Regulators reveal plans to spark first wave of decom in Asia

New rules are being introduced to accelerate decommissioning activity in Asia, national regulators revealed at the Decommissioning and Mature Wells Management Conference in Kuala Lumpur in December.

Malaysia wants operators to start planning for decommissioning (Image credit: Petronas)

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Malaysia wants to see 50 wells decommissioned in 2016, with 20-25 firm candidates already slated for either partial decommissioning or suspension, Shahril Mokhtar, a team leader at Malaysia Petroleum Management (MPM), the regulatory body for the country’s oil and gas industry, told the conference.

Intelligence brief: US tightens rules on reporting of decom costs; GoM, North Sea drilling at multi-year lows

Decommissioning news you need to know.

Offshore operators in the US will need to report decommissioning expenses within 120 days (Image credit: Dutko)

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US tightens rules on reporting of decom costs

Offshore oil and gas operators will be required to submit summaries of actual expenditures within four months of completing any decommissioning activity, under new rules announced by the US Bureau of Safety and Environmental Enforcement (BSEE).

Growth in Asia Pacific decom highlights knowledge gap

The Asia Pacific has been chiefly a bystander amid a flurry of global decommissioning activity, but the slow pace of global economic recovery and aging infrastructure has some operators reconsidering their options.

Malaysia's iconic Petronas Towers are named for its major oil producer (Image credit: George Clerk)

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Full-cycle production costs for oil-weighted companies involved in the Asia Pacific are typically about 25-30% lower than the global average, according to online data service Evaluate Energy.

In the Gulf of Mexico, where production costs are higher, 4,595 rigs were taken offline in 2014 and oil prices at $40-per-barrel are now putting pressure on margins in lower-cost regions.

Producers in the Asia Pacific will need to improve their decommissioning and abandonment (D&A) knowledge sooner rather than later.

Tougher US funding rules aim to prevent costly bailouts

Concern over potential insolvencies was behind the US Bureau of Ocean Energy Management’s decision to tighten financial security regulations for offshore oil and gas operators, BOEM Risk Management Operations Group’s Wanda Lilly told DecomWorld.

GoM operators must prepare for new financial regulations (Image credit: frentusha)

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Amid low oil prices and a trend of bigger firms selling aging properties to smaller firms, BOEM is increasingly concerned about the ability of operators to carry out their obligations – and is keen to make sure the final bill for decommissioning is not picked up by US taxpayers.

The Gulf of Mexico (GoM) decommissioning market was estimated to be worth $37 billion as of January 2015. Whenever a well is drilled and infrastructure installed, the value of the market expands, and when wells are abandoned and infrastructure decommissioned, the value contracts.