New decommissioning service launched today by Lloyd’s Register helps operators, equity holders, investors and regulators navigate the regulatory and technical complexities of late-life operations and decommissioning to drive significant cost savings, improve project efficiency, reduce risk, and safely decommission assets and facilities.

In-depth technical knowledge, cost estimation and determining decommissioning risk liabilities make it easier for companies to plan and execute with confidence against a challenging low oil-price market.

“Operators are faced with a huge challenge and conflict between maximising economic recovery, a low oil price and decommissioning on the horizon,” says Alasdair Buchanan, Energy Director at Lloyd’s Register.

“We understand decommissioning requires an investment with little to no return for operators, accompanied by an element of ambiguity globally about the requirements set by regulators and uncertainty on long term liability. The onus is on operators to execute decommissioning in the most cost effective manner, especially in jurisdictions such as the UKCS where tax relief is available on decommissioning activities.”

Lloyd’s Register is offering an integrated portfolio of late-life and decommissioning services to support operators, equity holders and regulators in key territories including the UKCS, GOM and across Asia in how best to manage their operations productivity, with minimal risk and cost effectively in the run up to Cessation of Production (CoP) and decommissioning.

“We are launching this new service to help duty holders, owners, operators, equity holders and regulators drive significant cost savings, improve project efficiency, reduce risk and safely decommission assets and facilities,” highlights Buchanan. “Following several years of acquisition, we have the in-house capability to support industry across late-life operations and decommissioning. It is a unique offering from CoP preparation, planning and surveys, to plug and abandonment, waste management and monitoring post removal – all from one independent provider.”

The expertise covers subsea operations through to topsides, offshore and onshore technical and engineering solutions, project and data management, assurance and commercial services.

Decommissioning doesn’t need to be daunting

Industry estimates suggest the tax certainty created by the UK Government’s policy for oil and gas decommissioning will drive at least an additional £13 billion of capital investment in the North Sea.

“If you’re responsible for any element of decommissioning or if your operations are moving towards CoP, you’ll know only too well the scale of the project ahead of you,” says Buchanan. “For any operator or investor, issues exist around managing costs, environmental and safety implications and the daunting challenge of navigating through the regulations and standards that must be adhered to, but it doesn’t have to be a daunting process.”

“We offer a wide range of services across the decommissioning life-cycle that provide a standardised process to decommissioning, that in itself, will lead to further cost savings and commercial incentives in planning, project managing, budgeting and execution.”

The company has brought together a decade of investment in new technology and company acquisitions, and which now give operators a one-stop-shop for the technical expertise and experience needed to run decommissioning projects. Its unique standardised process to decommissioning can be applied in:

• MER and CoP

• Facilities engineering and subsea projects

• Field decommissioning

• Wells plugging and abandonment

• Environmental and waste management

• Complete late-life management

• Rig and rigless base intervention

• Intervention well control riserless and riserbased

• Reactivation of drilling equipment and systems.

Providing certainty

“Determining the nature, timing and sequence of ending the life of a field or facility, in the most cost effective way, requires specialist knowledge of the reservoir, well design, production properties and the process equipment.”

Buchanan states that before any operator embarks on decommissioning, experienced subsurface teams are needed that use specialists in geology, geophysics, petrophysics, reservoir and petroleum engineering and field development to conduct a range of technical studies.

“Our aim is to provide a high level of certainty and reassurance to industry that the approach to decommissioning and the associated costs of carrying out decommissioning can be done effectively,” emphasises Buchanan. “The oil price drop has made decommissioning more relevant for many operators and we believe that as those costs are so big at the end of field life, cost estimates for decommissioning should be subject to careful scrutiny.

“Our process at Lloyd’s Register is also about understanding the minimum that needs to done to achieve a safe and robust decommissioning process. It is also important that solutions are not over-engineered or over compensated for in costly, unnecessary remedial activity that has little to do with compliance to certain standards or processes.”

Service extends in to investment decisions and M&A activity

Lloyd’s Register points out that the service extends to non-operated partners or M&A organisations.

“If you are considering an asset purchase or transfer, you need to understand your decommissioning liabilities and where you are exposed to cost escalation,” comments Buchanan. “Our independent evaluations provide that in-depth asset knowledge, residual value determination and decommissioning cost liabilities.”

Despite the industry’s best efforts to extend field life, the North Sea is a mature basin and there are around 8,000 wells which will ultimately require decommissioning. The industry estimates that two thirds of those will have to be decommissioned in the next 30 years. In addition, decommissioning represents a significant opportunity to create jobs and global influence, as outlined in the Oil and Gas Authority’s Decommissioning Strategy published in June 2016.

“We have a long and successful relationship working in conjunction with the oil and gas industry and they are telling us that there is a need for more cost-effective decommissioning expertise. We have listened and now, with this new service launch, we look forward to demonstrating the innovative ideas we can bring to decommissioning in the UKCS and beyond.”