Imagine an enterprise that has the potential to earn a substantial portion of a projected £15 billion. This is the amount forecast to be spent on oil and gas decommissioning in the whole of the UK North Sea over the next ten years.
Look at the southern North Sea alone and decommissioning work is predicted to be worth £2.5 billion in the UK Sector, add the Dutch sector and this spend rises to around £4.5 billion. That’s about £400 million a year over the next ten years.
One region of the UK is particularly well-placed to undertake this work – East Anglia. Working to ensure the region benefits from this opportunity is the ‘Late Life & Decommissioning Special Interest Group’ (SIG).
A joint initiative between the East of England Energy Group (EEEGR) and Decom North Sea, the SIG has operator and supply chain membership, in addition, to support from the Oil and Gas Authority and Oil & Gas UK.
Julian Manning, the group’s Chair, and Stuart Wordsworth, the Vice-Chair, discuss their work to bring revenue and employment to the region by developing a sustainable decommissioning sector.
Together, Julian and Stuart have over 50 years’ experience of the oil and gas industry and strong links with East Anglia. In this issue, they speak to Ellen Rossiter about the opportunities that exist and the challenge that remains.
First, we need to step back to the 1960s when gas was first found in the southern North Sea. Over the next few decades, wells were drilled and infrastructure built, but now much of this is coming towards the end of its design life.
“There is a lot of ‘late life’ work going on which aims to extend the use of these assets. This includes Inspection, Repair and Maintenance (IRM) work,” explains Stuart. “In addition, some operators are exploring the possibility of drilling new wells to boost production so a business case can be made to extend the life of the existing infrastructure.
“Another aspect of ‘late life’ work focuses on Maximising Economic Recovery (MER) which is all about hub strategy. Key parts of the infrastructure act as hubs for the North Sea, like the onshore terminals of major operators which many smaller operators utilise too. It’s important we don’t see these decommissioned prematurely as so many companies depend upon them.
“Once all of these opportunities for late life work have been exhausted, the removal of these assets is the decommissioning element. The decommissioning industry has been driven by activity in the Gulf of Mexico, where hurricanes damaged the platforms and they had to be decommissioned, replaced or repaired.
“It’s been estimated that given the age of the infrastructure, the next decommissioning hot spot will be in the UK, in the southern North Sea and this presents a great opportunity for East Anglia.
“Hundreds of platforms and the associated subsea equipment will need to be decommissioned and we want to see this work done properly, efficiently and carried out from this region.
“East Anglia is ideally situated to deliver late life and decommissioning work to the whole of the Southern Gas Basin, for both the UK and the Dutch sectors – we are striving to ensure East Anglia is in a good position to achieve this.
“We’ve been working for a number of years now to understand the size of the challenge and to see what can be done to capture this workload in the region,” explains Stuart.
“The people, the engineering, the project management and the vessels all usually come from outside of East Anglia, so the region sees little of the revenue from the work and that’s what we’re trying to change.
“We want the region to be recognised as capable of carrying out this work, to successfully bid for it and ideally to use local people to carry it out.
“If we can get the project teams to work out of the region, supply the vessels and equipment from the likes of Lowestoft or Great Yarmouth and train the local workforce, we can go about building a sustainable business for the region.
“It’s forecast this work will last for at least 20 years when taking into account the UK and Dutch sectors of the southern North Sea, then there is the global export potential too.
“After the UK, the next hot spots of decommissioning activity are likely to be in Asia, West Africa and the Middle East. So if we build up this expertise in East Anglia, we can export it globally – creating a sustainable industry.
“In order to capture this work in East Anglia and to make the most of the export market, there is much work that needs to be done. We need to encourage more companies to invest here, and to do this we need to make the region more attractive to them.
“Investing in the infrastructure, providing the right facilities, creating more enterprise zones with attractive business rates, making better use of brownfield sites, ensuring the right equipment is situated in the region and offering appropriate training – is all part of the work that remains to be done.
“Some operators have invested in the region, with offices, facilities and employees based in Norfolk and as the decommissioning work gathers pace we want to see more companies following suit, but at the moment many are managed from outside the region.
“Some companies relocated to Scotland when oil was found, we want to make East Anglia attractive to them once again, so they’ll work from here and all of these factors; infrastructure, facilities, rates, equipment and training are crucial in achieving this goal.
“We are reaching out to stakeholders across the region including Pete Aldous MP, the New Anglia LEP, the local authorities in Norfolk, Suffolk, Great Yarmouth and Lowestoft, the ports, East Coast College and UEA so that we take an aligned approach and make the most of this opportunity.
“We’ve also reached out to the National Decommissioning Centre and the Oil and Gas Technology Centre in Aberdeen, plus the University of Aberdeen and Robert Gordon University to show we want to work in partnership with them, so we develop the right skills here.
“Decommissioning has been underway in the southern North Sea for the last ten years, but generally speaking only a small percentage of spend is secured within the region. This presents an opportunity for change that will have a positive impact for all stakeholders in the region.
“Much additional revenue could be brought into the region – if we prepare properly and invest in the infrastructure and facilities needed to undertake this work.
“Time is of the essence and we don’t have much time to get it right. That’s why it’s so important that we all work together to make the most of these upcoming opportunities. We don’t want them to pass by East Anglia.
“In addition, we’ve reached out to the Dutch decommissioning and reuse body Nexstep to leverage synergies and create efficiencies within the consolidated southern North Sea gas basin. The consolidated level of work is substantial and provides a basis for work stretching beyond the next 10-15 years. In summary:
- Over 1,200 wells need to be abandoned and deconstructed
- Over 250 Marine structures need to be removed
- Over 5,000 km of pipelines must be abandoned or removed
“The region has every opportunity to be pivotal in global shallow water decommissioning activities and be recognised as a centre of excellence to draw resources from in the future. Our aim is to create an awareness of the regions resources whilst establishing the framework to build out a world class capability.”