Oil and Gas Decommissioning
A
s decommissioning strategies in the North Sea and the Gulf of Mexico are tweaked for increased efficiency and cost reduction to maximise economic recovery, some regions are only just putting together their decommissioning frameworks. However, one advantage these new markets have is that with careful planning, they can avoid making the same mistakes that more mature markets have made.
New hot spots Despite limited experience and knowledge in new key markets such as Southeast Asia (expected decommissioning spend of more than US$77bn), Brazil (US$6bn expected to be spent on 18 Petrobras projects by 2024), and the Arabian Gulf (usually carried out within redevelopment projects and therefore difficult to track), the industry is particularly adept at applying global lessons on a situational basis. Countries such as Australia, Brazil, Brunei, India and Malaysia have been vocal about wanting to engage with the decommissioning expertise of the UK. Petronas, Malaysia’s national oil company, estimates that its spend
on decommissioning alone during the next five to 10 years will be around US$2bn.
What does good practice look like? When planning for the decommissioning of assets, lessons learnt from both the North Sea and Gulf of Mexico apply, with in-region experts able to offer comprehensive insights on planning for the later life of assets into decommissioning. Key points that underpin a successful decommissioning strategy include the need for planning ahead, understanding and controlling the costs associated with the decommissioning of an asset, and engaging clearly and transparently with key stakeholders and the supply chain. Ensuring regulatory compliance, and balancing costs and risks well in advance of cessation of production (CoP), are also crucial.
Collaboration cuts costs While the life extension of an asset may buy an operator anywhere between one and 10 years of extra production, the extra time can be used for planning and preparation that could save large amounts of money in the future. Unlike other parts of the industry, decommissioning is not a competition, and
Expected decom spend Southeast Asia more than
US$77bn US$2bn
Petronas expects to spend around
during next 5–10 years
Brazil
US$6bn on 18 Petrobras projects by 2024
it pays to co-operate with other operators to reduce costs for all involved. The cost of well plug and abandonment is estimated to be around 49% of global decommissioning spend. Operators have
New wave of
opportunities? With US$200bn expected to be spent on decommissioning globally during the next 20 years, EIC’s Diveena Danabalan tracks international developments
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