Despite being a US$300 billion industry, decommissioning is struggling with an image problem. With a growing number of installations requiring urgent attention what needs to change?
It’s nearly 50 years since the first British North Sea oil began coming ashore, an industry that at its height brought tens of billions annually into the UK economy. Although not quite a ‘sunset industry’ the changing energy market and the inconvenient reality that many older assets are reaching the end of their operational lives means there is a growing emphasis on tackling the decommissioning of that offshore infrastructure.
Oil and gas (O&G) decommissioning is a burgeoning market, valued at around US$300 billion globally overall. In 2022, the UK North Sea sector spent around £1.6 billion, but the figure is likely to rise significantly in the next few years as topsides (the surface deck) and subsea decommissioning of the UK Continental Shelf gathers momentum, potentially more than doubling its current expenditure.
But decommissioning is an expensive and complicated task for asset owners; while opportunities may emerge from new sectors such as carbon sequestration for the present at least it brings little in the way of financial recompense. A significant factor is the safety of those workers undertaking the decommissioning work on ageing infrastructure that has spent decades at the mercy of the elements.
The engineering of modern-day structures, be they rigs, ships or wind turbines, are mandated at least in part to give due consideration to end-of-life management, but the same wasn’t true for these older structures and each project brings with it a litany of problems with regard to disposing of hazardous materials to ensure compliance with modern environmental legislation.
None of this will be possible without skilled decommissioning experts, including marine engineers and naval architects, with the expertise and experience to undertake such projects. But with the energy sector already struggling with a staffing shortage, how best to attract young talent to a niche sector that’s often perceived as ‘unsexy’ compared to the alternatives?
Bureau Veritas
It’s a multifaceted challenge very much on the radar of classification society Bureau Veritas (BV), which has taken on an increasingly central role in shaping the future of decommissioning. As a company that had grown and expanded in large part through acquisitions, a number of BV’s subsidiaries were already providing consultancy services in a variety of offshore activities – such as warranties, risk assessments and structural analysis – some of which was already related to decommissioning.
What it lacked, at least until a few years ago, was a defined strategy towards decommissioning, according to Dawn Robertson, BV’s global director for exploration and production.
She explains: “We held workshops bringing together a lot of parties together to frame exactly what decommissioning is, where BV could provide a service, and where we already offered a service and perhaps didn’t realise it. When we joined together all the dots we were able to draw together a full value proposition of services and take that to market.”
It was a journey that involved BV becoming an active member of trade organisation Decom North Sea, today known as Decom Mission, with Robertson becoming the chair of its Decommissioning Leadership Group and later joining its board of directors. Entering what was already a developed market has allowed BV to spot the gaps and tailor its UK-centred decommissioning services accordingly.
Developed market
Although other markets are now rapidly emerging for offshore decommissioning, such as the Gulf of Mexico and South Asia, also demanding decommissioning services, the North Sea and Australia (BV has been heavily involved in the decommissioning process for the FPSO Northern Endeavour) remain the most developed, with an established O&G skills pool.
This is due to the very specific challenges it poses; as well as being significantly older the North Sea assets are often located in much shallower waters, meaning that it’s not considered viable for these assets to be deliberately sunk under a ‘rigs to reef’ scheme.
But North Sea decommissioning projects also struggle financially; operators benefit from the British government’s tax relief scheme, but with skilled project engineers and managers at a premium there is the risk that the best of them will be lured overseas to lead projects elsewhere. There is additional competition in the form of offshore wind farms, with a growing number of older turbines now being decommissioned to make way for newer models.
Decommissioning must also grapple with the stigma of being perceived as waste management rather than the cutting-edge of engineering, something that belies the growing sophistication of the technology being employed. Typically around half the cost of any project is accounted for by the plugging and abandonment part of the operation, with a host of new solutions gaining reaction in recent years, ranging from fusion-based alloy plugs for wells to underwater drone surveillance for potential leakages.
Meanwhile above the waterline, topside removal is being improved by advances such as laser cutting and the fact that no two projects are ever quite the same places a strong emphasis on innovation.
“People think that decom is about end of life and not even engineering, but disposal is really complex. It’s a real challenge for people that are up for things like that and generally, engineers like solving problems,” says Robertson.
Energy transition
Given the importance that North Sea O&G has had to Scotland’s economy, in particular over the last half century, there is a conspicuous reluctance by the British and Scottish governments to address its legacy as newer, cleaner alternatives become the focus. Robertson says that one of the biggest problems is reframing the narrative as newer, cleaner alternatives take the stage.
She comments: “I’ve had meetings at Hollyrood where if people were looking for funding as part of the energy transition deal then decommissioning wasn’t included in the money coming from the government to support it.
“When [companies involved in decommissioning] asked to be a part of this they have been told it’s not on the list; rather it’s hydrogen, carbon capture, and electrification of assets. But from a decom point of view, the actual removal of the asset has the biggest impact on carbon emissions reduction.”
From a regulatory perspective it’s generally accepted that carbon emissions measurement and management needs a clearer definition of when a decommissioning project starts and ends, particularly with regard to so-called Scope 3 emissions (those resulting from assets not owned or controlled by the reporting organisation, but part of its value chain).
There remain deeper questions about whether obligatory decommissioning is really serving the greater good of the environment; under the OSPAR Convention operators of decommissioned assets are meant to ensure the seabed is restored to something like its original condition, but many are sceptical about whether attempting to do so actually causes more harm than good.
Notwithstanding this, BV is encouraging its clients to adopt the ‘10 R’s’ approach to the Circular Economy – refuse, rethink, reduce, reuse, recycle, repair, refurbish, remanufacture, repurpose, recycle, and recover – and use this mindset to rethink the discussion around decommissioning.
Robertson says: “Speaking personally, something I’m quite passionate about is making sure we’re thinking about all of the circular economy potentials when it comes to these assets and actually changing their purpose.
“Some of these assets are structurally quite sound and The North Sea Transition Authority did a study that identified certain areas that are suitable for carbon capture pipelines… But the assets themselves could potentially serve as operations and maintenance hubs for offshore wind farms.”
