Decommissioning Insight 2019


3.6 Ten-Year Regional Breakdown Looking more closely into the regional expenditures, we begin to see some common traits. For example, on a pro- rata basis, well decommissioning costs range from 50 per cent of the overall expenditure in the CNS to 42 per cent in the NNS and west of Shetland, and 41 per cent of spend in the SNS and IS. However, unit costs still tend to be higher in the NNS and CNS compared to the SNS, reflecting the increased complexity of the scope. The CNS also contains a greater quantity of subsea wells expected to be decommissioned over the next ten years; these are generally more expensive to decommission than platform wells. More generally, the SNS has seen some recent successes in well decommissioning activity and a greater industrialisation of the process, which may account for the apparent reduction in expected costs. The CNS and NNS will certainly glean knowledge from these experiences, driving further efficiencies. Forecasts for the CNS and NNS anticipate that 20 per cent and 17 per cent of decommissioning expenditure will be spend on project management and continued operational expenditure on platforms after production has ceased. Estimates for the SNS and IS region suggest a much smaller share of expenditure, around 9 per cent, for these activities. This is mostly due to the larger size of the installations and greater complexity in the NNS and CNS, compared to SNS assets. The proportion of expenditure forecast for removals costs also varies significantly across the UKCS, with 26 per cent allocated in the SNS, 23 per cent allocated in the NNS and only 10 per cent in the CNS. Forecast removals costs in the CNS in the near term are relatively low due to the aforementioned M&A activity in the region, which has pushed back some CoP dates. In the SNS, the proportion expected to be spent on removals has increased, likely as a result of the amount of well decommissioning activity liquidated over the past two years, which has reduced wells costs but led to greater removals (given these are concurrent activities). Expenditure on subsea infrastructure is relatively consistent around the North Sea, accounting for 9 per cent of expenditure in each of the CNS and NNS, and 8 per cent in the SNS. All regions have seen a reduction in forecast spend in comparison with the 2018 Decommissioning Insight , suggesting further efficiencies are expected in this area. The slightly higher level of expenditure in the former two regions is perhaps due to the deeper water adding complexity to subsea decommissioning activities. While the four main cost drivers are considered to be wells, removals, post-CoP OPEX and subsea infrastructure, it is important to consider all aspects of decommissioning when aiming to reduce costs. Facilities and pipeline permanent isolation and cleaning, coupled with topsides preparation, account for only 7 per cent of total UKCS decommissioning expenditure. However, this element contributes 11 per cent of forecast expenditure in the SNS, making it a larger cost component than subsea infrastructure, likely because the composition of SNS assets is different. It is therefore essential that incremental gains are sought throughout every element of the WBS.


Made with FlippingBook - Online magazine maker