GG-COM-TM-013-A, Rev. 1

LESSONS FROM DECOMMISSIONING PLANNING IN THE UK

Feb 2017Peter Ryall

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Genesis provide advice over the full asset lifecycle to help energy companies maximize the value of their assets worldwide.

Globally, Genesis have worked on over 150 DAR studies & projects in the last 18 years.

As well as supporting energy companies, Genesis have also advised the UK Government, regulators and industry bodies on key areas of DAR planning and cost estimation.

We have developed standardised in-house early phase cost estimating tools for determining DAR liabilities

DAR

DECOMMISSIONING, ABANDONMENT & RESTORATION (DAR) EXPERIENCE

Awarded the MaureenDecommissioning ProjectHazID by Phillips Petroleum

1998 1999 2002 2007 2012 2013 2014 2015 2016201020042000

Sig

nific

ant E

vent

s Awarded the first ever Facilities, Environmental & Decommissioning Support contract by the DTI (UK)

Reference case study to investigateDecommissioning Options for Shell forthe Brent Field

Bayu-Undan Darwin LNG Abandonment Study for Conoco-Phillips (Australia)

Awarded global DAR EFA by ENI to support their global asset portfolio.

Awarded Miller Decommissioning Appraisal Studies by BP

Ichthys Abandonment Cost Estimation Study for INPEX

Flotta Terminal DAR Study for Talisman Energy

Following significant global market interest Genesis embarks on thedevelopment of a proprietary DAR Estimating and Reference database

Commissioned by OGUK to write the Comparative Assessment Guidelines for UK Industry

Completed a DAR Efficiencies Study incorporating a technology review for the OGA.

Total Frigg DAR HSE Studies

3 | DAR

IMPACT OF DAR COSTS – DEPENDS ON THE TIME

FID

At FIDDecommissioning is barely a

blip on the project PV economics

In Late LifeDecommissioning decisions drive the residual value of

the facility

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LATE LIFE PLANNING

Late Life

Objectives:

- Maximise residual value

- Provide certainty in likely costs

- Understand risks & opportunities to allow flexible response to events

Value of Front-End Thinking

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UK PLANNED DECOMMISSIONING 2016-2025

• Approx. £18bn planned between 2016 and 2025.

• 40-50% cost in well P&A.

Source: Oil & Gas UK

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MAXIMISE RESIDUAL VALUE

OPEX

Production

Decom costs

1. There has been a sudden reaction to the reduction in oil price, causing forced decommissioning for some assets leading to possible efficiency losses. Industry and government aligning on best practice.

2. Drilling is a major part of DAR cost and biggest area for savings:

• Wireline logging for scanning linked with stimulation to improve productivity to offset the costs. Early identification of problem wells for P&A.

• Wireline logging and preparation of commissioning can be performed by LWIV for subsea wells.

• Collaboration across assets to give area LWIV campaigns to yield economies of scale

5. For platform removal biggest savings by providing schedule flexibility to lift contractor:

• Early engagement – design competition

• Plan for NUI or Lighthouse mode

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Commence DAR studies early– Refresh early abandonment costs based on latest data– Allow time for investigation of alternative strategies– Provide time for surveys – Allow time for external review and stake-holder engagement for non-conventional

approach

Well Survey to highlight any issues

PROVIDE COST CERTAINTY

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Identify Risks and Opportunities to operation during late field life

Scheduling activities back from a planned cessation of production date reduces flexibility to respond to risks and opportunities:– Product price fall– Competitive vessel rates– Collaborative opportunities

Provide flexibility in Safety Case to permit potential future operating philosophy

DAR

RISK & OPPORTUNITIES

Oil Price VariationUK Topsides Removal Costs

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DECOMMISSIONING REGULATORY OVERVIEW

UK Australia

Regulatory Body BEIS NOPSEMA

Platforms & Other facilities

OSPARStarts with a presumption of complete removal.

Derogation possible for steel jackets and concrete structures through CA process.

OPGGSA

Base case is removal.

Partial removal or abandonment can be considered on a case by case basis if demonstrated to be ALARP and at an acceptable level.Pipelines OSPAR

Case by case dependent on the outcome of agreed CA.

CA Comparative Assessment

BEIS Dept. Business, Energy and Industrial strategy

NOPSEMA National Offshore Petroleum Safety and Environmental Management Authority

10 | DAR

UK COMPARATIVE ASSESSMENT (CA)

Recommend

Safety• Decom

Personnel• Other users of

the sea• During decom /

post-decom

Environment• Discharges• Resource

consumption• Long-term

environmental impact

Technical• Maturity of

scope• Technology

Readiness

Societal• Impact on

activities eg. Fishing

• Provision of jobs or infrastructure

Economic• Cost• Risks &

Uncertainties

Evaluate

Studies

Coarse Screening

Screening Criteria

Identify Options

A B C D

B

A B C D

Independent Review

Stakeholder Engagement

Cost estimation tools

Environmental and safety studies

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Undertake DAR studies early:– to identify main cost drivers and investigate ways to reduce costs.– Allow time for surveys and stakeholder engagement if non-standard approach taken– Allows flexibility to accelerate or defer or change plans to react to risks or opportunities

Apply Front-End thinking to optimise late-life activities: Release synergies between OPEX, production enhancement and decommissioning costs

Regular review of plans to account for changed circumstances

Comparative assessment process yields basis to support an ALARP position for Australian projects

DAR

CONCLUSIONS

THANK YOU

Contact usEnquiries can be directed to: peter.ryall@genesisoilandgas.com+61(0)8 9320 0177