When European Oil and Gas Magazine last spoke with Brian Nixon, chief executive of Decom North Sea, the dedicated North Sea decommissioning organisation and forum established to tackle the key areas of weaknesses and the bottlenecks that are likely to inhibit UK decommissioning supply chain capability, he spoke extremely positively about the growing decommissioning market, saying: “The increase in decommissioning activity is likely to reach around £1.2 to £1.4 billion per year within the course of the next two to three years.”
Around a year later, and with decommissioning projects continuing to develop at a positive rate despite the upheaval in the market, we caught up with Brian to find out the latest developments at the organisation, and indeed the North Sea decommissioning market on a wider level. “Over the last 12 months or so our organic growth has continued steadily throughout the year, with us now being just short of 200 members,” he said. “Importantly, I think that this confirms that Decom North Sea, and the industry at large, acknowledges and agrees that it is the right time to seriously begin planning, preparing and considering investment in longterm decommissioning within our sector.”
The recent announcement by the UK Chancellor that the UK Government will introduce legislation in 2013 giving it statutory authority to sign contracts with companies operating in the UK and UK Continental Shelf, to provide assurance on the relief they will receive when decommissioning assets has provided even greater certainty. Brian commented, “The announcement has provided a set level of relief for operators which will assist the whole industry - and particularly the smaller breed of operators working in the North Sea - and will encourage more asset sales, with prospective buyers now being assured of Government support when the assets reach the decommissioning phase.
“We believe the Budget will lead to operators being able to move forward with their decommissioning plans, which will in turn help to reassure the hundreds of supply chain companies and encourage them to consider investment in new equipment or tooling or to attract new staff.
“We are not trying to accelerate the pace of decommissioning by any means but we are trying to increase the pace of innovation and efficiency in the industry and this needs a more steady flow of projects than seen to date,’’ he explained.
While the budget has been weighing on the mind of many of the contractors involved in the decommissioning market, as Brian revealed, it has not stopped businesses pushing ahead in advancing their various decommissioning plans. “Over the course of the last year or so we have seen some very important, and very in-depth, planning, preparation and research and information gathering being completed by operators in order to allow them to undertake analysis to finalise plans and programmes for decommissioning, so there has been a great deal of activity in the market in that respect.
“In terms of practical projects we have seen some important ones being carried out, including Perenco successfully completing the Welland decommissioning programme in the Southern North Sea, the completion of the Shell Inde field, which consists of five southern North Sea platforms, and Hess progressing with a cluster of four subsea developments that are now onshore and being finally disposed of so, as you can see, it has been a busy year.”
It has also been a busy year for Decom North Sea, which as Brian explained, has been in the driving seat pushing forward some important industry projects. “Over the course of the last year or so we have significantly driven forward a number of key joint industry projects (JIPs) that are all geared towards improving efficiency and performance, whilst ensuring satisfactory environmental and safety standards are maintained, to really drive the industry forwards to a point where we are fully ready to undertake the major programmes of decommissioning that are predicted.
“The first of these JIPs is what we are calling the standard template for decommissioning programmes,” he continued. “Previously, we had recognised that when looking at decommissioning programmes that have been submitted to regulators there has been a significant variance in the size and extent of these plans, with some ranging from anywhere between 100 to 400 pages plus. In response we hope to really streamline these plans, to work with the companies and the regulators to produce a standard template from which everyone can work in order to achieve the maximum results in the safest and most efficient manner. Ultimately, I think that it would be highly beneficial if we could standardise the application process to the whole of the North Sea, so we see a European-wide potential for this scheme.
“Another important initiative that we are working on that I would like to highlight is a JIP based around the concept of reuse,” Brian explained. “There is already a strong incentive among operators with regards to recycling, with past projects demonstrating recycling figures of around 97 to 98 per cent of various grades of steel in offshore platforms being recycled. Through our work we are calling on operators, contractors and consultant members for guidance in this field to explore the possibility of higher levels of reuse. There is a lot of major equipment that has the potential to be refurbished and resold, which provides a possibility to reduce costs for operators and for the industry as whole, so this is something I would really like to see us have some success in achieving.”
The decommissiong sector continues to grow at a steady pace, and looking ahead, Brian remains confident that Decom North Sea, and the industry as whole, can develop the skills and capabilities needed to make it a world leader in the industry: “We are now clearly recognised by the industry as the European industry forum and that is very encouraging, but we still have a significant amount of work to do – Decom North Sea can only maintain its leading position by continuing to deliver value to its member companies, and by demonstrating efficiency improvements throughout the decommissioning sector. Ultimately, decommissioning is going to grow rapidly in the coming years with there being huge opportunities in a number of regions. So, if we can establish a cost-effective, safe and environmentally friendly supply chain here in the North Sea it puts us in a really good position to secure long-term business in the international market in the future.”
For further information please visit: www.decomnorthsea..com