Decommissioning & Abandonment Summit 2016: Day One - Air of Optimism as Participants Roll up Sleeves on Costs, Collaboration and Deepwater

Day one of the 8th Annual Decommissioning & Abandonment Summit in Houston was “Deepwater Day”, and productive debate was heard both inside the auditorium and in the jam-packed exhibition hall between sessions.

Shell General Manager of Deepwater Wells Discipline Donna Birbiglia summed up what many were thinking in her brief opening remarks: “The dilemma is, do we produce or do we abandon? And today, in the current environment, that’s a really important question for all of us: it impacts the future for the industry and for us and our companies.”

Birbiglia will present the keynote speech on day two. On day one she reminded the audience that deepwater decommissioning is still in an “immature phase”.

More than 400 people attended the conference on Tuesday. The positive vibes were well summarized by Endeavor Management Executive Vice-President Bruce Crager’s comments at the awards dinner that night on “the glass being half-full, not half-empty”.

FCBI Energy Head of Oil & Gas Phil Chadney also set a positive tone in his opening remarks with a quote from the chairman of GE on focusing on what you can control.

“In the environment that we find ourselves in now, it’s easy to get bogged down in the oil-price commentary, tracking every gain or loss,” he said. “We understand the reality of the industry in the current cycle, but the long-term challenges and opportunities remain the same so, to some extent we need to limit the negative externalities of today’s low oil price and focus on what we do best.”

Crager spoke in a panel discussion on subsea-decommissioning costs alongside Chevron’s Dave Barrow, Shell’s Colin Buchan and ExxonMobil’s B. Max Baumert. He noted the differences between smaller operators and larger operators on decommissioning, saying that smaller players tend to be “very cost-focused”, whereas larger operators such as Shell adopt “more of a belt-and-suspenders technique: they really don’t want to ever see this well again”.

He also noted that operators would like a greater range of services, “but it’s hard to have that and keep it fully committed. The services companies are saying ok I’ll give you that, but what’s it going to do the rest of the time?

He concluded: “Long-range planning will result in better visibility of industry needs for well intervention. If we can think ahead: what do we need as an industry, and it may be that that vessel has to work in multiple locations to meet that need, we’ll come up with better solutions to meet that project by project.”

Among the day’s many other highlights was a panel discussion on comparisons between rig-based and rigless abandonments, featuring a number of big names including Gary Siems, ex-Stone Energy decommissioning manager and now- Petroleum Asset Retirement specialist, and Delaney Olstad, Weatherford’s business-development chief.

The theme of operator collaboration featured heavily in the discussion. Summarizing the thoughts of the other panel members, Siems said operators looking to go down that route would need to address five major challenges:

• Making sure not to give the impression that there is price-fixing of contractor services between operators.
• Ensuring fair sharing of costs between operators.
• Enabling operator B to board a contractor's vessel at the same time as operator A is using it, so that operator B can conduct due diligence in preparation for the vessel coming over to their own project.
• Ensuring equipment reaches the asset of the other operator in proper operating condition.
• Developing a contract that suits all sides (another panel member gave an example in which this was achieved).

In another session, Oceaneering project manager Chris Mancini provided a detailed insight into the contractor’s completion just two weeks ago of a temporary abandonment with resin –the first time this substance had been permitted for such a use in the Gulf of Mexico.

“The problem as it was defined by the operator is we had a well that couldn’t be reliably abandoned or have a lower abandonment, temporary abandonment done with traditional methods, i.e. cement, because there was a downhole obstruction. It wasn’t clear as to what was the nature of that obstruction. It was believed that an FBIV [full-bore isolation] valve might have been partially closed. But in any case there was this obstruction in place in the wellbore,” he said.

“Using this technique we were able to come up with a low-risk solution. It was also a low-cost solution for providing this initial abandonment of this reservoir in preparation for de-risking this well intervention or the complete well intervention with the rig-based solution, which is following on here in another few weeks.”

Bruce Crager summed up the strong first day with the following: "I was very impressed with the quality of presentations and the individuals that attended the Decomworld summit today. It is clear that decommissioning is an active segment of the offshore industry and is expected to grow due to the increasing number of facilities and wells which will need to be decommissioned in the next few years."

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