Industry Leaders Challenge Status Quo on Day Two of Decom’s Flagship Event
Keynote speeches from major operators and government regulators featured on the second day of DecomWorld’s flagship decommissioning event in Houston, with the speakers challenging many common assumptions about the industry.
Donna Birbiglia, Shell’s head of completions, well interventions, abandonments and well testing, set the tone with a call for the industry to think differently about the way it carries out decommissioning.
“Prior to this recent downturn, the cost of goods and services had risen pretty much in line with the oil price increase. Unfortunately, in my view, the prices don’t seem to track as quickly when the oil price is on the downward trend. This lag in service-company cost adjustments places additional strain on the industry, the operators and the service companies alike. And it forces the release of trained staff, making it even more difficult to respond when the oil price rebounds,” she said in front of a packed conference hall in the day’s opening speech.
“Given the increase in well inventory, and the maturation in deepwater fields, the industry needs to act now to change the way decommissioning is executed… We need to collaborate. We need to integrate. We need to innovate. And we have to do it together. There’s no silver bullet. There’s no one person out there who has the answer. It has to be done together, to deliver that win-win. We have to excite and inspire our intellectual community to think of decommissioning as the industry’s next big challenge. We need to hear engineers say: ‘fantastic, put me on that abandonment well’.”
On the regulatory side, Jim Christie, who became the UK Oil and Gas Authority’s head of decommissioning at the beginning of February, presented on how the government is taking a new approach to striking a balance between maximum economic recovery and decommissioning, and also stressed the need for a collaborative approach.
The notion that decommissioning involves the complete removal of all infrastructure was challenged by the trio of BHP Billiton’s Larry Johnson, Ramboll Environ’s Joseph P. Nicolette, and legal firm Pillsbury Winthrop Shaw Pittman’s Thomas Campbell, who presented a case study on Net Environmental Benefit Analysis (NEBA). The panel was noteworthy for another reason, with Johnson noting that he had met the other two at the previous year’s Decommissioning & Abandonment conference.
NEBA, they explained, can quantify the ecological benefits of subsea infrastructure, while measuring it against the potentially “enormous” ecological harm that can be caused by removing the infrastructure.
Addressing opposition in the UK in particular to leaving infrastructure in-situ, Campbell said: “I question the wisdom of our clean seabed regulations. I would put forward a friendly hypothesis, and that is that the UK government will spend tens of billions of dollars reducing the ecological productivity of the North Sea - by the decommissioning.”
Johnson also responded to Birbiglia’s comment about there being no silver bullets, saying that NEBA “is a silver bullet for the industry; there aren’t many silver bullets”.
Shell’s Paul Smy presented on the North Sea’s upcoming Brent Field decommissioning program, which remains one of the biggest ongoing decom projects in the sector. Noting reverse installation of such a large platform cannot be performed, he commented that Shell would like to know more about how much plugging and abandonment can be done prior to cessation of production.
“One of the other things I’d like to point out about the Brent field is that each of those platforms has a different COP [cessation-of-production] date. And the way it’s plumbed together makes it quite challenging to do a decommissioning sequence that doesn’t suffer from dependencies on other platforms in the system,” he noted.
A recurring theme from the first two days of the conference was the need to bridge the gap between operators and services companies.
Phil Chadney, FCBI Energy Head of Oil & Gas, summarized the two positions: “What is evident is that because decommissioning is largely accepted as a non-revenue generating activity by operators, cost reduction must be a primary focus. But from a contractor perspective, margins are already tight – especially in the current climate – and in the long run, cost reduction will not promote contractor innovation in the industry.”
“There is a need to manage cost expectations from the operator community and shift the operators’ mindset to ‘decommissioning as value generation’. Equally, the hidden gem of cost reduction lies in collaborative decommissioning campaigns and demonstrating environmental benefits of leaving assets in place – but just how the industry achieves this is still up for debate.”
The conference was set to conclude Thursday with presentations of some of the decommissioning world’s most successful recent innovations, including the latest in well diagnostics from Fotech Solutions, and one on new, proven riserless P&A technology from Wild Well Control.
And with that, preparations begin in earnest for the 9th Annual Decommissioning & Abandonment Summit, to be held at the Omni Hotel in Houston on 14-16 March, 2017.