Intelligence brief: Oil majors report rising decom provisions; North Sea ports compete for market share
Decommissioning news you need to know
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Decom provisions on the rise, report oil majors
The world’s four largest publicly traded oil and gas producers all revealed increases in future decommissioning expenditure in their 2015 annual reports.
Shell reported $24.247 billion in provisions for decommissioning and restoration as of December 31, 2015, up almost 11% from $21.887 billion at the end of the previous year. Shell expects $6.165 million to be utilized within one to five years, $6.199 billion within six to 10 years, and the remainder from 2026 and beyond.
BP reported provisions of $18.946 billion at the end of 2015, compared to $18.720 billion one year earlier and $17.205 billion the year before that. Separately, it recorded $16.507 billion in provisions in 2015 relating specifically to environmental expenditure, litigation and claims, and Clean Water Act penalties from the 2010 Gulf of Mexico oil spill. It also warned of uncertainty regarding the outcome or resolution of current or future litigation over the spill.
Last month, ExxonMobil and Chevron acknowledged rising asset-retirement obligations in their Form 10-K annual reports to the US Securities and Exchange Commission. ExxonMobil reported a 2% increase to $13.704 billion, and Chevron a 4% increase to $15.642 billion.
ConocoPhillips, generally considered the seventh in the group of “supermajors” or world’s largest publicly-traded operators, said its asset retirement obligations fell from $10.939 billion to $9.911 billion.
Eni and Total file their annual reports in the second half of March.
North Sea ports compete to attract decom market
Several ports put their hands up in recent weeks for a share of the North Sea decommissioning market, with one in eastern England anointed as a future capital for the sector.
Great Yarmouth and the southern North Sea (SNS) should be the “trial ground for North Sea decommissioning”, Bill Cattanach, head of supply chain at the UK government’s Oil and Gas Authority, said in a message to the East of England Energy Group (EEEGR).
“If we do this right, we can take it to be world class and be the centre of excellence, not just in the SNS, but for shallow water decommissioning in the Netherlands, Denmark and beyond,” EEEGR Chairman Julian Manning said at an industry conference.
“The UK SNS is an ideal trialing ground for decommissioning in the sense that it is gas, has easier to handle infrastructure, and much more accessible for companies to collaborate and campaign.”
Forth Ports announced plans to invest more than £10 million ($14.3 million) in the Port of Dundee to create a new quayside with heavy-lift capability, coupled with a significant onshore operational area. The investment – the largest in the Scottish port’s history – will position Dundee at the “forefront” of the North Sea oil and gas decommissioning and offshore wind sectors, it said.
In Denmark, the operators of the port of Odense announced a kr 358 million ($53.3 million) expansion. Although located in a fjord within the straits that connect the North Sea to the Baltic Sea, the port’s management said the expansion would ensure it is “well-prepared for a situation when the future multi-million market for decommissioning – i.e. eco-friendly scrapping of offshore wind turbines and oil and gas platforms from the North Sea – will really gather momentum.”
The port already boasts cranes capable of lifting and transporting units weighing up to 1000 tons, according to the announcement, and the extension will include the establishment of a special pavement area with a loadbearing capacity of 70t/m2, which will allow even very big mobile cranes to operate.