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Press Release 09/06
IMCA GIVES MEMBERS AN INSIGHT INTO £50BN DECOMMISSIONING MARKET
Despite the fact that the huge decommissioning programme for North Sea offshore oil and gas installations, confidently predicted for the past ten years, has not yet happened, sooner or later the worldwide expenditure for decommissioning is predicted to be in the region of £50 billion (US$75 billion). With this in mind, IMCA - the International Marine Contractors Association - has published a far-ranging position paper on this very significant potential market.
It points out, for example, research and development topics which should be considered, and suggests that the contractual risks on decommissioning projects should be more appropriately shared.
"The paper has been prepared to assist and inform our 300+ member companies around the globe," explains Hugh Williams, the association's chief executive. "It gives an overview of the challenges and opportunities, outlining some of the important engineering, safety, commercial and contractual issues and a number of the technological developments that are of interest to our members based in 35 countries. We want feedback from them - sharing knowledge is, after all, beneficial to the industry as a whole."
Sections are devoted to the background, scale, legislation (with an appendix covering the legislative framework in a number of countries and with reference to the OSPAR treaty); raising awareness; the decommissioning task (e.g. the use/non-use of divers; and the ageing and condition of platforms and equipment). It also covers experience; sectors in the decommissioning market; research and development; the contracting regime; drill cuttings; and safety - an essential issue and crucial to IMCA and its members.
"Decommissioning has had a high profile in the North Sea for the last ten years," says Hugh Williams. "This has been due to such factors as cost; opportunities to influence legislation; realisation that the first North Sea structures should soon be ready for removal, with the first larger removals looming; catching the public eye; and because some of the bigger oil companies were getting ready to sell their older fields to smaller or new players and the decommissioning unknowns hindered the sales.
"However, the 'bulldozer' effect has been strong. Decommissioning has been seen as a big market which has been predicted to occur 'in about five years' time' since the early 1990s. To a large degree, the market has still not arrived; there are a variety of possible reasons for this such as more tiebacks to use existing infrastructure; better field depletion methods and well stimulation; delayed removals (e.g. Ekofisk); and high oil prices are keeping older assets viable for longer."
IMCA members are involved with offshore, marine and underwater engineering so all will be fundamentally involved in decommissioning. The newly published paper, produced by IMCA's decommissioning workgroup will provide them with useful information and some fascinating statistics on this large-scale business:
- There are about 6500 offshore facilities in the world, nearly two thirds of which are in the Gulf of Mexico. There are some 600 in the North Sea, 400 of which are on the UKCS
- In the UK, over the next 10-20 years, on average, 15-20 installations are expected to be decommissioned annually. In addition, several thousands of kilometres of pipelines may have to be removed, trenched or covered. The continental shelf bordering the states of the European Union and Norway has more than 600 offshore oil and gas platforms and several thousand kilometres of pipelines
- Some 1200+ platforms have already been removed world-wide
- The largest number is removed in the Gulf of Mexico (about 100 pa)
- A large proportion of the world's biggest platforms is in the North Sea
- Estimates of expenditure for future North Sea removal vary depending on a number of factors, but it may be assumed that it is about £15-30 billion (US$20-50 billion) for the North Sea's 600+ facilities
- World-wide expenditure could exceed £50 billion (US$75 billion)
- Current estimates (third quarter 2005) suggest that there will be decommissioning work available, particularly in the North Sea, throughout the next decade, into the 2020s and beyond
The background
IMCA has four technical divisions, covering marine/specialist vessel operations, offshore diving, hydrographic survey and remote systems and ROVs, plus geographic sections for the Americas Deepwater, Asia-Pacific, Europe & Africa and the Middle East & India regions, as well as a core focus on safety, the environment, competence and training. The Europe & Africa section has, as part of its remit, the aim of sharing the latest developments on decommissioning (and also on offshore renewable energy) through presentations and discussions aiming to develop common positions (as demonstrated by the newly published paper) and identify areas for future IMCA work. Member-only days have been held and Hugh Williams has spoken on the topic at key industry meetings.
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