decommissioning - oil and gas authority · pdf file1. accountabilities - pauline innes 2....
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Decommissioning
September 6th 2017
Offshore Europe Seminar
1. Accountabilities - Pauline Innes
2. Regulatory Guidance - Pauline Innes
3. Decommissioning Context - Gunther Newcombe
4. Cost Estimate and Certainty - Neil Edward
5. Operator Engagement - John Ibbotson and Ian Fozdar
6. Delivery Capability - Bill Cattanach
7. Well P&A - Michael Comfort and John Youles
Outline
Accountabilities
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF Decommissioning – Status Update
Regulator Roles
2OGA and OPRED working together
Department for Business, Energy & Industrial Strategy (BEIS)
Energy Development
(Headquartered in London - Emily Bourne)
Oil and Gas Authority (OGA)
Chief Executive - Andy Samuel
(London and Aberdeen)
Offshore Petroleum Regulator (OPRED)
for Environment & Decommissioning
Chief Executive - Wendy Kennedy
(Aberdeen)
Policy and Corporate
Governance
Director - Sarah
Pritchard
Environmental
Operations
Director - Jonathan Ward
Decommissioning (ODU)
Director - Pauline Innes
OPRED’s role in Government
Clear accountability for offshore oil and gas decommissioning
policy, regulation and approval within BEIS
3
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF Decommissioning – Status Update
ODU and OGA Remits
4OGA and ODU working together
ODU
Approval and regulate
decommissioning
programmes for UKCS oil
and gas installations and
pipelines
Decommissioning policy
and guidance
Protect against risk of
companies defaulting
OGA
Working to assess and
minimise decommissioning
costs
Working with supply chain
Delivering MER UK
Regulatory Guidance
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
What we consider
Legislation, International Obligations
& Policy Guidance
Part
IV
Guidance Notes
Decommissioning of
Offshore Oil and Gas Installations and
Pipelines
under the Petroleum Act 1998
5
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
Decommissioning UKCS Offshore
Installations & Pipelines
Safe, efficient
and cost
effective
Minimise risk
to the
environment
and other
users of the
sea
Aim to achieve a clear
seabed
Regulatory decisions balance a number of legislative and policy
consideration to ultimately agree an acceptable
decommissioning solution
6
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
Other users of the
sea
Views of the
Fishermen’s
organisations
Technical
feasibility
Views of the
Technical
Specialist
OPRED
Stakeholders
and public
view from
consultation
Impact on Safety
Views of the
HSE
Economics and
Cost
Views of the
Decom team
in OGA
Impact on the
Environment
Views of OPRED
Environmental
Managers
Approval of a
Decommissioning
programme
Secretary of State
We have a Comparative Assessment system which assesses 5 key areas to
ensure a balanced decision in determining the decommissioning solution.
Factors taken into consideration
7
Decommissioning Context
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
Government• Long standing
• Robust
• Globally recognised
Strategy & Programme
Cost certainty and reduction
Delivery capability
Scope, guidance and stakeholder engagement
Driving targeted cost efficiency programmes including innovative and regional approaches with
extensive and effective knowledge sharing and best practice adoption
Developing an efficient and exportable low cost and profitable delivery capability supported by a
competent and efficient supply chain, a selection of business execution models all designed to
allocate risk, align industry participants and drive down costs
Working with BEIS and other relevant parties to identify and evaluate opportunities to further
optimise and define parameters for decommissioning scope and improve industry engagement
Builds on the Strategy
Focus over the next year
Reviewed on an annual basis
Clear action plan and timetable for delivery
Sets out a number of key deliverables
8Jointly developed by OGA & Industry & issued in 2016
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
OGA Decommissioning Team
Currently in process of recruiting a new Head of Decommissioning 9
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF Decommissioning – Status Update
Decommissioning Programme
Review Process
• Standard review template
• Agreed with OGA and
OPRED & in use
• Addresses:
– Cost estimate and
minimisation
• Timing
• OGA engagement
• Reuse
• Collaboration
• Benchmarking
• Future steps
10OGA & OPRED working together
COP & DP Forecast
Source: 2016 Stewardship Survey
Volume of COP’s & decommissioning plans increasing into 2018 with majority in SNS 11
Major
Others
Operator Decommissioning Costs
Source: OGA Stewardship Survey 2016
Decommissioning – Status Update 12
0
1
2
3
4
5
6
7
Gro
ss F
ore
ca
st
De
co
mm
issio
nin
g E
xp
en
dit
ure
(£
bn
)
Others
Majors
Five companies’
assets amount to
50% of total
decommissioning
costs
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF Decommissioning – Status Update
Decommissioning Spend
Source: 2016 Stewardship Survey
OGA need to work with industry to optimise collaboration and phasing 13
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF Decommissioning – Status Update
Key Deliverables
Decommissioning – Status Update 14Key deliverables for OGA decommissioning team
1Q
2017
SCAP DNS / Accenture
Report
Cost
Activities
Delivery Capability
Well P&A
Operator EngagementInternal
Strategy & Plan
Regulations in Practice
External UpdateRoad Test
WorkshopCNS Workshop
Engagements &
WorkshopsSelect
2Q
2017
3Q
20174Q
2017
1Q
2018
2Q
2018
3Q
20184Q
2018
Cost Estimate
ReportHMT Cost
ProfilesCost Estimate
ReportHMT Cost
Profiles
External Report
External
Engagement
Plan
Delivery
Plan
DTF WorkshopReissue Delivery
Programme
Cost Estimate & Certainty
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF Decommissioning – Status Update
Cost Estimate
• Based on UKCS 2016/2017
Stewardship Survey utilizing operator
supplied data with current and
proposed offshore facilities, pipelines,
all wells and onshore terminals
• Probabilistic approach used by
combining ranges from survey
classifications
• Approach and outputs reviewed with
OPRED, HMT, HMRC and assured
independently with Rider Hunt
• P50 probabilistic estimate is £59.7bn
OGA UKCS decommissioning probabilistic cost estimate £59.7bn 15
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF Decommissioning – Status Update
Need for Change
• Industry and government have
shared desire to minimise cost
• Awareness that business as usual
will not be sufficient to transform
cost
• Typical improvements of 35%
seen in other industries e.g.
automotive and aviation
• Minimum target of £39bn based
on 35% improvement on £59.7bn
P90
P50
P10
Transformational
approach
P90
P50
P10
Business as
usual
Cost
Cost
Pro
ba
bilit
yP
rob
ab
ilit
y
Decommissioning – Status UpdateIndustry decommissioning cost target £39bn 16
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF Decommissioning – Status Update
Industry Performance
Brent
Estimated cost decreased over £1bn
over past 2 years
Work with supply chain: cost
reduction in topsides and substructure
removal
Reduced well P&A costs: execution &
contracting strategy, efficiency
improvements
Learning transferable: Shell willing to
share
Murchison
Lessons learned to help half cost of
future projects
2 years ahead of schedule, estimated
final cost 88% of sanction cost
Early engagement with contractors,
flexibility of schedule
Sharing/engagement with regulators,
peers and industry
SNS
Internal well P&A campaigns delivering
50% cost reductions
Multi-operator well P&A to further
reduce costs and share experiences
Optimisation of schedule and market
flexibility
Engaging with SNS peers/industry
Decommissioning – Status UpdateDecommissioning – Status UpdateTangible evidence of significant cost saving by industry 17
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
Decommissioning – Status Update
Measuring Progress
• Future cost estimates will be
normalised against 2016 baseline
taking into account Inflation, scope
additions & completions
• Values plotted to give a
percentage realisation towards
target
• Improvements in estimates will be
identified through operator
engagements
• Reduction of 35% is at industry
level and not expected from every
operator for every asset
Pro
gre
ss
to
wa
rds
P5
0 T
arg
et
Time
Decommissioning – Status UpdateDecommissioning – Status UpdateDecommissioning – Status UpdateSignificant cost improvements expected in next 10 years towards £39bn target 18
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
OGA and Industry Next Steps
• Decommissioning cost report issued 29th
June, communicating current estimated cost
(£59.7bn) and target (<£39bn)
• Engaging with operators to:
– review cost dashboards
– review cost reduction focus areas
– share meaningful metrics/tools (e.g.
Basis of Estimate)
• Joint OGA and Industry taskforces to deliver
key initiatives during 2017/2018
• Update decommissioning stewardship survey
in 2017 to provide improved information on
decommissioning cost
Decommissioning – Status UpdateDecommissioning – Status UpdateDecommissioning – Status UpdateOGA and Industry working on ways to reduce decommissioning costs 19
Production Installations 0 Northern North Sea Pipeline(s) Wells Execution Plan
Name DescriptionInstallation
CategoryPOB Mass (Te) Premise Ref.: Description OD (") Dist.(km) Product Premise Well Base OGUK Type Well-Count Late-Life Management
Alfalfa A NUI - Normally Unmanned Installation Small - Oil 0 450 Remove PL631 Inde D Platform (Perenco) to Inde CP Platform (Perenco) 2 5 Chemical Injector Part Remove Type 0 0
Alfalfa B Integrated platform Combination >150 16,200 Remove PL870 Ninian Southern Platform to Tie In At Base of NSP 12 25 Injector Water Leave Type 1 0
0 0 Type 2 7
0 0 Type 3 0
0 0 Type 4 17
0 0 Type 0 0
0 0 Type 1 0
0 0 Type 2 0
0 0 Type 3 0 P&A
0 0 Type 4 0
Scope & Cost Phasing (£MM) Prior Years Future Cost L/Cycle Cost Est.Quality % Lifecycle 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 +
Operator Proj.Mgmt 1 MM£ 16 MM£ 17 MM£ AACE Class 3 5% £1 £2 £3 £3 £3 £2 £2 -£ -£ -£ -£ -£ -£ -£ -£ Running/Owners Costs 3 MM£ 66 MM£ 69 MM£ AACE Class 3 21% £1 £20 £20 £20 £5 -£ -£ -£ -£ -£ -£ -£ -£ -£ -£ Well P&A 4 MM£ 85 MM£ 89 MM£ AACE Class 3 27% £5 £20 £40 £20 -£ -£ -£ -£ -£ -£ -£ -£ -£ -£ -£
Fac./Pipelines Make Safe 5 MM£ 3 MM£ 8 MM£ AACE Class 3 2% -£ -£ £3 -£ -£ -£ -£ -£ -£ -£ -£ -£ -£ -£ -£ Topsides Preparation 1 MM£ 2 MM£ 3 MM£ AACE Class 3 -£ -£ £2 -£ -£ -£ -£ -£ -£ -£ -£ -£ -£ -£ -£
Topsides Removal 2 MM£ 125 MM£ 127 MM£ AACE Class 3 -£ -£ -£ £50 £75 -£ -£ -£ -£ -£ -£ -£ -£ -£ -£ Fac./Pipeline Make SafeSub-structure removal 3 MM£ 4 MM£ 7 MM£ AACE Class 3 -£ -£ -£ £1 £3 -£ -£ -£ -£ -£ -£ -£ -£ -£ -£
Super-/Sub-structure recycling 2 MM£ 1 MM£ 3 MM£ AACE Class 3 -£ -£ -£ -£ -£ £1 -£ -£ -£ -£ -£ -£ -£ -£ -£ Subsea infrastructure 0 MM£ 0 MM£ 0 MM£ AACE Class 3 -£ -£ -£ -£ -£ £0 -£ -£ -£ -£ -£ -£ -£ -£ -£ Site remediation 2 MM£ 1 MM£ 3 MM£ AACE Class 3 -£ -£ -£ -£ -£ -£ £1 -£ -£ -£ -£ -£ -£ -£ -£
Monitoring 1 MM£ 1 MM£ 2 MM£ AACE Class 3 1% -£ -£ -£ -£ -£ -£ £1 -£ -£ -£ £1 -£ -£ -£ £0
Cessation of Production (Year) 2018 304 MM£ 328 MM£
Warm StackCold Stack Removals & Recycling
Scope & Cost Phasing (£MM)Prior Years Future Cost
Operator Proj.Mgmt 1£ 16£
Running/Owners Costs 3£ 66£
Well P&A 4£ 85£
Fac./Pipelines Make Safe 5£ 3£
Topsides Preparation 1£ 2£ ContractingTopsides Removal 2£ 125£
Sub-structure removal 3£ 4£
Super-/Sub-structure recycling 2£ 1£
Subsea infrastructure -£ 0£
Site remediation 2£ 1£
Monitoring 1£ 1£
Business Environment
Operating Model
Industry Collaboration
Facilities re-use / Carbon Capture & Storage
Saving Opportunities vs Min vs Mode
Project Management £1 £0 MM
Post-CoP Running Costs £63 £0 MM
Well P&A £47 £31 MM
Facilities/Pipelines Make Safe £5 £0 MM
Topsides & Substructure Prep. + Removal £97 £3 MM
Topsides & Substructure recycling & disposal £2 £1 MM
Subsea infrastructure £0 £0 MM
Site remediation £2 £0 MM
Monitoring £1 £0 MM
£218 £36 MM
Summary / Conclusion
44%
Conclusion Added on Cost Category review tab
Total
23 March 2017 I.Fozdar
Conclusion Added on Cost Category review tab
Conclusion Added on Cost Category review tab
Conclusion Added on Cost Category review tab
Conclusion Added on Cost Category review tab
Platform
Subsea
Conclusion Added on Cost Category review tab
Conclusion Added on Cost Category review tab
Conclusion Added on Cost Category review tab
Conclusion Added on Cost Category review tab
Conclusion Added on Cost Category review tab
£-
£10
£20
£30
£40
£50
£60
£70
£80
£90
£100
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 +
MM
Decommissioning Cost Phasing
Operator Proj.Mgmt Running/Owners Costs Well P&A Fac./Pipelines Make Safe Topsides Preparation Topsides Removal Sub-structure removal Super-/Sub-structure recycling Subsea infrastructure Site remediation Monitoring
5%
21%
27%
2%1%
39%
2% 1%0% 1% 1%
Decommissioning Cost Breakdown (WBS)
Operator Proj.Mgmt Running/Owners Costs Well P&A Fac./Pipelines Make Safe Topsides Preparation Topsides Removal
Sub-structure removal Super-/Sub-structure recycling Subsea infrastructure Site remediation Monitoring£0
£50
£100
£150
£200
£0
£50
£100
£150
£200
Project Management Post-CoP Running Costs Well P&A Facilities/Pipelines MakeSafe
Topsides & SubstructurePrep. + Removal
Topsides & Substructurerecycling & disposal
Subsea infrastructure Site remediation Monitoring
Decommissioning Project Cost Uncertainty and UKCS Benchmarks
Project P10 - P90 Range
Project Lifecycle Total Spend
UKCS Benchmark P10 - P50 Range
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
Industry Cost Modelling
• Develop a high level transparent decommissioning economic model that can be
used by industry stakeholders to quantify opportunities for cost reduction
– Create an AACE Class 5 probabilistic model with a transparent
reference case, using OGUK WBS construct using BEIS data set
– Uncertainties such as asset base, end state, condition, methodology,
resources and timing to be appropriately considered
– Economic model parameters will be explored to identify and articulate
cost reduction opportunities
– Model construct and outputs will be on a basin level basis by WBS to
maintain asset specific anonymity
• OPRED/OGA/OGUK/Industry team established, with steerage by
Decommissioning Task Force (DTF), to construct, review and evaluate the
model and outputs.
• Output will be shared at OGUK St Andrews Decommissioning conference end
November with a publication issued by OGA
Decommissioning – Status UpdateDecommissioning – Status UpdateDecommissioning – Status UpdateCost modelling led by BP with virtual team set up under DTF 20
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
Data Improvement
• 2017 UKCS Stewardship Survey will
include improved decommissioning data
collection processes, additional guidance
and a request for new information on:-
– Contingency
– Rig reactivation costs
– topside/substructure weights
• Basis of Estimate Guidance
– BOE template published to
coincide with Decommissioning
Cost Estimate Report
– Template provides industry a
standard basis of estimate that
captures and communicates
critical aspects of a project cost
estimate
– Helps operators standardise
input of data in the 2017 UKCS
Stewardship Survey
Decommissioning – Status UpdateDecommissioning data quality improvements from 2017 UKCS Stewardship Survey 21
Operator Engagement
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
Cost Reduction
Imp
rove d
eco
mm
issio
nin
g e
ffic
ien
cy
Cost certainty and reduction
• Benchmarking
• Metrics identifying high cost elements
• Standardisation of methods
• Sharing good practice
Delivery Capability
• Learning from other industries
• Innovative approach to contracting & commercial strategies
• Changing behaviours
Regulatory Guidance
• Improve awareness
• Communicate requirements
• Develop tools e.g. cleaning
Well Abandonment
• Campaign approach to well P&A
• E&A suspended well stewardship
• Pilot and upscale
10%-15%
Potential savings (not additive)
25%-35%15%-20%35%-45%NNS
WoS
CNS
SNS
IS
Owners Cost
Well P&A
Topside removal
Subsea Infrastructure
Substructure removal
Onshore recycling
59.7bn
59.7bn
Decommissioning – Status UpdateDecommissioning – Status UpdateDecommissioning – Status UpdateKey focus areas identified and OGA working with industry 22
Decommissioning – Status UpdateStructured engagement framework
Operator Engagement
• OGA web-based decom ‘regulatory
roadmap’ being updated Q3 2017
• BEIS updating decommissioning
guidance Q4 2017
• OGA Stewardship Implementation
Guide (Decom) issued Q2 2017
• Plan for decom in place 6 years prior to CoP
• Execution & Contract Strategy in place 3 years
prior to CoP
24
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF Decommissioning – Status Update
Cost Benchmarking Cost Breakdown (WBS)
Operator Input
Cost PhasingAreas of Potential Savings
Decommissioning – Status UpdateDecommissioning – Status Update 25Benchmarking dashboard used to evaluate Operator decommissioning plans
Operator Dashboard
Commentary
Pipelines Description & Tonnage
Well ClassificationFacilities Description & Tonnage
Benchmarking
26
Project
Management
Post CoP
Running Costs
MonitoringTopsides &
Substructure
Prep & Removal
Topsides &
Substructure
Recycling Disposal
Subsea
Infrastructure
Site
Remediation
Facilities/Pipeline
Make SafeWell P&A
Project P10-P90 Range
Project Lifecycle Total
Spend
UKCS Benchmark P10-P50
Range
50
0
250
100
200
300
150
Co
st
£ M
M
UKCS Benchmark P50
UKCS Benchmark P10
OGA engage operators to challenge, share and transfer best practice
Delivery Capability
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
Government• Long standing
• Robust
• Globally recognised
Decommissioning – Status Update
Decommissioning Overview
Decommissioning – Status Update
Supply Chain Opportunities
490,000tonnes
Around 800
platform and
450 subsea
wells
Topside
tonnage130,000
tonnes
FPSO
tonnage290,000
tonnes
Steel
Jacket
tonnage
15,000tonnes
Substructure
tonnage
Source: BEIS Data 2015
Decommissioning – Status UpdateDecommissioning – Status UpdateDecommissioning – Status UpdatePotential size of market based on anticipated COP dates up to end 2015 27
4. Influencing and Promoting
• Active participants in developing a Sector Deal
• Supporting new pilot scheme to change tendering between service sector and operators
• Industry demand intelligence portal ‘Project Pathfinder’ covering new and decommissioning projects
Market Stimulating Initiatives
1. Supply Chain Action Plans (SCAP)
3. 2035 Vision
• OGA co-chairs the Supply Chain and Exports Taskforce
• Exports workgroup ensures connections with DIT, SDI and UKEF
• Focus on Norway by working closely with MPE and British Embassy
• OGA assessing domestic and international opportunities for the UK Supply Chain
2. Decommissioning Supply Chain Capabilities
• SNS PILOT Well P&A Forum – 8 Operators participated - held two SME opportunity Hackathon events
• Report on UK supply chain decommissioning capability and capacity is being prepared
• Working with governments and industry to promote UK port and yards capability
• Concept already used in other energy sectors
• Part of the enhanced asset stewardship process, FDPs and decommissioning plans
• Workgroup with five operators and two supply chain companies means good industry buy-in
For Vision 2035 to be
achieved, domestic
share of work to grow
from 50-65% and share
of international export
market to grow from
3.7% to 7.4%
Decommissioning – Status UpdateDecommissioning – Status UpdateDecommissioning – Status UpdateOGA working with the service sector 28
Onshore Disposal
• Dales Voe Shetland official
opening was on 28th August
to dismantle Buchan Alpha
production facility
• Current site has a water
depth limit (13m) with
requirement to develop a
deeper water facility which
will need a investment
• UK and Scottish governments
supportive of
decommissioning
• Call on industry to provide
funding support
Decommissioning – Status UpdateDecommissioning – Status UpdateDecommissioning – Status Update 29Significant investment required to develop Dales Voe as first UK “deep-water” site
Well P&A
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF Decommissioning – Status Update
Suspended Open Water E&A Wells
• Stewardship process working with largest holders
who hold nearly 40% of suspended open water E&A
wells
• Meetings held with operators in Q2 to understand
their individual plans
• Review planned in Q3 with all operators to explore
synergies and potential joint programmes
Decommissioning – Status Update 30Current estimate to P&A all current suspended open water E&A wells is £0.5bn
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF Decommissioning – Status Update
Multi Operator Scope
• Cost reduction initiative investigating the optimal means of coordination of
scope for multiple operators for decommissioning
• Desire is that Cost-Optimal solution is available to all operators
• Similar methodology could be applied to any element of scope where timing is
flexible and there are suitable common requirements
Decommissioning – Status UpdateDecommissioning – Status Update 32To date collaborative approach by operators is not common practice
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF Decommissioning – Status Update
Subsea Development Wells• Subsea well P&A expenditure in range £10-15 billion over
next 40 years
• Cost-Optimal execution could be achieved through a
sufficiently large programme of continuous work but not all
operators have scope within own portfolio to construct
such a programme
• Savings in the range 10-30% have also been estimated
by supply chain companies amd collaboration could yield
further improvements through sharing of knowledge and
experience
• Access to the foundations for cost-optimal execution cash
flow management
• Timing is flexible as there is no significant on going cost
and common requirement for mobile asset and specialist
services
• Provide common testing ground e.g. trial and
implementation of new techniques and technologies
Decommissioning – Status UpdateDecommissioning – Status Update 31Value of opportunity £0.5 to £2.25bn
Click to edit Master title style
Click to edit Master subtitle style© OGA 2017This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF Decommissioning – Status Update
Next Steps
• Working with operators and supply chain companies
• Appraise coordination options and work through common challenges
• Quantify the opportunity
• Examine whether the current regulatory environment is providing the optimal
solution for HMG
• Supply chain invite to participate imminent
• Update to be issued at end Q4
Decommissioning – Status UpdateDecommissioning – Status Update 33Objective: Cost-optimal Subsea Well P&A