cutting techniques and a reduced reliance on Heavy Lift Vessels.
One area of increasing focus is the circular economy. Whilst the industry has achieved outstanding recycling rates (primarily of steel), there is a desire to see some of the infrastructure moved up the waste hierarchy and value chain through finding ways to either re-use or re-purpose. There are clear synergies with carbon capture and storage, should this technology ever be developed at scale.
Finally, in step with the digital revolution transforming our world, digital technologies are being deployed to advance the decommissioning practice. Examples include the use of drones by Cyberhawk to undertake pre-decommissioning asset inspections, concepts such as ‘True Digital Twin’, which combines both a digital copy of a structure and performance data, enabling prediction of the structural health of an asset, and a DCF & Decom North Sea (DNS) sponsored project to develop a digital decommissioning knowledge hub, designed to share knowledge, guidance, research and practice.
Nathan Swankie is a Principal at Ramboll. Ramboll is a leading engineering, design and consultancy company founded in Denmark in 1945. With 300 offices in 35 countries, Ramboll combines local experience with a global knowledgebase constantly striving to achieve inspiring and exacting solutions that make a genuine difference to clients, end-users, and society. Ramboll works across a range of markets, including Environment & Health, Energy, Buildings and Transport.
For further information please visit: https://uk.ramboll.com/