In deepwater, operators urged to plan for decommissioning earlier than ever
Operators of offshore facilities can avoid future heartache by planning for decommissioning as early as possible, Brian Twomey, Managing Director of Reverse Engineering Services, told the 8th Decommissioning and Abandonment Summit in Houston last month.
Standard practice is to begin planning for decommissioning about five years from expected cessation of production (COP), Twomey noted. But he and fellow panelists representing Shell and ExxonMobil gave arguments for starting 10 years before COP or even at the stage of project development.
Decommissioning will prove particularly challenging in the case of large, deepwater facilities in the Gulf of Mexico, many of which are nearing end of life, Twomey said. He noted that only 15 offshore platforms weighing more than 14,000 tons have ever been removed worldwide. These include the Piper Alpha (total weight: 36,000t; jacket weight 14,000t) and the ongoing North-West Hutton removals (total: 39,700t; jacket: 8,100t) in the UK North Sea and a number of platforms in Norwegian waters.
“We’re in a situation of very great difficulty even understanding how we tackle some of these more-exotic deepwater facilities,” he said, adding that many existing projects would never have been started if they had estimated the true decommissioning cost earlier in their life-cycle.
Ernest Hui, Global Decommissioning Business Improvement Lead at Shell, gave the example of installing a downhole-pressure gauge in a well to demonstrate how decommissioning should come into calculations at an early stage. “Theoretically,” he said, “you want to put [it] as close in the flow as you can, but that’s an obstruction for abandonment later on. Just having that conversation, moving it up a couple of feet doesn’t hurt anything as far as the reading, but makes it easier for decommissioning.”
According to Twomey, most operators do not begin to think about decommissioning before calculating their asset retirement obligation (ARO), an estimate of decommissioning provisions made in accordance with international financial reporting standards. The task of compiling an ARO is usually conducted only after production has begun. Compilation of a cost estimation in accordance with AACE standards usually begins five years out from COP.
What operators should do, according to Twomey and Hui, is start estimating decommissioning and liability costs at the same time as construction and installation costs, with risk-assessment built into the decommissioning estimate. The estimate should uphold at least AACE Class 4 standards, include three costs – likely, high, and low – and be regularly updated in the years or decades to end-of-field life.
“Your estimate is a living document, or should be, so the data you gather will be more and more accurate as the granularity grows… And that data book: guess what it becomes? It becomes your bid document. It gives the contractor confidence that you actually know what you’ve got,” Twomey said.
“By the time you bid [for decommissioning], you should have minimal assumptions. If you don’t, the contractor should rightly want some protection from that information that’s not guaranteed to be accurate. That is why this process is ultra-critical.”
During the conference, several speakers emphasized the importance of preparing staff and contractors for decommissioning as early as possible.
Bryan Wood, a senior decommissioning official at ExxonMobil, said the major had found that waiting until three to five years before the end of an asset’s life to begin engaging the contracting community is too late. In the case of deepwater facilities, he said, the operator looks at three distinct scopes of work: removal of topsides; removal of risers and umbilicals; and disposal of the substructure. Each contractor takes a unique approach to each of these categories, and five to 10 years is required to properly assess the options, he said.
Hamish Tait, UK Head of Integrity Engineering at Stork Engineering, stressed the importance of planning in a separate session at the conference. He said it was up to management to ensure operations staff buy into the idea of being prepared for decommissioning and, most importantly, that they communicate with one another.
“I can work out how good they are at managing their hazards overall,” Tait said, by looking at how “Mr Process Safety Engineer speaks to Mr Technical-Safety Engineer.”
He added: “How well does [Mr Technical Safety Engineer] assess all this information that’s getting produced? As an asset gets older, and as it goes through to decommissioning, this effectively is going to change, it’s going to have to run faster. Ask yourself: how well do these people speak to each other? What information do they ask of each other?
“What sort of competences do they have when it comes to late-life through to decommissioning? What sort of training do you need to give them so they effectively stay there and see decommissioning as a positive thing?”
Twomey went furthest, saying that at every phase, starting with construction, there should be a decommissioning person actively asking what can be done now to make the job easier for whoever will be conducting the decommissioning 30 years down the road.