Decom North Sea hosts Networking breakfast during OTC

The Gulf of Mexico (GoM) is one of the most important regions for energy resources and infrastructure, producing 370 million barrels of oil and 1,103 billion cubic feet of natural gas in 2013, worth an estimated $40 billion.

As the industry matures, record levels of infrastructure are facing decommissioning and in a bid to identify potential opportunities, Decom North Sea (DNS), the offshore oil and gas decommissioning forum, will host a Networking breakfast during OTC week.

The event will take place on May 7, at the Hilton Houston Post Oak and will include a global outlook of decommissioning and abandonment from market analysts Infield Systems Ltd and an overview from Marathon Oil, which currently has decommissioning activity in both the North Sea and GoM, on the similarities and differences in the two markets and where they feel improvements can be made.

Jim Christie, Global Decommissioning Projects Manager at Marathon Oil Corporation commented: “We may be an ocean apart, but if two of the largest decommissioning markets can collectively focus on the three “C’s” we have an opportunity to be successful in meeting decommissioning goals. The three “seas” are of course Compliance, Collaboration and Contracting.”

Oil was first discovered off the coast of Louisiana in 1936, from a platform built on timber pilings in 10-to-15-foot-deep (3.0 to 4.6 m) water. Today, there are more than 4,000 production platforms and drilling rigs off the coast of Louisiana alone. In recent years, the industry has worked hard to extend the economic and productive lives of mature offshore platforms through the development of marginal and remote satellite reservoirs, the introduction of new technologies and expertise with asset integrity and production optimisation. Despite these advances, it is now recognised that a growing number of oil and gas assets have either reached, or are approaching, the end of their economic life. In accordance with current regulations, assets will have to be decommissioned and removed. This presents challenges for the owners and operators, while offering major business opportunities for engineering consultants, contractors and service specialists.

Since 2010, the GoM decommissioning market has witnessed record levels of activity. The majority of decommissioning activity occurs in shallow waters of less than 400ft. With over 2,600 platforms and 10,000 wells in shallow waters, the estimated cost to clean up this infrastructure is £18 billion, although activity in these waters is believed to have peaked.

Deepwater installations produce over 80% of the GoM’s oil production, and have expected longevity as these younger fields sit atop large hydrocarbon accumulations. Five to eight deepwater structures are expected to be decommissioned during 2014-2016.

Last year approximately 260 structures were removed and 1,400 well abandoned, at a cost of between £1.8-£2.1 billion. In the coming years, 175 to 275 structures are expected to be removed annually, with a decommissioning spend of $1.5-$2.0 billion per annum. The opportunity decommissioning provides for the supply chain cannot be ignored. At this moment there are 796 idle structures in GoM, all requiring consideration for what happens next.

The North Sea is a mature region, and in some respects, UK operators are pioneers of the decommissioning industry. As the dedicated North Sea industry forum, Decom North Sea (DNS) is charged with sharing experience in this sector by stimulating collaboration of its 230 members. Member companies are drawn from operators, major contractors, service specialists and technology developers from more than eight different countries, with the aim of bringing people from all over the industry together in an open environment to discuss opportunities and, above all, to learn from one another.

Sarah Hillyear, operations manager at Decom North Sea at Aberdeen Harbour.Sarah Hillyear, operations manager at DNS explains: “Decommissioning is a complex series of activities. Commitment must be given to decommissioning operations, and plans put in place early in the life of a field – maybe 10 to 15 years ahead of closure. In the GoM, decommissioning has been ongoing for a number of years with hundreds of structures being removed each year. Up until recently this has been mainly small shallow water structures but as the more complex deeper water structures reach the end of their economic life, there is potentially a lot to learn from the UK’s decommissioning efforts.

“In the GoM, the ‘big boys’ control the majority of the market. The top 10 operators were responsible for over 80% of decommissioning in 2013, with Apache Shelf Corp. and Chevron Corp. spending £500million; roughly one third of the total market expenditure. The key is to look at how smaller contractors can work with these large operators, and DNS is there to help with facilitating an open and honest information flow across all parties involved in decommissioning. We are delighted to host a networking breakfast to stimulate cooperation and knowledge share at a time when the opportunities presented by decommissioning seem limitless.”

Press Release, May 06, 2014

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