Decommissioning Insight 2018

3.1 Survey Development and Methodology Data for this report have been provided by 28 operators across the UKCS, either as part of the Asset Stewardship Survey run by the Oil and Gas Authority (OGA), or separately, and have been compiled on a confidential basis. For the fourth year, data have also been contributed by other countries around the North Sea, specifically Norway, the Netherlands and Denmark. Five key operators provided data fromNorway, 11 from the Netherlands, and three from Denmark. Data from the Netherlands came from NexStep 1 , the joint initiative of Energie Beheer Nederland (EBN) and the Dutch oil and gas industry, represented by Netherlands Oil and Gas Exploration and Production Association (NOGEPA). Oil & Gas UK also collated data directly from operators in Norway and Denmark. The co-operation of all the operators and regulators is greatly appreciated, particularly that of the UK’s OGA. It should be recognised that the forecasts in this report are provided by operators and represent their best estimates at the time of the survey, and timings are therefore subject to change. Similar to last year’s Decommissioning Insight , this report focuses on cost and activities over the next ten years to put the spotlight on tangible opportunities available to the UK’s decommissioning supply chain if industry is, together, able to demonstrate leadership in this space. Over theyears, theUKdecommissioning industryhasdevelopeda standardapproach tomodellingdecommissioning using the Work Breakdown Structure (WBS) and much of the analysis is presented on that basis. An overview of the WBS and the concepts behind it are provided in section 8. A number of decommissioning practitioner profiles have also been included in this year’s report to provide insight on the different activities and skills required throughout a decommissioning project. These profiles illustrate the high levels of experience, competence and technology being applied across the decommissioning scope and are an exciting sign of things to come. 3.2 Maturity of Estimates Each year, UK operators provide the cost classification for each of their decommissioning projects using the Association for the Advancement of Cost Engineering (AACE) classifications. These seek to define the project stage and indicate the degree of uncertainty in the estimates. Class 4 or 5 estimates mean that the projects are in the early planning states where the scope of work is still being defined and feasibility studies are being carried out. Class 5 estimates have an expected accuracy range of -20 to +100 per cent; this range narrows over time. Class 2 estimates, meanwhile, represent projects that are in the contracting stage with some activities already being executed. These have a higher degree of accuracy, of -5 to +20 per cent. Almost 90 per cent of the Asset Stewardship Survey submissions for decommissioning on the UKCS are still Class 4 and 5 estimates, which means there is still a high level of uncertainty in the figures presented. However, year upon year decommissioning estimates have been improving in submissions, and the level of Class 4 estimates has doubled from around 20 per cent last year to 40 per cent this year. 2

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1 Nexstep National Platform for Re-use and Decommissioning www.nexstep.nl 2 https://www.ogauthority.co.uk/news-publications/publications/2018/ukcs-decommissioning-2018-cost-estimate-report

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