Why it's time to double down on oil on gas decommissioning

The Southern North Sea (SNS) was the first in the UK basin to start plugging and abandoning end-of-life wells and dismantling and removing platforms. But progress across the wider UKCS has been sluggish – with too many excuses for the delays, especially in well decommissioning.

While pockets of operators are working together, performing well and saving on cost, the majority must improve by “doubling down on their planning”, according to the North Sea Transition Authority (NSTA).

The regulator is getting tough by opening investigations into missed deadlines and preparing to take sanctions.

Though the world-leading UK supply chain is ready and waiting to undertake multiple campaigns, the serious backlog could see service providers heading to work overseas, causing bottlenecks while pushing up costs.

If this expertise and equipment were lost, plans to repurpose UK infrastructure for carbon capture and storage would be at risk – especially in the SNS where carbon capture and storage (CCS) projects are well advanced, as well as the pipeline of decommissioning in the wider basin.

In July, the Pioneering Spirit lifted the final piece of the iconic Brent field infrastructure – the Brent Charlie topside – ending its decade-long decommissioning campaign. The NSTA fired a warning shot to operators: persistently delaying the plugging and abandoning of their wells would lead to investigations and maximum £1m fines.

NSTA head of supply chain and decommissioning Pauline Innes said the entire decommissioning programme is expected to cost an “eyewatering” £40bn – with a £2bn spend this year, another £2.5bn next year and a predicted £24bn spend by 2032 showing “things are moving”.

But only 70% of planned well decommissioning had been achieved.

“It is unacceptable to defer activity,” she said, as the NSTA UKCS Cost and Performance Update 2024 was released. “What we are saying is that we think we can do better.”

Operators are legally required to leave the marine environment clean and safe once production stops. They must also decommission platforms, pipelines and wells.

Pauline Innes, NSTA head of supply chain and decommissioning (Image: Courtesy of NSTA)
The industry had been given the chance to get its house in order with collaboration, campaigning and good practice, but it “isn’t as wholesale as we would like”, said Pauline.

“We have been working with the industry for several years to put them on swifter pathways and some are not moving as quickly as we would like them to.

“We are seeing activity, but we are intervening more than we have done to make sure we get that momentum going.

“A couple of years ago, we said we would take a tougher stance and told them they needed plans and to give us deadlines and dates. We are now reaching the point where some are delivering, and some are not.

“We are saying: ‘We have given you fair warning’. We can support them.”

An investigation into a case of non-delivery was ongoing by the NSTA’s Directorate of Regulation.

“We have opened investigations into potential licence breaches, and we will take regulatory action to incentivise others into action. The supply chain is at a critical stage, and it is saying to us it has the capacity and the capability now. It has the rigs and the people, and we have oil and gas assets that need to be decommissioned.”

Deferring contracts reduces supply chain revenue and its ability to invest in capacity and resources, leading rig contractors to seek opportunities in other regions where operators offer longer, more secure contracts.

“If the supply chain moves out of the basin, there will be a risk of costs increasing to get them to come back.”

Also, the rigs and the people who deliver decommissioning in the UK now are needed to help with CCS delivery.

“Decommissioning can be that anchor to help them deliver long-term plans. That is why it is such a critical issue that has been bubbling for a while. If [operators] don’t act, old rigs will be scrapped, new ones will go overseas into the global market, and it will cost even more.”

Schooner’s 1,200-tonne platform deck was lifted in the Southern North Sea by Netherlands-based Heerema Marine Contractors in the last major operation of Norwegian operator DNO’s multi-year North Sea decommissioning programme (Image: CHPV)
Deferral excuses range from “the more acceptable” rigs not being ready or delayed because of weather or technical reasons, Pauline said. “In some instances, the cost in the market was higher than they anticipated. They had designed and planned and gone to the market to tender based on two years ago – the prices have escalated.

“Operators believe they have discretion and would rather spend money and their limited capital budget on something else.”

Pauline’s answer to that is: “Welcome to the regulations – have you seen our sanctions process?”

Taking tougher regulatory action will make it clear that, although there is discretion and some flexibility, operators still have to deliver.

“We need to respect fairness in that process,” said Pauline.

For the operators, the reputational damage of being on the wrong side of the regulator would sting more than the fine: “Nobody wants to be accused of non-delivery.”

Good practice needed

The NSTA is spearheading a “holistic programme” to identify which UKCS  wells will be ready for decommissioning between 2026 to 2030 and supply chain capacity.

Examining the potential for campaign collaboration and offering support, as well as sanctions, are all part of the project. It has been designed to guide the regulator when promoting and facilitating well decommissioning.

Encouraging good practice where operators and the supply chain work together to come up with cost and time efficient models was paramount.

But more good practice is needed, said Pauline. 

“We have had a couple of different models, for example, where supply chain companies go out to a variety of different operators, and they all agree to a sequence of their work in a back-to-back campaign. 

“They say: ‘We have got these wells that need to be decommissioned and we have the flexibility’. That means that the supply chain can optimise their schedule to be efficient. That is what we like.

“We have had some positive feedback that it works on multiple levels and would like more of that.”

Schooner’s jacket was removed after the piles had been cut three meters below the seabed. Schooner’s deck and jacket were taken to the Hoondert Yard in the Netherlands for dismantlement and recycling (Image: CHPV)

Another model involved operators working together to go to market with multiple wells. Back-to-back campaigns with a rig working all year round, not solely in the summer, had been efficient, said Pauline.

To find out about work coming up, the supply chain can use the NSTA’s Energy Pathfinder site and Decommissioning Data Visibility Dashboard, which showcases 16 decommissioning portfolios.  

The NSTA is also planning to carry out analysis of port capacity for decommissioning. 

Decommissioning in the energy transition

“I always describe decommissioning as a key milestone of the energy transition journey,” Pauline said.

“It signals the end of one system and is paving the way for what is to come.”

The most cost-efficient way to decommission is to plug and abandon wells as soon as they cease production. Otherwise, operators face costs on ongoing upkeep and manpower. 

Offshore infrastructure are hazardous areas that come with high operating costs after production stops. Deferring work adds to the cost and can mean that platforms continue to use power and release emissions – even though they are no longer producing oil and gas.

Planning well decommissioning in the late life stage, before they stop production is cost efficient and good for the environment, she said.

Repurposing for CCS is crucial, and well stock and the pipeline infrastructure will need to be assessed for the right sites, with the right technical capability and conditions, to be chosen.

With Bacton at the centre of CCS plans, the SNS is one of the fundamental areas for infrastructure reuse. 

Supply chain needs to work together

Offshore decommissioning accounts for about 7% of Great Yarmouth business Armultra’s turnover.

It could be 15-20% if campaigns got started and the huge forecasts talked about nine years ago happened.

Director Tom Beales said getting campaigns under way would make a big difference to the revenue of supply chain businesses.

“That is where I would like to see it developing – if we have the chance to do it. We are only getting one or two projects a year. We are not hearing about the three- to six-month campaigns – more a week here or there.”

Tom Beales, director of Armultra (Image: Armultra)
The quantity of work hadn’t turned out as hoped and forecast in 2015-16. In July, Armultra started a three-month campaign in the Southern North Sea (SNS) with a 30-strong crew of welders, platers, riggers, NDT (non-destructive testing) and heat tech.

The work includes cutting the platform legs and putting in skid beams ready for the heavy lift barge vessel to lift the topside.

Tom would like to see SNS decommissioned infrastructure come into Great Yarmouth port.

“The figures [in the NSTA report] are great. As a country, we need to make sure that the work is done in the UK and comes into UK ports.

“We have the skills and the capacity here to do it. The labour is in shortage, which is more down to the rates than the number count. We have to encourage expertise and numbers into the industry and put it together as a complete package.

“The UK supply chain needs to get the work. Now we do the cutting offshore and it is shipped somewhere else, not into Great Yarmouth.

“There is so much work out there if we work together with the ports and other businesses here involved in decommissioning – ASCO, Peterson – to make decommissioning work. It isn’t straightforward.”

Armultra, which will mark its 40th anniversary in Great Yarmouth next year, employs about 160 people.

A key issue effecting the offshore energy supply chain was getting the labour, said Tom.

“When you look back 10 to 20 years, offshore was getting paid so well and far more than onshore, so everyone wanted to go offshore. Now they can earn as much, if not more, onshore and be home at nights or weekends, rather than offshore for 14 days at a time.”