Intelligence brief: North Sea contractors expect order books to grow; Others ‘envious’ of UK late-life policy

Decommissioning news you need to know

Contractors foresee more decom work in the next five years (Image credit: Aberdeen & Grampian Chamber of Commerce / Bibby Offshore)

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North Sea contractors see order books filling up in next five years 

Six out of every seven contractors in the North Sea expects to increase their involvement in decommissioning work over the next three to five years, according to the latest version of the twice-yearly Aberdeen & Grampian Chamber of Commerce Oil and Gas Survey.

The percentage of 85% was the highest since this question was first asked of contractors in 2010. In the previous survey conducted in November 2015, 79% of contractors saw an increase in decommissioning work over the next three to five years.

While bullish on decommissioning, three in four contractors were less confident about their prospects than they were a year ago. And 14% of contractors reported they are working at or above optimum levels in the UK Continental Shelf, down from the high of 79% three years ago.

Some 42% of firms in the sector (including operators and contractors) said their number one priority is increasing efficiency and productivity, while a further 23% said their main goal is cutting costs.

OGA says other regulators ‘envious’ of late-life policy

Andy Samuel, Chief Executive of the UK’s Oil and Gas Authority, has told a parliamentary committee that other regulators are envious of the United Kingdom’s new “fit for purpose” strategy to maximize economic recovery.

Samuel told  the Energy and Climate Change Committee that he met with his peers at the US Bureau of Ocean Energy Management last week. He has also held recent meetings with regulators from Norway, Brazil and the Canadian province of Nova Scotia.

The UK does not have all the answers, Samuel said, before stating: “On the more mature basin aspects, people are very, very interested in what we are doing, and a couple of the regulators I met last week were frankly envious, because what we do have is this kind of fresh policy that is fit for purpose that some of them do not have.” He said the OGA has been working closely with the treasury and it has a clear plan with “very good cross-party support”.

Samuel also revealed that a couple of the regulators he spoke to “are incredibly frustrated”. Declining to name which regulator he was referring to, he said that “one of them is being forced to come down very hard on industry around the risk of decommissioning liabilities, which is something that the government here has pretty much covered.”

He continued: “You can imagine that this a bad time for that regulator to come down on their clients, potentially forcing them into administration. So they are being forced to do something that they know is not good for maximizing recovery.”

The UK's draft policy on maximizing economic recovery stipulates that before commencing the planning of decommissioning of any infrastructure in UK waters, owners of such infrastructure must ensure that all viable options for their continued use have been suitably explored. Samuel said the OGA had been working on the decommissioning strategy with industry and will publish its decommissioning plan by the end of June.

Aibel, Reach Subsea to team up on decommissioning

Norwegian contractors Aibel AS and Reach Subsea have agreed to enter into a formal cooperation agreement for projects in subsea oil and gas, renewables, ship and rig repairs, and decommissioning of existing platforms, subsea structures and other offshore installations.

In a joint statement the two firms said they operate in the same market segments but have different client bases and contracting approaches. They said the cooperation would enable them to execute projects which they cannot provide alone.

The two companies plan to share resources to undertake complex projects that may require decommissioning, project management, engineering, fabrication and installation, or remotely operated vehicle services.