Decommissioning of North Sea Wells and Platforms Opens Job and Investment Opportunities

Phil Black - PII Editor 25/02/2015

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Significant job and investment opportunities lay ahead for Great Yarmouth for the next 30 years if it seizes the opportunity now to become a key hub for the forecast £40bn programme to decommission North Sea wells and platforms.

The potential to become a major centre for Southern North Sea decommissioning could be within the borough”s grasp if it wanted it, the UK”s decommissioning industry”s representative body leader said yesterday.

To reap the potential future economic rewards, the Great Yarmouth area needed to develop its oil and gas capability alongside other industries, Nigel Jenkins, chief executive of Decom North Sea, the representative body for the industry with 260 members drawn from operators, contractors and service providers, said.

Supply chain companies that come up with the “brightest ideas” to tackle the massive offshore task with the most cost-effective solutions stand to be winners in the contest for a share of the work.

“We know there are hundreds of wells to be plugged and abandoned in SNS, this is just the tip of the iceberg with redundant installations and subsea infrastructure to be removed,” he said.

Mr Jenkins will tell supply companies that collaboration is key in the lucrative competition ahead when he speaks at next week”s East of England Energy Group (EEEGR) flagship conference for the Southern North Sea, SNS2015, at the Norfolk Showground on Wednesday and Thursday (March 4 and 5).

“My definition of collaboration is working together for meaningful business benefit. You only do it if there is a business benefit. ”

“People need to be working hard and thinking how can we make the East of England a centre of excellence for Southern North Sea decommissioning.”

Great Yarmouth is well-placed to capture the opportunities off its coast during this “fascinating period” of decommissioning, forecast projected to cost about £40bn until 2040, (Oil & Gas UK Insight Report 2014) Mr Jenkins said.

The borough and wider Norfolk would be winners in the 30-year decommissioning programme starting now.

Mr Jenkins will speak at SNS2015 March 5 with Bill Cattanach, of DECC, in a follow up from the round-table and previous Decommissioning Special Interest Group in Norwich in the autumn and will also feature a decommissioning model by Julian Manning, of Baker Hughes.

The energy supply chain is placing high hopes on decommissioning as exploration and production activity in the oil and gas industry faces challenging times, with an Oil and Gas UK survey yesterday reporting its worst annual performance for four decades with falling oil prices and rising costs, leading the sector to spend and invest £5.3bn more than it earned from sales during 2014.

Investment is set to fall this year, as well as drilling, but production is expected to rise.

Mr Jenkins said Decom North Sea and DECC were currently working with several operators in the southern North Sea with 500-plus wells to plug and abandon.

“What we need are centres onshore where decommissioning can be managed from and assets can be taken. This industry may well go on for 40 years and so is a great opportunity for the area. ”

“Over the next five years the operators have about 500 wells to plug and abandon. It is a big challenge and an extremely expensive process.

“If we can work together and find new technologies and get new suppliers in the supply chain, there is great potential to make Great Yarmouth and the Norfolk and Norwich area the hub for P&A and decommissioning in the SNS.

Operators were looking for cost-effective solutions because of pressures across the industry to reduce decommissioning costs.

The industry had to embrace the right culture for collaboration – a culture of solving problems and rewarding success.

“The way we solve problems in decommissioning is sharing ideas where everyone is interested in getting the costs down.”

“It all about maximising efficient execution,” he said,

Mr Jenkins has extensive experience of decommissioning in the nuclear as well as offshore industry.

On his appointment, Mr Jenkins said: “I am excited about the future of offshore decommissioning. The recent Wood Review highlighted the need for operators, the supply chain and regulators to work together to develop innovative decommissioning solutions, maximising the value derived from the North Sea. ”

He will also present to the conference a decommissioning model in the Norwegian Continental shelf of how costs were brought down 30-70%.

EEEGR chief executive Simon Gray said the East of England”s low cost base compared to Aberdeen would help the region to ride difficult times and collaboration on projects was crucial.

“It”s even more important than ever to be as competitive as we can. Cost control and contract management will be crucial to operators.

“This is the opportunity for the East of England to drive down costs and show
what we do is at the highest standard for the lowest price. Our region is best in the international market.”

At SNS2015, supply chain companies will also be able to pitch for business from GDF Suez E&P, operators of the largest gas field discovered in the southern North Sea in the last 25 years, to start production later this year, coming in at Bacton with the capacity to meet the needs of more than 1.5 million UK households. Contracts and procurement manager for operations Andrew Collins will be taking 10-minute appointments at the new Meet the Buyer feature at SNS2015 along with SSE, UKTI, Seatrax, Schlumberger, James Fisher and Sons plc, Baker Hughes, Fugro Alluvial Offshore Ltd and Siemens.

GDF Suez”s operations manager Keith Murphy will also give the main conference an update on the project, which will be the UK”s second largest production site of natural gas from 2016 onwards with estimated reserves of 18 billion cubic meters, on the second day of the conference.

SNS2014 is supported by the European Regional Development Fund (ERDF).