At last... some visibility into North Sea decommissioning costs

What do you think most affects the cost of decommissioning platforms in the North Sea? Water depth? Function, as in oil or gas? How about location? According to a new study, it’s none of the above...

The main factor affecting the cost of decommissioning platforms in the North Sea is simply how much material there is to take away, a new study by a joint industry forum has found.

It also found that North Sea facilities are typically waiting 10 to 15 years to be removed, and that project management and detailed engineering combine to account for around 22% of the overall price tag.

Based on research into recently removed steel platforms, the report sheds rare light into operators’ liabilities, claims the Performance Forum, which did the study.

Writing in Offshore Technology International, Aileen Jamieson, director of the Performance Forum and vice president of natural resources for consultant Turner & Townsend, said the study produced five key findings.

1. Cost is strongly related to the total weight of facilities removed.

The study highlighted that the total cost of decommissioning platforms was unrelated to function (oil or gas), location (Norwegian or UK platforms) or even water depth. The main factor was simply how much material was being taken away.

2. Project management costs are approximately 8% of the total decommissioning cost.

This is a rule of thumb, and when project management is combined with detailed engineering, the costs increase to approximately 22% of the total decommissioning cost.

3. To save money operators should focus on disconnection and removal because, combined, they account for around two-thirds of total cost.

The original installation method also plays a role, as platform topsides in shallow water in the southern North Sea (SNS) were typically installed in a single lift with the substructure lifted from barge.

However, platforms in NNS/CNS were historically installed in large module lifts, with the substructure launched either from barge or floatout.

4. The time span from cessation of production to end of removal is now running at between 10 and 15 years.

Decommissioning is typically done in phases, and the analysis highlights that it generally takes 150 months from hydrocarbon free to end of removal.

5. There is no correlation between the cost of decommissioning and the time it takes, due to long periods of inactivity.

Instead, decommissioning duration is predominantly influenced by the availability/scheduling of heavy lift vessels, the number of platforms being removed in the same field and the weather.

There can also be lengthy periods where platforms sit in lighthouse mode, where care & maintenance is ongoing but no removal activity occurs.

In some recent decommissioning programs this period of inactivity lasted for more than three years, the study found.

The Performance Forum is a membership organisation with 21 global oil and gas companies.