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September 2016

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Pipelines International

September 2016

From the Editor

John Tiratsoo

The UK Government’s Oil and Gas Authority has recently published its major decommissioning strategy for the UK Continental Shelf (UKCS) in the North Sea. As the OGA points out, the UKCS’s decommissioning challenge is significant, and will be both expensive and span several decades. It must be carried out safely and with care to protect the environment, although it hopes that decommissioning will present significant opportunities for innovation, cost reduction, and development of UK skills and capabilities.

According to the OGA, estimates of scope, complexity, and cost vary, but there are over 250 fixed installations, over 250 subsea-production systems, over 3,000 pipelines, and approximately 5,000 wells, all of which require to be decommissioned over several decades. UK oil and gas infrastructure is highly integrated, with installations relying on each other to produce hydrocarbons and to transport this resource back to shore, and this complexity and integration, the authority says, will require careful planning and execution.

The OGA was set up in 2015 as an executive agency, sponsored by the Department of Energy & Climate Change (DECC) and will shortly become a government-owned company, subject to the passage of the 2015-16 Energy Bill that is currently before Parliament. The bill proposes transferring various petroleum-related powers from the Secretary of State at DECC to the OGA and also proposes a suite of new powers for the authority to ensure compliance with the strategy to maximise economic recovery of the UK’s oil and gas resources – the MER UK Strategy.

Consequently, the authority is committed to achieving the maximum economic extension of field life and ensuring that decommissioning is executed in a safe, environmentally sound, and cost-effective manner. It is hoped that these achievements may also deliver significant value and a competitive market advantage to the UK on the global decommissioning stage.

The oil and gas industry in the UK is largely unfamiliar with large-scale decommissioning projects, the authority says, but much can be learned and transferred from other sectors and industries. Innovation and transformation are underway in the industry and will continue to be important for ultimate success, but the OGA hopes that more-immediate incremental improvements and challenges to traditional approaches can also bring significant results.

The current status of the industry and some of the key opportunities and risks are described in the Decommissioning Strategy document, and shape the decommissioning priorities, summarised as:

  • Cost certainty and reduction in a technically competent, safe, and environmentally responsible manner
  • Decommissioning delivery capability in terms of supply-chain expertise and capacity, effectively supported by appropriate business models, contracting arrangements, and industry alignment
  • Decommissioning scope, guidance, and stakeholder engagement by working with the DECC and other relevant parties to identify and evaluate opportunities to optimise and define decommissioning scope and to improve industry engagement with the organisations that regulate the decommissioning process.

Equally important, the OGA says, are the methods by which these priorities will be managed and results delivered.

From a financial viewpoint, the authority’s current mid-point cost estimate for UKCS decommissioning to 2050 is approximately £47 billion (US$61 billion), with a stated uncertainty range of ± 40 per cent. A cost-reduction target of at least 35 per cent below this mid-point has been adopted by the OGA as the MER target.

While much of the highest value and complex work for decommissioning projects in the North Sea will undoubtedly be concerned with removal of structures, the decommissioning and possible removal of the associated pipelines will also not be straightforward.

In order to discuss the specific issues concerning pipelines, the Tiratsoo Technical Division of Great Southern Press is organising the first conference on Pipeline Decommissioning since 1987, which will be held in Gateshead, UK, on 23-24 March 2017. A call for papers has been issued, and details can be seen at www.pipe-decomm-conf.com

The program planning is being undertaken by a Steering Group chaired by Fred Williams, a Netherlands-based independent consultant, who was also the author of a paper at the 1987 conference held in Aberdeen and organised by Pipelines International’s predecessor publication Pipes & Pipelines International. As readers can see, therefore, the subject of pipeline decommissioning has been around for at least 30 years, though it is only recently that it has really come to the fore.

Food for thought: at a recent conference held at Rosen’s facility in Lingen, Germany, both Dr Phil Hopkins and Dr Brian Leis discussed issues concerning what will undoubtedly become 100-year-old pipelines. While a steel pipeline does not necessarily deteriorate as a result of age alone, the same cannot be said for its operators. For pipelines that remain un-decommissioned, therefore, there are major challenges ahead. The second Tiratsoo Technical conference on Ageing Pipelines, tentatively scheduled for October 2017 in Gent, Belgium, will further discussion on this important topic.

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