Decommissioning cost drivers and strategies

In an editorial for Offshore Engineer Magazine on Decommissioning Strategies, Jim Macklin, VP Engineering & Projects, explained that “Wells and facilities decommissioning around the world is entering a new era. Some drivers for the changes in decommissioning are eco-awareness, a recent particularly onerous cycle of climatic events, facility design evolution, the glaring media spot light on the Macondo disaster and the resulting regulatory reaction. As we build bigger, better, more complex production systems for the recovery of deeper and more difficult reservoirs the remediation and removals become increasingly more challenging.

Reversing the installation process is neither efficient nor cost effective. Drilling and construction assets for the wells and installation of these facilities are in demand, aged or out of service. The current downturn in the market will drive a wave of vessel decommissioning in the drilling market to eliminate old iron and nearly obsolete drilling rigs. Upgrading these rigs is not practical in light of new regulations. Addressing liabilities associated with former production properties late in their life cycle is no longer acceptable.  Identifying decommissioning strategies during concept selection needs to be the new norm.”

In summary, decommissioning cost drivers include:

  • Facility design evolution as we build bigger and more complex production systems
  • Regulatory changes, especially due to increased environmental awareness
  • Changes made during the life cycle of the facility, such as deck extensions for additional equipment

As a result, new decommissioning strategies should be considered, such as:

  • Execution technologies including rigless Plug & Abandonment and Rigs-to-Reefs programs
  • Considering decommissioning methodology during front end engineering
  • Assessing the removal cost in the selection of the design concept

As Macklin puts it “The main driver for O&G companies is to profit; sadly decommissioning is not a profit center. O&G employees do not see a career path in decommissioning.  Third party engineering and consulting companies are a more likely solution.” Read more about InterMoor’s capabilities and track record here.