Shell’s Champion West Fields, Brunei (Shell)

It has been nearly two years since Asia-Pacific oil-producing countries agreed on broad guidelines for decommissioning the region’s substantial stock of ageing offshore oil and gas infrastructure.
At the time it was hoped that the document would kick-start a concerted effort to deal with the backlog of assets ripe for decommissioning, and stimulate the global industry.
But the guidelines have yet to make their mark because it was left to individual countries to develop handbooks on specific aspects of decommissioning and so far, says one expert in the region, only Brunei has taken that on.
The guidelines were drafted by the ASEAN Council on Petroleum (ASCOPE) to provide a common technical reference for ASEAN countries.

“In around 2006, ASCOPE began looking into decommissioning guidelines because 54% of the offshore infrastructure in the ASEAN region was 20-plus years old,” said Ellen Sjolie, head of section for risk advisory at DNV GL’s Deepwater Technology Centre in Singapore.
But the guidelines were only the beginning. ASCOPE also identified 20 separate technical handbooks which needed to be developed in detail, covering program development, cost estimation methodology, risk assessment, well plug and abandonment, pipelines, subsea systems, and all other necessary aspects.
“Those handbooks have yet to be developed,” Sjolie told Upstream Intelligence. “ASCOPE never intended to develop the handbooks. It was left to industry and individual countries to do this.”

Not quite there yet
“To my knowledge,” Sjolie said, “Brunei is the only country stepping forward in saying we want to use the ASCOPE guidelines and further develop the handbooks on a country level, maybe because Brunei has assets that are 40-plus years old.”
She added: “In Brunei you have Brunei Shell Petroleum as a very strong company and now they are starting to make plans for decommissioning. That will drive what is done at a national level, even if other companies are not quite there yet.”
Sjolie said that the level of decommissioning-related activity in the region is quite high, but is currently concentrated on well plug and abandonment. The delay to the handbooks has not prevented individual companies from developing their own approaches, but she said that on issues such as cost estimation, industry-wide best practice guidelines would be helpful.
“But,” she asked, “who’s going to be the driver? It’s a need, but is it an immediate need for the companies, and what is the stance of individual governments?”

Decommissioning backlog
The ASCOPE guidelines were seen as crucial for developing the decommissioning industry in a region made complex by its multiplicity of regulatory regimes.
With the discipline still new there, questions long settled in more mature decommissioning markets like the Gulf of Mexico and the North Sea remain unanswered.
In Indonesia, for example, there are relatively few laws on decommissioning and issues such as reefing rigs remain cloudy. “There is marine dumping legislation that would allow placing the rigs into the water as reefs,” said Karlheinz Spitz, Asian regional director of risk-management consultancy, Greencap. “But what is missing is the technical guidelines to explain the difference between rigs-to-reef and marine dumping.”
An expert who helped draft the guidelines said that a lack of regulation in the region has been one cause of a serious decommissioning backlog.
Dr. Brian Twomey, an advisor to ASCOPE in producing the guide, told DecomWorld in 2013 that the guideline was “a first step on the road, which hopefully helps bring clarity, simplicity and flexibility.”
Twomey said then that as many as a third of the estimated 1,700 offshore facilities in the broader Asia-Pacific region needed to be decommissioned.
“Without clear decommissioning legislation, the engineers and cost estimators do not know the rules of the game and cannot produce accurate cost estimates,” he said.

Pressure to retire
The drastic fall in the price of oil may underscore the need for the handbooks. Faced with plummeting revenues, operators in the Asia-Pacific region could face pressure to push forward asset-retirement plans.
A vivid sign of the contraction in exploration and production activity came this week, when it was reported that, of around 180 drilling rigs in South Asia, more than half are idle.
Meanwhile, Ellen Sjolie said that Brunei’s leadership on the guidelines may act as a catalyst for the region.
“You need to start somewhere. If one country does the handbooks it’s not going to be very different for other countries. Plus, in Brunei you have Brunei Shell Petroleum, Petronas and Total as big players who are active in the whole region, so the best practice can spread.”